Saturday, November 21, 2009
When it comes to taxation at the state and local level, no government is being truly fair to the poor, according to the Institute on Taxation and Economic Policy (ITEP). Their assessment of all 50 state tax systems revealed varying levels of regressive policies that force low-income people to pay a higher percentage of their income than the wealthy. The U.S. government is little help either with its “federal offset” that allows taxpayers to include federal itemized deductions on state and local taxes.
After factoring in the federal offset, the average state and local tax rate for the wealthy comes to 5.2%. But for middle-class citizens the tax rate is 9.4%, and for the poor it’s 10.9%.
The least fair states, according to ITEP, are: Washington, Florida, South Dakota, Tennessee, Texas, Illinois, Arizona, Nevada, Pennsylvania, and Alabama.
The best states, or what the institute calls the “less regressive,” are Vermont, Delaware and New York, as well as the District of Columbia.
-Noel Brnkerhoff
Who Pays? A Distributional Analysis of the Tax Systems in All 50 States (Institute on Taxation & Economic Policy) (PDF)
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