States are Soaking the Poor and Letting Rich Skate

Economics Inequity Taxes

            New Orleans      The Institute on Taxation and Economic Policy for the last seven years has done an annual report based on a distributional analysis of state taxation policies.  It’s terribly depressing reading, not because this nonprofit doesn’t do an excellent job, but because their conclusions take away any hope states are offering a fair deal to the majority of their citizens who are low-and-moderate income as opposed to the wealthy.


This is a read-and-weep affair, especially if you live in some of the states, like Arkansas, Mississippi, and Louisiana, where the soaking is up to our necks, but here are their findings in brief:

  • The lower one’s income, the higher one’s overall effective state and local tax rate. The lowest-income 20 percent of taxpayers face a state and local tax rate nearly 60 percent higher than the top 1 percent of households. The average paid by residents to their home states is 11.3 percent for the lowest-income 20 percent of individuals and families, 10.5 percent for the middle 20 percent, and 7.2 percent for the top 1 percent.
  • In 41 states, high-income families are taxed at lower rates than everyone else. 42 states tax the top 1 percent at a lower rate than the bottom 20 percent, while 46 states tax the top 1 percent less than the middle 60 percent of earners.
  • In 34 states, low-income families are taxed at higher rates than everyone else despite having the least ability to pay. Only Maine, Minnesota, New Jersey, New Mexico, New York, Vermont, and DC now reserve their lowest overall tax rates for low-income families.
  • Tax structures in 44 states exacerbate inequality.
  • Tax structures in California, Maine, Minnesota, New Jersey, New York, Vermont and the District of Columbia reduce inequality.
  • In the 10 states with the most regressive tax structures, the lowest-income 20 percent pay three times as much of their income in taxes as the wealthiest 1 percent. In Florida, home to the nation’s most regressive tax system, low-income families pay almost five times as much as the wealthy. After Florida, the next most regressive tax codes can be found in Washington, Tennessee, Pennsylvania, Nevada, South Dakota, Texas, Illinois, Arkansas, and Louisiana.
  • Heavy reliance on sales and excise taxes makes tax systems more regressive. The lowest-income 20 percent of taxpayers pay 7.0 percent of their income toward sales and excise taxes, the middle 20 percent pay 4.8 percent and the top 1 percent pay a comparatively meager 1 percent rate.
  • States described as “low tax” are often high tax for low-income families. States such as Florida, Tennessee, and Texas are often described as “low tax” due to their lack of personal income taxes. This characterization is true only for high-income families.
  • Some states are passing policies that exacerbate tax repressively. Arizona and Kentucky recently moved in the direction of more regressive taxation along with Arkansas, Idaho, Iowa, Mississippi, Nebraska, North Carolina, Ohio, and West Virginia—all of which have prioritized tax cuts for more affluent households and corporations.

It’s not just the “rich men north of Richmond” who are fleecing people on taxes, it’s pretty much the rich men and their minions in the vast majority of state capitals all around the United States.  What are we going to do about it?