The Atlantic: Robin Hood in Reverse
media mentionBut according to a new report from The Institute on Taxation and Economic Policy, the impact of those federal tax breaks is largely offset by the burden of state and local taxes. Here’s how state and local taxes break down as a percentage of income: The richest Americans pay the least.
The tax mix changes from state to state. In Washington State, the top one percent pay just one-seventh as much of their income as the poorest twenty percent, largely because the state does not levy a personal income tax. In Kansas, where Governor Sam Brownback’s tax cuts have left the state facing a budget shortfall, the top tax bracket starts at just $30,000 for married couples—so a CEO making six figures pays the same rate as a construction worker making five. Alabama taxes groceries, which absorbs a larger proportion of the household budgets of lower-income families than their richer neighbors. At the other end of the spectrum, Vermont charges low sales and excise taxes and offers a sizable earned-income tax credit for working families. Nevertheless, in every single state “at least some low- or middle-income groups pay more of their income in state and local taxes than wealthy families.” Some states like Texas and Florida have a reputation for being “low-tax.” That may be true for people like NBA player Trevor Ariza, who reportedly left the Washington Wizards for the Houston Rockets this summer in part to save millions on his income tax bill. Someone selling hamburgers at the Wizards’ arena, however, would end up paying a higher proportion of their income in taxes by moving to Texas.