The Progressive: States and Localities Move to Reverse Racist and Regressive Tax Policies

And a recent analysis of state and local tax systems by the Institute on Taxation and Economic Policy shows that, as a whole, state and local governments tax the poor at higher rates than they do the rich.

Why is state and local taxation so backwards in the United States? Some state constitutions prohibit progressive forms of taxation, like income taxes. And many that do have income taxes don’t allow municipalities to extend them onto the local level—forcing municipalities to fund school, transportation, and fire departments with taxes and fees that disproportionately impact the working poor and people of color.

The result is that, on average, local and state tax rates on the poorest 20 percent of taxpayers are 50 percent higher than they are for the richest 1 percent, according to the Institute on Taxation and Economic Policy analysis. In a whopping forty-five states, the poor are taxed at higher rates than the wealthy.

The Institute identifies state and local government over-reliance on regressive sales and property taxes—both of which fail to capture numerous forms of wealth, including income. According to Dylan Grundman, the institute’s senior policy analyst, the poorest 20 percent of taxpayers pay 63 percent of their taxes through sales and excise taxes. Read more

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