A Tale of Two States: How State Tax Systems Perpetuate Income Inequality

February 11, 2019

ITEP Staff

“The historic role tax and other policies have played in exacerbating the wealth divide and discussions about how to remedy this injustice is a national conversation that is long overdue,” wrote ITEP Deputy Director Meg Wiehe in an article for Newsweek. “Examining the federal policy landscape is a logical place to start, but state policymakers are missing a key opportunity if they don’t join this national conversation and take a hard look at how their tax codes are affecting individuals and families across the income spectrum.”

To explain how state tax systems make income inequality worse, we compared tax systems in New Jersey and Texas which, before taxes, have similar levels of income inequality. This comparison provides an example of how policymakers’ decisions affect the economic wellbeing of their constituents.