Despite some economic gains in recent years, the number of Americans living in poverty has held steady over the past four years. At the same time, wages for working families have remained stagnant and more than half of the jobs created by the economic recovery since 2010 were low-paying, mostly in the food services, retail, and employment services industries. Our country’s growing class of low-wage workers often faces a dual challenge as they struggle to make ends meet. First, wages are too low and growing too slowly – despite recent productivity gains – to keep up with the rising cost of food, housing, child care, and other household expenses. At the same time, the poor are often saddled with highly regressive state and local taxes, making it even harder for low-wage workers to move out of poverty and achieve meaningful economic security. The Earned Income Tax Credit (EITC) is designed to help low-wage workers meet both those challenges.
Publications
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brief September 17, 2015 Rewarding Work Through State Earned Income Tax Credits
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report September 17, 2015 Low Tax for Whom?: Tennessee is a “Low Tax State” Overall, But Not for Families Living in Poverty
Annual data from the U.S. Census Bureau appear to lend support to Tennessee’s reputation as a “low tax state,” ranking it 50th nationally in taxes collected as a share of personal income.1 But focusing on the state’s overall tax revenues has led many observers to overlook the fact that different taxpayers experience Tennessee’s tax system very differently. In particular, the poorest 20 percent of Tennessee residents pay significantly more of their income (10.9 percent) in state and local taxes than any other group in the state. For low-income families, Tennessee is far from being a low tax state.2 In fact, only thirteen states tax their poorest residents more heavily than Tennessee.
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report September 17, 2015 Low Tax for Whom?: South Dakota is a “Low Tax State” Overall, But Not for Families Living in Poverty
Annual data from the U.S. Census Bureau appear to lend support to South Dakota’s reputation as a “low tax state,” ranking it 51st nationally in taxes collected as a share of personal income, the lowest overall tax state.1 But focusing on the state’s overall tax revenues has led many observers to overlook the fact that different taxpayers experience South Dakota’s tax system very differently. In particular, the poorest 20 percent of South Dakota residents pay significantly more of their income (11.3 percent) in state and local taxes than any other group in the state. For low-income families, South Dakota is far from being a low tax state.2 In fact, only eleven states tax their poorest residents more heavily than South Dakota.
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report September 17, 2015 Low Tax for Whom?: Washington is a “Low Tax State” Overall, But Not for Families Living in Poverty
Annual data from the U.S. Census Bureau appear to lend support to Washington’s reputation as a “low tax state,” ranking it 36th nationally in taxes collected as a share of personal income.1 But focusing on the state’s overall tax revenues has led many observers to overlook the fact that different taxpayers experience Washington’s tax system very differently. In particular, the poorest 20 percent of Washington residents pay significantly more of their income (16.8 percent) in state and local taxes than any other group in the state. For low-income families, Washington is far from being a low tax state.2 In fact, Washington is the highest tax state in the country for poor people.
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report September 17, 2015 Low Tax for Whom?: Florida is a “Low Tax State” Overall, But Not for Families Living in Poverty
Annual data from the U.S. Census Bureau appear to lend support to Florida’s reputation as a “low tax state,” ranking it 48th nationally in taxes collected as a share of personal income.1 But focusing on the state’s overall tax revenues has led many observers to overlook the fact that different taxpayers experience Florida’s tax system very differently. In particular, the poorest 20 percent of Florida residents pay significantly more of their income (12.9 percent) in state and local taxes than any other group in the state. For low-income families, Florida is far from being a low tax state.2 In fact, only three states tax their poorest residents more heavily than Florida.
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report September 17, 2015 Low Tax for Whom?: Texas is a “Low Tax State” Overall, But Not for Families Living in Poverty
Annual data from the U.S. Census Bureau appear to lend support to Texas’ reputation as a “low tax state,” ranking it 39th nationally in taxes collected as a share of personal income.1 But focusing on the state’s overall tax revenues has led many observers to overlook the fact that different taxpayers experience Texas’ tax system very differently. In particular, the poorest 20 percent of Texans pay significantly more of their income (12.5 percent) in state and local taxes than any other group in the state. 2 For low-income families, Texas is far from being a low tax state. In fact, only six states tax their poorest residents more heavily than Texas.
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report September 17, 2015 Low Tax for Whom?: Arizona is a “Low Tax State” Overall, But Not for Families Living in Poverty
Annual data from the U.S. Census Bureau appears to lend support to Arizona’s reputation as a “low tax state,” ranking it 37th nationally in taxes collected as a share of personal income.1 But focusing on the state’s overall tax revenues has led many observers to overlook the fact that different taxpayers experience Arizona’s tax system very differently. In particular, the poorest 20 percent of Arizona residents pay significantly more of their income (12.5 percent) in state and local taxes than any other group in the state.2 For low-income families, Arizona is far from being a low tax state. In fact, only four states tax their poorest residents more heavily than Arizona.
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brief July 22, 2015 Sales Tax Holidays: An Ineffective Alternative to Real Sales Tax Reform
Lawmakers in many states have enacted “sales tax holidays” (at least 17 states will hold them in 2015), to provide a temporary break on paying the tax on purchases of clothing, computers and other items. While these holidays may seem to lessen the regressive impacts of the sales tax, their benefits are minimal. This policy brief examines the many problems associated with sales tax holidays and concludes that they have more political than policy benefits.
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brief June 24, 2015 Pay-Per-Mile Tax is Only a Partial Fix
Read this report in PDF form Introduction For years, academics and transportation experts have been discussing the possibility of taxing drivers for each mile they travel on the nation’s roads. … -
report June 17, 2015 Testimony: Adding Sustainability to the Highway Trust Fund
The federal Highway Trust Fund (HTF) is the single most important mechanism for funding maintenance and improvements to the nation’s transportation infrastructure. Absent Congressional action, however, the HTF will face insolvency at the end of July. Unfortunately, despite the critical importance of infrastructure to the U.S. economy, the condition of the HTF has been allowed to deteriorate to the point that imminent insolvency has become entirely normal.
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report May 6, 2015 Issues with Taxing Marijuana at the State Level
Read as a PDF. Table of Contents Introduction Why Tax Marijuana? Designing a State Tax on Marijuana How Much Revenue Would Marijuana Legalization Generate for States Factors that Could Negatively… -
report April 15, 2015 Undocumented Immigrants’ State & Local Tax Contributions (2015)
This report was updated February 2016 Read as a PDF. (Includes Full Appendix of State-by-State Data) Report Landing Page In the public debates over federal immigration reform, sufficient and accurate information… -
brief March 23, 2015 State Tax Preferences for Elderly Taxpayers
State governments provide a wide array of tax breaks for their elderly residents. Almost every state that levies an income tax now allows some form of income tax exemption or credit for citizens over age 65 that is unavailable to non-elderly taxpayers. And most states provide special property tax breaks to the elderly. Unfortunately, too many of these breaks are poorly-targeted, unsustainable, and unfair. This policy brief surveys federal and state approaches to reducing taxes for older adults and suggests options for designing less costly and better targeted tax breaks for elderly taxpayers.
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report February 16, 2015 Most Americans Live in States with Variable-Rate Gas Taxes
The federal government and many states are seeing shortfalls in their transportation budgets in part because the gasoline taxes they use to generate those funds are poorly designed. Thirty-one states and the federal government levy “fixed-rate” gas taxes where the tax rate does not change even as the cost of infrastructure materials inevitably increases over time. The federal government’s 18.4 cent gas tax, for example, has not increased in over 22 years. And twenty states have gone a decade or more without a gas tax increase.
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report February 10, 2015 How Long Has it Been Since Your State Raised Its Gas Tax?
An updated version of this report has been published with data through July 1, 2017. Read the report in PDF form. Many states’ transportation budgets are in disarray, in part… -
report February 5, 2015 Grocery Tax Exemption Is No Improvement for Idaho
Read as a PDF. A proposal to eliminate Idaho’s Grocery Credit Refund and create a sales tax exemption for all grocery purchases would reduce state revenues by roughly $34 million… -
report January 30, 2015 Who Pays? (Fourth Edition)
Major tax overhauls are on the agenda in a record number of states, and “Who Pays?” documents in state-by-state detail the precise distribution of state income taxes, sales and excise… -
report January 10, 2015 Who Pays? Fifth Edition
Read the Report in PDF The 2015 Who Pays: A Distributional Analysis of the Tax Systems in All Fifty States (the fifth edition of the report) assesses the fairness of… -
report September 18, 2014 State Tax Codes As Poverty Fighting Tools
Read the Report in PDF Form The Census Bureau released data in September showing that the share of Americans living in poverty remains high. In 2013, the national poverty rate… -
report August 5, 2014 Sales Tax Holidays: An Ineffective Alternative to Real Sales Tax Reform
Sales taxes are an important revenue source, comprising close to half of all state revenues in 2013. But sales taxes are also inherently regressive because the lower a family’s income, the more of its income the family must spend on things subject to the tax.
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brief July 30, 2014 Options for Progressive Sales Tax Relief
See the 2016 Updated Brief Here Read the Policy Brief in PDF Form Sales taxes are one of the most important revenue sources for state and local governments—and are also… -
report July 21, 2014 State Estate and Inheritance Taxes
For much of the last century, estate and inheritance taxes have played an important role in helping states to adequately fund public services in a way that improves the progressivity of state tax systems. While many of the taxes levied by state and local governments fall most heavily on low-income families, only the very wealthy pay estate and inheritance taxes.
Recent changes in the federal estate tax, however, culminating in the “fiscal cliff ” deal of early 2013, have forced states to reevaluate the structure of their estate and inheritance taxes. Unfortunately, the trend of late has tended toward weakening or completely eliminating state estate taxes. This policy brief discusses inheritance and estate taxes and how states can adopt these important components of a progressive tax structure.
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report May 28, 2014 Pay-Per-Mile Tax is Only a Partial Fix
The gasoline tax is the single largest source of funding for transportation infrastructure in the United States, but the tax is on an unsustainable course. Sluggish gas tax revenue growth has put strain on transportation budgets at the federal and state levels, and has led to countless debates around the country about how best to pay for America’s infrastructure.
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report May 21, 2014 STAMP is an Unsound Tool for Gauging the Economic Impact of Taxes
The Beacon Hill Institute (BHI), a free-market think tank located at Suffolk University, frequently uses its State Tax Analysis Modeling Program (STAMP) to perform analyses purporting to show that lowering taxes, or not raising them, will benefit state economies. But STAMP suffers from a number of serious methodological problems and should not be relied upon by anybody seeking to understand the economic impacts of state tax policies.
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brief May 20, 2014 State Gasoline Taxes: Built to Fail, But Fixable
An updated version of this brief was published on February 9, 2017. Read this report in pdf. Every state levies taxes on gasoline and diesel fuel, usually just called…