The nation is currently engaging in serious discourse about how to expand economic opportunity and remedy income inequality via the federal tax code. State tax systems are also important and have a dismal effect on the growing economic divide. In a new report, Fairness Matters: A Chart Book on Who Pays State and Local Taxes, we further parse our Who Pays? data.
Who Pays?
Who Pays? A Distributional Analysis of the Tax Systems in All 50 States is the Institute on Taxation and Economic Policy’s flagship report. First published in 1996, and updated most recently in 2018, Who Pays? shows the distributional impact by income level of all major state and local taxes in each state, as well as in the District of Columbia. This section highlights related Who Pays? resources, articles and information.
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blog March 6, 2019 How State Tax Systems Worsen the Economic Divide – in Charts
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blog February 11, 2019 A Tale of Two States: How State Tax Systems Perpetuate Income Inequality
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.
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blog January 30, 2019 Data for the Win: Advocating for Equitable State and Local Tax Policy (Webinar)
Watch the video recording below for discussion on how ITEP’s distributional data can be part of an advocacy and communications strategy for securing state tax policies that raise enough revenue to fund various priorities. Outline includes a brief overview of findings from the sixth edition of Who Pays? A Distributional Analysis of the Tax Systems in All 50 States as well as insight from state advocates who use Who Pays? and other tax policy analyses research to pursue their legislative agendas.
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ITEP Work in Action November 15, 2018 Louisiana Budget Project: Tax Code Is Holding Louisiana Back
Years of efforts to reform Louisiana’s regressive and overly complicated tax code have run aground in the state Legislature. The result: Louisianans pay the second-highest sales taxes in the nation, while the tax code is riddled with costly exemptions and deductions. The state’s broken tax structure is a major reason why the state lurched from budget crisis to budget crisis over the last decade and has struggled to fund critical programs and services like higher education and health care. The Advocate’s editorial board shares its thoughts on the latest report from the Institute on Taxation and Economic Policy.
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ITEP Work in Action November 9, 2018 Louisiana Budget Project: Race Equity and Taxes in Louisiana
Louisiana’s upside-down tax structure means the highest income-earners pay less than the poorest families, when measured as a percentage of income. The Institute on Taxation and Economic Policy’s “Who Pays” report lays this out in careful detail, and the latest edition breaks down the tax distribution by race. The conclusion: Black households pay a higher percentage of their income in state and local taxes than white households. Louisiana has work to do to make the tax structure fairer and reduce racial inequalities.
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ITEP Work in Action November 5, 2018 Louisiana Budget Project: Louisiana’s Regressive Tax Structure
Poor and middle-income families in Louisiana pay state and local taxes at a higher rate than the wealthiest families. That’s the key takeaway from the latest state-by-state breakdown of tax distribution by income groups from the Institute on Taxation and Economic Policy (ITEP). Louisiana’s tax structure is the 14th most regressive in the nation.
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ITEP Work in Action November 3, 2018 Idaho Press: Economic Study Finds That Poor Idahoans Pay More State and Local Taxes Than Rich Ones
The biggest drivers of the inequality in Idaho are the sales and property taxes. In every bracket of income measured by the Institute’s report, the amount that families paid in state and excise taxes went down as their total income increased. The lowest-earning 20 percent spent twice as much of their annual income on property taxes as the highest 20 percent, with an average of 3.3 percent paid on their property compared to 1.6 percent.
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ITEP Work in Action November 1, 2018 Cherokee Tribune & Ledger-News: Financial Watchdog: Pritzker’s Spending Promises Would Raise Taxes on Middle Class
The Institute on Taxation and Economic Policy says Illinois has one of the most regressive taxes in the nation, largely due to its flat income tax. In its annual “Who pays?” report, the institute said the poorest 20 percent of Illinois households pay 14 percent of their income in taxes because of the flat tax in addition to high sales and property taxes.
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ITEP Work in Action October 27, 2018 Charleston Gazette-Mail: Statehouse Beat: Fake History on Teacher Strike Hard to Fathom
Speaking of the Senate, the nonpartisan Institute on Taxation and Economic Policy put out its annual “Who Pays” report on tax equity, which found the vast majority of states have tax systems that are inequitable, with lower- and middle-income families paying a larger percentage of income in taxes than upper-income families.It singled out the “Terrible 10” states with the most regressive tax systems, with the common denominator among those states being that they have no or very low income taxes, which they make up through having very high and broad-based sales taxes.
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ITEP Work in Action October 26, 2018 KUOW: A $40,000 Salary Is no Longer Middle Class in Washington State. Here’s Why.
Look what’s happened to an income of $40,000. In 2015, the Institute on Taxation and Economic Policy (ITEP), based in Washington, D.C., looked at incomes in Washington state and found that a salary of $40,000 was still middle class. It was smack-dab in the middle of middle-earning incomes in the state.
In 2018, ITEP looked again. This time, $40,000 had slipped a notch, to the second-lowest 20 percent of earners. The reason: More people in the state were making higher-end incomes.
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ITEP Work in Action October 26, 2018 The Olympian: Olympia Went to Court to Block an Income Tax Proposal. Two Years Later, It’s Backing Seattle’s Version.
In 2016, an Olympia household earning $25,000 a year paid about 13 percent of its income in state and local taxes, while a household earning $250,000 paid less than 4 percent, according to the resolution.
A report this month from the Institute on Taxation and Economic Policy said Washington has the most regressive tax structure in the country, thanks to its lack of a personal income tax and comparatively high sales taxes.
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ITEP Work in Action October 25, 2018 Massachusetts Budget and Policy Center: Who Pays? Low and Middle Earners in Massachusetts Pay Larger Share of their Incomes in Taxes
Taxes are the main way communities pay for the things we do together. Taxes pay for essential programs and infrastructure we take for granted, like fire protection, public education, and health inspectors; roads, bridges, and public transit; and the support for people facing hard times. Examining how much people at different income levels pay in taxes is important when considering the fairness of tax policy.
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ITEP Work in Action October 25, 2018 News and Tribune: In Indiana and Illinois, Taxes Hit Low-earners Hard
TERRE HAUTE — Low-earning residents of Indiana and Illinois pay a greater share of state and local taxes than those in all other Midwestern states, and those in most states nationally, according to a new study by a non-partisan think tank.
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October 25, 2018 U.S.: Who Pays? 6th Edition
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ITEP Work in Action October 25, 2018 The Garden Island: Gap Keeps Growing Between Rich, Poor
The study finds that those in the bottom fifth of the income spectrum in Hawaii pay 15 percent of their income in state and local taxes, while those in the top 1 percent pay only 8.9 percent, “which exacerbates inequality in our state,” according to a press release about the study.
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ITEP Work in Action October 24, 2018 Real Change: Study: Washington Bottoms Out on US Tax Assessment
Guess what? Washington state’s taxation system continues to be one of the most regressive in the country.
This news comes from the Institute on Taxation and Economic Policy (ITEP), which did a deep dive into the taxation policies of all 50 states.
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ITEP Work in Action October 24, 2018 The Journal Record: Prosperity Policy: An Upside-down Tax System
A modestly progressive income tax slightly offsets our regressive sales taxes. But Oklahoma lawmakers cut our top income tax rate by nearly 25 percent since 2004, further tipping the scales to the wealthiest households. Then while grappling with massive budget shortfalls caused in part by these tax cuts, lawmakers took aim at measures that primarily benefit low- and middle-income working families by making the state Earned Income Tax Credit non-refundable and freezing the state standard deduction, while leaving cuts to the top income tax rate in place.
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ITEP Work in Action October 24, 2018 Hawaii Public Radio: Hawaii Tax System Places Larger Burden on Low Income Residents
Low-income residents in Hawaii are paying a higher share of their income in taxes than higher level earners. That is the conclusion of a recent report from the Institute on Taxation and Economic Policy titled Who Pays? The Hawaii tax system is considered highly regressive, due to heavy reliance on the General Excise Tax, or GET. This is despite a progressive, graded state income tax and the lowest property taxes in the nation.
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ITEP Work in Action October 23, 2018 Third and State: Pennsylvania’s Terrible Tax Code Asks More of You as You Make Less: Hitting Community’s of Color Especially Hard
The Commonwealth once again claims its spot in the “Terrible 10” most unfair tax structures in the nation. The lowest 20% of income earners in the state pays more than double (2.3 times) their share of family income on state and local taxes than the top 1%.
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ITEP Work in Action October 23, 2018 Hawai’i Budget & Policy Center: Hawaii’s Tax System Exacerbates Inequality
A new report out from the Institute on Taxation and Economic Policy (ITEP) provides the vital statistics for each state’s tax system. It lays out, in clear and compelling numbers, the sobering message that Hawaiʻi taxes—and those in the United States on average—increase inequality between rich and poor.
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ITEP Work in Action October 23, 2018 Florida Policy Institute: Amendment 5 Would Lock in the Regressive Policies and Abysmal Funding Levels that Perpetuate Inequality
Florida’s unfair tax system, which forces low-income residents to contribute the most as a share of their household incomes, along with the state’s worst-in-the-nation per-person investment in public services, would be locked in under Amendment 5.
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ITEP Work in Action October 23, 2018 Enid News & Eagle: A Low Tax State for Only Some Oklahomans
While Oklahoma has a reputation as a low tax state, poor and middle-income Oklahomans are actually paying a greater share of their income in taxes than the national average, while the richest 5 percent of households — with annual incomes of $194,500 or more — pay less.
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ITEP Work in Action October 23, 2018 Washington Examiner: Think tank: Texas Isn’t a Low-tax State if You’re Poor
Carl Davis for the Institute on Taxation and Economic Policy: [ M]any states traditionally considered to be “low-tax states” are actually high-tax for their poorest residents. The “low tax” label is typically assigned to states that either lack a personal income tax or that collect a comparatively low amount of tax revenue overall. But a focus on these measures can cause lawmakers to overlook the fact that state tax systems impact different taxpayers in very different ways, and that low-income taxpayers in particular often do not experience these states as being even remotely “low tax.”
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ITEP Work in Action October 22, 2018 Beacon Journal/Ohio.Com Editorial Board: A Taxing Matter Goes Missing in the Governor’s Race
It follows that low- and middle-income Ohioans pay a higher share than the national average, and wealthy Ohioans pay a lower share.
To a degree, that is expected in view of the vastly larger incomes of wealthy Ohioans. At the same time, the state would be well served by altering the shares to make the state and local system more fair, to reflect how new income in recent years, even decades, has flowed largely to households at the highest income rungs.
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ITEP Work in Action October 22, 2018 NorthJersey.com: 2018 Elections: Candidates Taking Wait-and-See Approach to SALT Deductions
A study by the Institute on Taxation and Economic Policy, a non-partisan think tank, found that a majority of New Jersey taxpayers in every income group will pay less taxes next year than they did in 2017 as a result of last year’s federal tax-code overhaul.
The cap is expected to affect those in high-income brackets the most. Thousands of New Jersey homeowners rushed to prepay their 2018 taxes in December to take advantage of bigger deductions on their 2017 returns before the cap took effect.