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DC’s tax system is markedly regressive. This is driven largely by the regressive impact of the city’s sales, excise, and property taxes. The personal income tax is the only effective tool that DC has available for offsetting this regressivity. In the comments below I discuss four options for fine-tuning DC’s income tax to lessen its impact on moderate- and middle-income taxpayers. I also describe four options for funding those tax cuts with policies that would increase upper-income taxpayers’ effective tax rates to be more in line with those paid by their less affluent neighbors.

As this report shows, this change would somewhat reduce the steep regressivity of Colorado’s overall tax system. In other words, taxpayers across all income levels would pay a more equal share of their income if Amendment 66 is approved, in large part because most of the revenue raised by the amendment would come from the wealthiest 20 percent of Colorado residents.

Gas tax revenues are on an unsustainable course. Over the last five years, Congress has transferred more than $53 billion from the general fund to the transportation fund in order to compensate for lagging gas tax revenues. By 2015, the transportation fund will be insolvent unless an additional $15 billion transfer is made. Larger transfers will be needed in subsequent years.

Annual state and local finance data from the Census Bureau are often used to rank states as “low” or “high” tax states based on taxes collected as a share of state personal income. But focusing on a state’s overall tax revenues overlooks the fact that taxpayers experience tax systems very differently. In particular, the poorest 20 percent of taxpayers pay a greater share of their income in state and local taxes than any other income group in all but 10 states (including DC). And, in every state, low- income taxpayers pay more as a share of income than the wealthiest top 1 percent of taxpayers. Arizona, Florida, South Dakota, Tennessee, Texas, and Washington are six states touted as “low tax” that have especially high taxes on poor residents. To learn more about how low tax states overall can be high tax states for families living in poverty, read the state briefs below.

New Census Bureau data released this month show that the share of Americans living in poverty remains high, despite other signs of economic recovery. The national 2012 poverty rate of 15 percent is essentially unchanged since 2010 , but still 2.5 percentage points higher than pre-recession levels. This means that in 2012, 46.5 million, or about 1 in 6 Americans, lived in poverty.1 The poverty rate in most states also held steady with five states experiencing an increase in either the number or share of residents living in poverty while only two states saw a decline.2

New data from the Census Bureau appear to lend support to Florida’s reputation as a “low tax state,” ranking it 45th 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 (13.2 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 two states tax their poorest residents more heavily than Florida.