The Reading Eagle: Pa. tax policies skewed against poor
media mentionThe Institute on Taxation and Economic Policy recently released a study of taxing policies in all 50 states.
It found that the tax system in every single state is unfair. It also concluded that some states are more unfair than others.
Guess which one comes up in what the institute calls, “The Terrible Ten.”
The institute, a nonprofit, nonpartisan research organization based in Washington, D.C., rated Pennsylvania as the eighth-most-regressive tax system in the nation for the total amount of taxes it takes from low- and middle-income families.
It’s important to note that the effect of taxes on senior citizens wasn’t part of the study. Taxes of any sort are an obvious burden on people living on a fixed income. Seniors also are more likely to benefit from the so-called circuit breakers, or tax breaks given to certain classes of people. (I’ll tell you more about that in a future column.)
The study states that flat-rate income taxes like those this state has are regressive because the poor pay the same rate as the wealthy, and that the sales tax is the most regressive tax of all, because poor families spend a greater portion of their income on taxable items than the wealthy do.
And the study states that a tax that relies heavily on the value of property is unfair to low- and middle-income families because they pay a far greater portion of their income in property taxes than the wealthy do.
According to the study, our lowest-income families pay 12 percent of their income in property, sales and income taxes. The middle class pays 9 percent to 10 percent. The top 1 percent of high earners pay 4.4 percent.
That’s why Pennsylvania makes “The Terrible Ten.”
In the context of this report, the current proposal by our lawmakers to replace the school property tax with a higher personal income tax and a higher sales tax on more items doesn’t sound like it would make our tax system fairer.
However, the researchers had no way to see that school property taxes are hitting our wallets a whole lot harder than the income and sales taxes combined.
Getting rid of the school tax and shifting to higher income and sales taxes should go a long way toward making the burden on all taxpayers as a percentage of their income more even and might be enough to get us off the worst of the worst list.