Wall Street Cheat Sheet: Here’s Proof You’re Getting Screwed on Your Taxes
media mentionEver feel like you’re paying more than your fair share when it comes to taxes? If a new study from the Institute on Taxation and Economic Policy (ITEP) holds true, then it may be more than just a feeling. According to the ITEP’s study, individuals who earn lower incomes tend to get hit harder and pay a higher share of their income in local taxes than their higher-earning counterparts.
ITEP ranks every state in the union from fairest to most regressive based on local tax burdens. What they found is that Delaware residents enjoy the fairest tax environment in the country, while residents of Washington state have the most regressive. While that may or may not come as a surprise, it’s the balance of taxes paid by low- and high-income earners that is truly the most surprising finding.
ITEP found that the lowest-earning 20% of Americans will pay an average of 10.9% of their income in state and local taxes, while the richest 1% will only end up paying 5.4%.
“In recent years, multiple studies have revealed the growing chasm between the wealthy and everyone else,” said Matt Gardner, executive director of ITEP, in a corresponding press release. “Upside down state tax systems didn’t cause the growing income divide, but they certainly exacerbate the problem. State policymakers shouldn’t wring their hands or ignore the problem. They should thoroughly explore and enact tax reform policies that will make their tax systems fairer.”