Who Pays? 6th Edition – State-by-State Data



Forty-five states have regressive tax systems that exacerbate income inequality. When tax systems rely on the lowest-income earners to pay the greatest proportion of their income in state and local taxes, gaps between the most affluent and the rest of us continue to grow.

The ITEP Tax Inequality Index measures the effects of each state’s tax system on income inequality by assessing the comparative impact a state’s tax system has on the post-tax incomes of taxpayers at different income levels. Essentially, it answers the following question: Are incomes more equal, or less equal, after state taxes than before taxes?

For example, consider this scenario: if taxpayers in the top 1 percent are left with a higher percentage of their pre-tax income to spend on their day-to-day living and to save for the future than low- and middle-income taxpayers, the tax system is regressive and receives a negative tax inequality index score. This indicates that the income inequality that existed before the levying of state and local taxes has been made worse by those taxes. On the other hand, states with slightly progressive tax structures have positive tax inequality indexes. This means that after taking state and local taxes into account incomes are no less equal than they were before taxes; and tax systems in those states, at the very least, did not worsen income inequality.


ITEP Tax Inequality Index

States in order of rank from least equitable to more equitable
1 Washington 14 Louisiana 27 Georgia 40 Utah
2 Texas 15 Hawaii 28 Missouri 41 Oregon
3 Florida 16 New Hampshire 29 Connecticut 42 Maryland
4 South Dakota 17 North Dakota 30 Massachusetts 43 Montana
5 Nevada 18 Alabama 31 North Carolina 44 New York
6 Tennessee 19 New Mexico 32 Rhode Island 45 Maine
7 Pennsylvania 20 Arkansas 33 Virginia 46 New Jersey
8 Illinois 21 Iowa 34 Wisconsin 47 Minnesota
9 Oklahoma 22 Michigan 35 Colorado 48 Delaware
10 Wyoming 23 Kansas 36 Nebraska 49 Vermont
11 Arizona 24 Mississippi 37 West Virginia 50 District of Columbia
12 Indiana 25 Kentucky 38 Idaho 51 California
13 Ohio 26 Alaska 39 South Carolina

NOTE: See Appendix B for detailed ITEP Tax Inequality Index and Methodology for more information.