In the 10 states with the most regressive tax structures (The Terrible 10), the lowest-income 20 percent pay up to six times as much of their income in taxes as their wealthy counterparts. Washington State is the most regressive, followed by Texas, Florida, South Dakota, Nevada, Tennessee, Pennsylvania, Illinois, Oklahoma, and Wyoming.Five states and the District of Columbia somewhat narrow the gap between lower- and middle- income taxpayers and upper-income taxpayers, making income slightly more equitable after collecting state and local taxes. Most state and local tax systems worsen income inequality by making incomes more unequal after collecting state and local taxes. Tax structures in 45 states exacerbate income inequality.The nationwide average effective state and local tax rate is 11.4 percent for the lowest-income 20 percent of individuals and families, 9.9 percent for the middle 20 percent, and 7.4 percent for the top 1 percent. The lower one’s income, the higher one’s overall effective state and local tax rate. On average, the lowest-income 20 percent of taxpayers face a state and local tax rate more than 50 percent higher than the top 1 percent of households.The absence of a graduated personal income tax in many states and an overreliance on consumption taxes contribute to this longstanding problem. The vast majority of state and local tax systems are inequitable and upside-down, taking a much greater share of income from low- and middle-income families than from wealthy families. It includes state-by-state profiles that provide baseline data to help lawmakers and the public understand how current tax policies affect taxpayers at all income levels. No two state tax systems are the same this report provides detailed analyses of the features of every state tax code. This comprehensive report assesses tax fairness by measuring effective state and local tax rates paid by all income groups. Who Pays: A Distributional Analysis of the Tax Systems in All 50 States (the sixth edition of the report) is the only distributional analysis of tax systems in all 50 states and the District of Columbia. State-by-State Data and ITEP Tax Inequality Index Mapįairness Matters: A Chart Book on Who Pays State and Local Taxes
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