Friday, September 21, 2012

Every State Taxes Its 1 Percent At A Lower Rate Than Low-Income Households

As ThinkProgress has noted, the “47 percent” that Mitt Romney derided for paying no federal income tax, and thus taking no “personal responsibility and care for their lives,” actually pay a slew of other taxes at rates higher than Romney himself pays. The lion’s share of the tax breaks handed out by the U.S. don’t go to low-income households or the middle class, but to the rich.

And according to a new report from the Institute for Taxation and Economic Policy, things are even worse at the state and local level level. In fact, all 50 states impose higher tax rates on low-income households than their richest 1 percent, when state and local taxes are taken into account:

The fact is that nearly every state and local tax system takes a much greater share of income from middle- and low-income families than from the wealthy. This “tax the poor” strategy is problematic because hiking taxes on low-income families pushes them further into poverty and increases the likelihood that they will need to rely on safety net programs. From a state budgeting perspective, this “soak the poor” strategy also doesn’t yield much revenue compared to modest taxes on the rich. It’s no wonder that so many states with regressive tax structures are facing long-term structural budget deficits. They‘re continually imposing higher taxes on people without much money.

Some of the worst offenders are Florida, where the top 1 percent pays a 2.1 percent tax rate while the bottom 20 percent of households pay 13.5 percent; Illinois, 4.1 percent and 13 percent, respectively; Nevada, 1.6 percent and 8.9 percent, respectively; Texas, 3 percent and 12.2 percent, respectively; and South Dakota, 1.9 percent and 11 percent, respectively. Washington state though, is the worst, where the richest 1 percent pay a 2.6 percent tax rate while the poorest 20 percent pay a whopping 17 percent in taxes.

In the entire U.S., only the District of Columbia charges the richest 1 percent a higher tax rate than the poorest 20 percent, according to the report.

1 comment:

  1. Tax are important factor for government to get a good financial capital. This tax the poor scheme is awkward because hiking taxes on low-income families impels them farther into scarcity and increases the prospect that they will need to rely on safety snare programs.

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