“Who Pays? is the only distributional analysis of tax systems in all 50 states and the District of Columbia. This comprehensive 7th edition of the report assesses the progressivity and regressivity of state tax systems by measuring effective state and local tax rates paid by all income groups.”
Key findings include:
- The vast majority of state and local tax systems are regressive, or upside-down. This requires a much greater share of income from low- and middle-income families than from wealthy families. The absence of a graduated personal income tax in many states and a heavy reliance on consumption taxes contribute to this effect.
- In 41 states, high-income families are taxed at lower rates than everyone else.
- In 35 states, low-income families are taxed at higher rates than everyone else despite having the least ability to pay.
- Tax structures in 44 states exacerbate inequality. Most state and local tax systems worsen income inequality by making incomes more unequal after collecting state and local taxes.
- In the 10 states with the most regressive tax structures, the lowest-income 20 percent pay three times as much of their income in taxes as the wealthiest 1 percent.
- Heavy reliance on sales and excise taxes makes tax systems more regressive.
- States described as “low tax” are often high tax for low-income families.