Who Pays? ITEP Releases Tax Inequality Index – Click on your state for details
Click on your state for details.
ITEP- Jan 2024–The vast majority of state and local tax systems are upside-down, with the wealthy paying a far lesser share of their income in taxes than low- and middle-income families. That’s according to the latest edition of the Institute on Taxation and Economic Policy’s Who Pays?, the only distributional analysis of tax systems in all 50 states and the District of Columbia.
This is largely driven by weak or nonexistent personal income taxes in many states. In those states, much of the income of the very wealthy avoids tax altogether, and there is a larger reliance on more regressive taxes like sales and excise taxes. Meanwhile, progressivity at the bottom of state and local tax codes is being largely driven by strong and refundable state credits, like Child Tax Credits and Earned Income Tax Credits.
“When you ask people what they think a fair tax code looks like, almost nobody says we should have the richest pay the least. And yet when we look around the country, the vast majority of states have tax systems that do just that,” says Carl Davis, ITEP’s Research Director. “There’s an alarming gap here between what the public wants and what state lawmakers have delivered.”
- The 10 least regressive jurisdictions are (starting with least): D.C., Minnesota, Vermont, New York, California, New Jersey, Maine, Massachusetts, New Mexico, Oregon. (The first seven of these have tax systems that are not regressive and therefore do not worsen inequality.)
Understanding the Terms: From the IRS
- Progressive tax is a tax that takes a larger percentage of income from high-income groups than from low-income groups.
- Regressive tax is a tax that takes a larger percentage of income from low-income groups than from high-income groups.
Understanding the Terms: From the IRS
- Progressive tax is a tax that takes a larger percentage of income from high-income groups than from low-income groups.
- Regressive tax is a tax that takes a larger percentage of income from low-income groups than from high-income groups.