Who Pays: Analysis of Tax Systems in All 50 States

The vast majority of state tax systems are regressive, meaning lower-income people are taxed at higher rates than top-earning taxpayers.

Who-PaysI’ve been perusing Who Pays: A Distributional Analysis of the Tax Systems in All 50 States because that’s what I do. It is “the only distributional analysis of tax systems in all 50 states and the District of Columbia. This comprehensive report assesses tax fairness by measuring effective state and local tax rates paid by all income groups.”

If you’re NOT from the United States, you may nevertheless find it interesting. “No two state tax systems are the same; this report provides detailed analyses of the features of every state tax code. 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.”

The conclusions are not surprising. “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.”

The “terrible ten” of states with the most regressive tax policies contain some of the states I frankly expected, but it had some revelations. “Washington State is the most regressive, followed by Texas, Florida, South Dakota, Nevada, Tennessee, Pennsylvania, Illinois, Oklahoma, and Wyoming.”

That said, “Those in the highest-income quintile pay a smaller share of all state and local taxes than their share of all income while the bottom 80 percent pays more.”

In other words: “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 report, the sixth edition, was put out by the Institute on Taxation and Economic Policy. “The report was originally released in 1996 and has since been updated in 2003, 2009, 2013, 2015 and 2018. The 2018 report includes tax changes enacted through September 10, 2018.”