State Taxes Unfairly Burden Low-Income Earners

February 16, 2015 Taxation in USA

WASHINGTON D.C. – Low-income taxpayers in the USA are paying a higher portion of their incomes than wealthy taxpayers, due to an excessive reliance on sales tax and excise duties.

Over the weekend the US based non-government organization Institute on Taxation and Economic Policy (ITEP) issued a new report detailing the fairness of the tax systems in different states in the USA.

The experts of ITEP indicated that “…virtually every state tax system is fundamentally unfair,” with low-income individuals in all states paying a higher portion of their taxes to taxes than wealthy individuals.

Across all the states of the USA the average total tax rate paid by the lowest 20 percent of earners is approximately 10.9 percent, while the middle 20 percent pay a rate of 9.4 percent, and the rate faced by the top 1 percent is 5.4 percent.

It was noted that a heavy reliance by state tax authorities in sales taxes, excise taxes, and the implementation of a non-progressive income tax system resulted in regressive tax systems in which low-income earners suffer.

The most regressive state tax systems in the USA are Washington, Florida, Texas, South Dakota, Illinois, Pennsylvania, Tennessee, Arizona, Kansas, Indiana, where the bottom 20 percent pay as much as 7 times more of their income than the wealthy.

Photo By: Emilian Robert Vicol