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Think Tank Says Poor Americans Pay More Taxes

By RTTNews Staff Writer   ✉   | Published:   | Follow Us On Google News
rttnewslogo20mar2024

A report by a non-partisan think tanks says that America's poor are disproportionately burdened when it comes to paying taxes.

According to the Institute on Taxation and Economic Policy, virtually every state tax system is unfair, grabbing a greater share of income from low- and middle-income families than from wealthy ones.

The report says that in 2015, combining all taxes at state and local levels, the average effective tax rate would be 10.9 percent for the poorest fifth of Americans, 9.4 percent for the middle fifth and 5.4 percent for the top 1 percent.

The data from the report is to help lawmakers implement tax reforms that tackle the issue. The report examines every state and the District of Columbia.

Other salient findings from the report are that in the 10 states with the most regressive tax system, the bottom fifth pay up to seven times as much of their income in taxes as their wealthy counterparts.

Washington State is the most regressive, followed by Florida, Texas, South Dakota, Illinois, Pennsylvania, Tennessee, Arizona, Kansas, and Indiana.

The report says that state personal income taxes are typically more progressive than the other taxes that states levy (e.g property, consumption), while sales and excise taxes are the most regressive, and to some extent, property taxes.

State consumption tax structures are highly regressive with an average 7 percent rate on sales and excise taxes for the poor, a 4.7 percent rate for middle-income people, and a 0.8 percent rate for the wealthiest taxpayers.

Personal income taxes vary in fairness due to differences in rates, deductions, and exemptions across states. A number of states, including Kansas, have exacerbated the situation in recent years by cutting income taxes.

While most American voters want a fairer tax code, their aspirations are stifled by the passivity of both the Democrats and the Republicans. With the GOP in control of both the House and Senate, Democrats can give the alibi that they are not culpable for the lack of effective tax reforms.

For comments and feedback contact: editorial@rttnews.com

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