Reply #31: State & Local Taxes in 2002 [View All]

[TahitiNut]

The Institute on Taxation and Economic Policy (ITEP) updated its analysis (by income quintile) of A Distributional Analysis of the Tax Systems in All 50 States for 2002. Constituting between 15 and 50% of all taxes paid by a "typical" taxpayer, these taxes aptly portray just how enormously regressive our overall tax system is and is increasingly becoming.

One of their findings indicates how increasingly regressive such taxes have gotten in 13 years. Between 1989 and 2002, the bottom 20% of income earners saw their state & local tax burden increase by 1.2% of their income, while the top 1% saw their tax burden decrease by 0.3% of their (greater) income. Compounding this of course, the lowest quintile saw their income itself decline (in real dollars) while the upper quintiles saw their income increase, the higher the quintile the greater the increase.

Thus, we have a tax system which compounds income inequity by increasing the burden on the losers and reducing the burden on the winners -- precisely the reverse of fair taxation where those who benefit most should pay for that benefit.

Not surprisingly to DUers, this inequity is, by far, the greatest in the most increasingly neoconservative states. Washington, Florida, Tennessee, South Dakota, Texas, Illinois, Michigan, Pennsylvania, Nevada and Alabama have the most regressive tax policies. These ten states ask their poorest residents — those in the bottom 20 percent of the income scale — to pay up to five-and-a-half times as great a share of their earnings in taxes as they ask the wealthy to pay.

But to get an even fairer perspective, it must be carefully noted that the least regressive state (California) still does not have a progressive tax policy. The top 20% still pay less state and local taxes as a share of their income than the bottom 20%!!!

In California, the least regressive state, the 2002 tax burden (net of federal tax offsets) was
11.3% for the lowest quintile ($11,100 average income),
10.1% for the second quintile ($23,700 average income),
9.2% for the third quintile ($38,300 average income),
8.7% for the fourth quintile ($61,900 average income),
8.1% for the next 15% ($111,200 average income),
7.6% for the next 4% ($241,700 average income), and
7.2% for the top 1% (income above $567,000!!).

And that's the least regressive state! :puke: