{"id":65723,"date":"2015-02-05T09:00:32","date_gmt":"2015-02-05T14:00:32","guid":{"rendered":"http:\/\/thesocietypages.org\/socimages\/?p=65723"},"modified":"2015-03-16T16:03:54","modified_gmt":"2015-03-16T21:03:54","slug":"state-and-local-taxes-penalize-the-poor-and-benefit-the-rich","status":"publish","type":"post","link":"https:\/\/thesocietypages.org\/socimages\/2015\/02\/05\/state-and-local-taxes-penalize-the-poor-and-benefit-the-rich\/","title":{"rendered":"State and Local Taxes Penalize the Poor and Benefit the Rich"},"content":{"rendered":"<p>Americans have become increasingly critical of public policy as a means of addressing social problems.\u00a0 Many believe that these\u00a0policies don&#8217;t work; the reality is that public policies are often subverted in ways that make them ineffective or even counterproductive.<\/p>\n<p>Take taxes and inequality. \u00a0As Danny Vinik, writing in the New Republic <a href=\"http:\/\/www.newrepublic.com\/article\/119450\/wallethub-americans-want-state-and-local-taxes-be-progressive\">explains<\/a>:<\/p>\n<blockquote><p>The vast majority of Americans\u2014both liberals and conservatives\u2014believe that state and local taxes should also be progressive. That\u2019s the finding of a <a href=\"http:\/\/wallethub.com\/edu\/most-least-fair-tax-systems\/6598\/\">new report<\/a> released by WalletHub Monday. The researchers surveyed 1,050 Americans on what they thought the combined rate of state and local taxes should be at various income levels. Not surprisingly, liberals want the rate structure to be a bit more progressive than conservatives do, but their responses [as the following chart shows] were relatively similar:<\/p><\/blockquote>\n<p><a href=\"https:\/\/thesocietypages.org\/socimages\/files\/2015\/01\/1-3.png\" data-rel=\"lightbox-image-0\" data-rl_title=\"\" data-rl_caption=\"\" title=\"\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-65724\" src=\"https:\/\/thesocietypages.org\/socimages\/files\/2015\/01\/1-3-500x276.png\" alt=\"1 (3)\" width=\"500\" height=\"276\" srcset=\"https:\/\/thesocietypages.org\/socimages\/files\/2015\/01\/1-3-500x276.png 500w, https:\/\/thesocietypages.org\/socimages\/files\/2015\/01\/1-3.png 717w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><\/p>\n<p>However the reality is quite different.\u00a0 State and local taxes are actually quite regressive.\u00a0 The Institute for Taxation and Economic Policy <a href=\"http:\/\/www.itep.org\/pdf\/whopaysreport.pdf\">studied<\/a> the \u201cfairness of state and local tax systems by measuring the state and local taxes that will be paid in 2015 by different [non-elderly] income groups as a share of their incomes.\u201d\u00a0 They did this state by state and, as presented below, on an overall basis. \u00a0As we can see, the lower the income, the greater the state and local tax burden.<\/p>\n<p><a href=\"https:\/\/thesocietypages.org\/socimages\/files\/2015\/01\/1-4.png\" data-rel=\"lightbox-image-1\" data-rl_title=\"\" data-rl_caption=\"\" title=\"\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-65725\" src=\"https:\/\/thesocietypages.org\/socimages\/files\/2015\/01\/1-4-500x291.png\" alt=\"1 (4)\" width=\"500\" height=\"291\" \/><\/a><a href=\"http:\/\/blogs.lclark.edu\/hart-landsberg\/2015\/01\/25\/taxes-and-politics\/www-itep_-org_pdf_whopaysreport-pdf_\/\" rel=\"attachment wp-att-2397\"><br \/>\n<\/a><br \/>\nHere are some of the report\u2019s key findings:<\/p>\n<ul>\n<li>Virtually every state tax system is fundamentally unfair, taking a much greater share of income from low- and middle-income families than from wealthy families. The absence of a graduated personal income tax and overreliance on consumption taxes exacerbate this problem.<\/li>\n<li>In the 10 states with the most regressive tax structures (the Terrible 10) the bottom 20 percent 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.<\/li>\n<li>Heavy reliance on sales and excise taxes are characteristics of the most regressive state tax systems. Six of the 10 most regressive states derive roughly half to two-thirds of their tax revenue from sales and excise taxes, compared to a national average of roughly one-third . Five of these states do not levy a broad-based personal income tax (four do not have any taxes on personal income and one state only applies its personal income tax to interest and dividends) while four have a personal income tax rate structure that is flat or virtually flat.<\/li>\n<li>States commended as \u201clow tax\u201d are often high tax states for low-and middle-income families. The 10 states with the highest taxes on the poor are Arizona, Arkansas, Florida, Hawaii, Illinois, Indiana, Pennsylvania, Rhode Island, Texas, and Washington. Seven of these are also among the \u201cterrible ten\u201d because they are not only high tax for the poorest, but low tax for the wealthiest.<\/li>\n<\/ul>\n<p>In short, we know how to construct tax policies that can lessen\u00a0inequality, but we&#8217;re not using state and local taxes to do it.<\/p>\n<p><em>Cross-posted at <a href=\"http:\/\/blogs.lclark.edu\/hart-landsberg\/2015\/01\/25\/taxes-and-politics\/\" target=\"_blank\">Reports from the Economic Front<\/a>\u00a0and <a href=\"http:\/\/www.psmag.com\/business-economics\/state-and-local-taxes-penalize-the-poor-and-benefit-the-rich\" target=\"_blank\">Pacific Standard<\/a>.<\/em><\/p>\n<span class=\"ft_signature\">Martin Hart-Landsberg is a professor of economics at <a href=\"http:\/\/college.lclark.edu\/faculty\/members\/martin_hart-landsberg\/\">Lewis and Clark College<\/a>.  You can follow him at <a href=\"https:\/\/economicfront.wordpress.com\/\">Reports from the Economic Front<\/a>.<\/span>","protected":false},"excerpt":{"rendered":"<p>Americans have become increasingly critical of public policy as a means of addressing social problems.\u00a0 Many believe that these\u00a0policies don&#8217;t work; the reality is that public policies are often subverted in ways that make them ineffective or even counterproductive. Take taxes and inequality. \u00a0As Danny Vinik, writing in the New Republic explains: The vast majority [&hellip;]<\/p>\n","protected":false},"author":1853,"featured_media":65724,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[29,36,23666,85,304,693],"class_list":["post-65723","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-class","tag-economics","tag-economics-social-welfare","tag-politics","tag-the-state","tag-public-opinion"],"jetpack_featured_media_url":"https:\/\/thesocietypages.org\/socimages\/files\/2015\/01\/1-3.png","_links":{"self":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/65723","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/users\/1853"}],"replies":[{"embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/comments?post=65723"}],"version-history":[{"count":4,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/65723\/revisions"}],"predecessor-version":[{"id":65852,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/65723\/revisions\/65852"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/media\/65724"}],"wp:attachment":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/media?parent=65723"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/categories?post=65723"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/tags?post=65723"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}