2003-05-27|8:31 a.m.
The Institute on Taxation and Economic Policy, a nonpartisan research group based in Washington, D.C., has just published a report, written by the estimable Robert McIntyre (a liberal tax analyst whose numbers are among the most credible in the field) and six co-authors, that provides detailed statistics about tax burdens and tax trends in each state. It also ranks states according to their relative tax progressivity (Washington, Florida, Tennessee, Texas, and South Dakota have the most regressive state tax systems; Delaware, Montana, Vermont, and California have the most progressive) and draws some broad conclusions about tax distribution nationwide. The report's central finding is that most state tax systems are regressive: on average, middle-income families pay more than twice as much of their income in state and local taxes as rich families do�and poor families pay a relatively greater share than even middle-income families. And these taxes have become more regressive over the past decade and a half. While taxes on the rich have fallen as a percentage of income since 1989, taxes on the middle class and the poor have risen. (A crucial determinant of how heavily a state's tax burden falls on its poorest citizens is how much the state relies on sales or excise taxes to generate revenue; poor families pay more than six times as much of their income in consumption taxes as rich families do.) As states mull over how to make up huge fiscal shortfalls in 2003 and 2004, this report is essential reading.
The full report is here.