Low-Earners In These 3 Low-Income Tax States Are Paying 5x More Than The Rich In Taxes

The disparity between the rich and poor keeps growing with the disproportionate burden carried by low- and middle-income families. 

A recent report from the Institute on Taxation and Economic Policy (ITEP), a nonprofit and nonpartisan organization dedicated to tax policy, sheds light on the regressive nature of state and local tax systems in the United States.

The report reveals a stark contrast in tax burdens: The lowest 20% of income earners pay an average state and local tax rate of 11.3%, while the top 1% only pays 7.2%. 

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According to ITEP, 41 states tax high-income families at lower rates than everyone else. Only six states and Washington, D.C. have the lowest tax rates for their lowest-income residents. 

Florida, Tennessee and Texas, which are often deemed as low-tax states because of the absence of personal income taxes, can paradoxically prove more expensive for low- to middle-class families. 

"In Florida, home to the nation's most regressive tax system, low-income families pay almost five times as much as the wealthy," according to the report. 

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Instead of relying on income taxes, these states have hefty sales and excise taxes on everyday items like groceries, utilities, gasoline and tobacco. These taxes, while seemingly indirect, disproportionately affect lower-income families by constituting a greater percentage of their overall income. 

The affluent contribute a smaller share of state and local taxes relative to their overall income, perpetuating economic disparities. 

A broader global trend, as reported by Oxfam, indicates a significant decline in corporate income tax rates since 1980, favoring corporations over the well-being of citizens. "Since 1980, corporate income tax rates in OECD [Orgainsation for Economic and Co-operation Development] countries have more than halved, dropping from 48% to just 23.1% in 2022."

This global trend reflects a broader shift toward policies that favor corporations over the well-being of citizens, contributing to the challenges faced by national governments in addressing inequality.

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