According to the research conducted by the Institute on Taxation and Economic Policy (ITEP), a total of 44 of the 50 US states worsen inequality by making the wealthy pay a lesser share of their income in taxes than lower income people, a new analysis has found.
State and local tax regimes are “upside-down”, the new research finds, with weak personal income taxes in many states allowing richer Americans to avoid tax. A reliance on sales and excise taxes, considered regressive because they disproportionately impact the poor, has helped fuel this inequality, according to the report.
The super-wealthy are treated particularly lightly by the tax system, with the top 1% paying less than every other income group across 42 states. In most states, the poorest residents are taxed at a higher rate than any other group. Various state-level policies, such as cutting taxes on the wealthy to supposedly drive economic activity, has worsened this situation, the report found. Inequality in recent decades has been far starker in the US than in other comparable countries.
“The regressive state tax laws we see today are a policy choice, and it’s clear there are better choices available to lawmakers”, said Aidan Davis, ITEP’s state policy director.