Study: Residents With Lower Incomes Pay a Higher Effective Tax Rate [View all]

[SunSeeker]

States and localities are filling their coffers by disproportionately burdening lower-income residents, who are taxed at a higher effective rate than top earners, according to a studyreleased Wednesday by a tax policy group.

The 50-state analysis by the nonpartisan Institute on Taxation and Economic Policy found that the lower one's income, the higher the effective overall state and local tax rate. The study includes sales taxes, excise taxes, user fees and income taxes. In fact, states which boast low income taxes are often the most likely to have systems that end up shifting the fiscal burden to lower-income residents, Carl Davis, one of the authors of the study, told reporters in a conference call.

Nationally, the people in the bottom 20 percent of earners face a state and local tax rate that is 50 percent higher than the top 1 percent of households, the study said. That does not mean lower-income people pay more in absolute dollars, only that their effective tax rates are higher. The national average effective state and local tax rate is 11.4 percent for the bottom quintile of taxpayers, compared to 7.4 percent for the top 1 percent of income earners, the study said.

https://www.usnews.com/news/best-states/articles/2018-10-17/residents-with-lower-incomes-pay-a-higher-effective-tax-rate-study