Today the Institute on Taxation and Economic Policy, a nonprofit, non-partisan research organization focusing on government taxation and spending, released a new report called Who Pays?, which analyzes the tax systems of each of the 50 states. Not surprisingly, the report determined that the tax policies of most states are regressive in nature: Nearly every state and local system the report looked at takes a greater share of income from lower- and middle-income families than from wealthy families.
According to the report—which took property, income, and sales tax into account in its calculations—on average state and local tax rates on the highest earners (those making $476,000 or more per year) comes out to about 6.4 percent, before federal tax credits and itemized deductions. After those deductions are taken, the wealthiest Americans pay a tax rate of approximately 5.2 percent.
The average tax rate for middle-income families--those earning $33,000-$54,000 per year--is around 9.7 percent before federal offsets and 9.4 percent after.
The average tax rate on the poorest 20 percent of Americans (those making less than $18,000 per year), the report notes, is more than double that of the most wealthy, at 10.9 percent. These families generally receive no federal tax offsets or deductions at all, and though they pay the lowest percentage in income taxes, they tend to be hit the hardest when it comes to sales and property taxes.
While Maryland did not end up in the report's top 10 most regressive states (to name names: Washington, Florida, South Dakota, Tennessee, Texas, Illinois, Arizona, Nevada, Pennsylvania, and Alabama), the report indicates that our state's tax policies do place a larger burden on the poor than on the rich. We tax our poorest citizens at a rate of 9.9 percent after federal deductions, while our richest 1 percent are taxed at a rate of 6.2 percent after their deductions are taken.
The report's analysis found that the states with the least regressive tax polices are Delaware, the District of Columbia, New York, and Vermont.
To read the full report for yourself, click here.
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