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Sunday, October 23, 2016

American politics are dominated by those with money. As such, America’s tax debate is dominated by voices that insist the rich are unduly persecuted by high taxes and that low-income folks are living the high life. Indeed, a new survey by the Pew Research Center recently found that the most financially secure Americans believe “poor people today have it easy.”

The rich are certainly entitled to their own opinions — but, as the old saying goes, nobody is entitled to their own facts. With that in mind, here’s a set of tax facts that’s worth considering: Middle- and low-income Americans are facing far higher state and local tax rates than the wealthy. In all, a comprehensive analysis by the nonpartisan Institute on Taxation and Economic Policy finds that the poorest 20 percent of households pay on average more than twice the effective state and local tax rate (10.9 percent) as the richest 1 percent of taxpayers (5.4 percent).

ITEP researchers say the incongruity derives from state and local governments’ reliance on sales, excise and property taxes rather than on more progressively structured income taxes that increase rates on higher earnings. They argue that the tax disconnect is helping create the largest wealth gap between the rich and middle class in American history.

“In recent years, multiple studies have revealed the growing chasm between the wealthy and everyone else,” Matt Gardner, executive director of ITEP, said. “Upside-down state tax systems didn’t cause the growing income divide, but they certainly exacerbate the problem. State policymakers shouldn’t wring their hands or ignore the problem. They should thoroughly explore and enact tax reform policies that will make their tax systems fairer.”

The 10 states with the largest gap between tax rates on the rich and poor are a politically and geographically diverse group — from traditional Republican bastions such as Texas and Arizona to Democratic strongholds such as Illinois and Washington.

The latter state, reports ITEP, is the most regressive of all. Four years after billionaire moguls such as Amazon’s Jeff Bezos and Microsoft’s Steve Ballmer funded a campaign to defeat an income tax ballot measure, Washington now makes low-income families pay seven times the effective tax rate that the rich pay. That’s right, those in the poorest 20 percent of Washington households pay on average 16.8 percent of their income in state and local taxes, while Washington’s 1-percenters pay just 2.4 percent of their income. Like many of the other regressive tax states, Washington imposes no personal income tax all.

“The problem with our state tax systems is that we are asking far more of those who can afford the least,” concludes ITEM’s state director Wiehe.

By contrast, the states identified as having the smallest gap in effective tax rates are California, Delaware, Minnesota, Oregon and Vermont — all Democratic strongholds and all relying more heavily on progressively structured income taxes. Montana is the only Republican-leaning state ITEP researchers identify among the states with the least regressive tax rates.

Of course, if you aren’t poor, you may be reading this and thinking that these trends have no real-world impact on your life. But think again: In September, Standard & Poor’s released a study showing that increasing economic inequality hurts economic growth and subsequently reduces public revenue. As important, the report found that the correlation between high inequality and low economic growth was highest in states that relied most heavily on regressive levies such as sales taxes.

In other words, regressive state and local tax policies don’t just harm the poor — they end up harming entire economies. So if altruism doesn’t prompt you to care about unfair tax rates and economic inequality, then it seems self-interest should.

David Sirota is a senior writer at the International Business Times and the best-selling author of the books Hostile Takeover, The Uprising and Back to Our Future. Email him at [email protected], follow him on Twitter @davidsirota or visit his website at

AFP Photo/Paul J. Richards

  • Gary Miles

    State taxes are all different, because all States are different and have different types of leadership. Comparing Washington State to Ohio is senseless, as a person only lives in one State. I think all taxes are too high, sans the local ones. If you live in a big city, your local tax will be higher versus someone living in a rural area where local taxes are less. I don’t mind taxes that are used for the right reasons. Roads and road maintenance is a right reason. Keeping storm runoff maintained is a good reason. The problem I see at all these articles complaining about taxes, is we send our taxes away and don’t see the benefits directly. When the Feds spend 750K on a study to find out why fat women have less sex than non-fat women, it should piss all of us off. I think we could all agree that corporate welfare needs to stop, like 30 years ago stop.

    • charleo1

      As I think we were talking about this the other day. And I suggested taxes were actually moderate, considering the number of things we collectively expect out of our gov. That we all tend to be self oriented, when it comes to the kind of largess we don’t consider worthy of our tax dollars. Thus, a group that benefits mightily from a 580 billion dollar tax funded healthcare subsidy, known as Medicare. Third behind only defense, and Social Security. May be heard complaining bitterly over the growing gov. dependence. Where the relatively minuscule by comparison cost of $60 billion over 10 years, to pay for a couple of years of community college. May be viewed as just more big gov. welfare! So, where does it end, they ask? But the answer is always the same regardless of the income level. The time we must start reigning in spending, lowering taxes, and paying down the debt, and shrinking the bloated gov. is right after it has helped me.

      • gmccpa

        Very well written Charleo. I’ve come to the opinion that no one really wants spending cuts. They only want spending cuts that affect ‘other people’.
        The ‘sex study’ type stories are really red herrings. If we really want savings…it has to come from the big ticket item. Military, Medicare, etc. And that’s not happening any time soon.

        • Gary Miles

          You have an great idea, maybe we can just cut Medicare altogether and let those who pay into it keep their money. Let’s just do away with the military all together, that would save a fortune and we really don’t need them anyway, as we are the most armed nation on earth and nobody will invade us. Let’s also, get rid of all the overfunded alphabet agencies in the Federal government and let the States handle those duties(which they should be anyway). Let’s remove the Feds completely out of every ones life. The State governments can handle everything the Feds do and we could cut taxes in half for everyone. That savings can go back in the pockets of the earners and make their life better. Those who don’t earn might take notice and do one of two things, become earners, or demand government steal from the earners and give to the non-earners (like today). Great Idea, we should run with it!

          • gmccpa

            Sure…and while we’re at it, why not just dissolve into 50 different countries.

        • idamag

          They want spending cuts that affect other people. As I said, above, they are like the kids who get ansty when their aging parents start spending money.

      • Bill

        The GOP will never be happy with taxes even if the rich paid no taxes at all they would cry they need more subsides for the rich to create those jobs that never happen. The only gobs the rich want to create are the ones you can’t live on because everyone knows the poor have too much already.

        • charleo1

          It’s hard to fathom just why the super wealth are trying to create, what they seem to be aiming for. With a lot of these guys who are the most active
          in funding these politicians who would cut the poor,
          to put a mere penitence in the pockets of people like the Koch Brothers. Who personal fortunes have doubled since Obama took office. Yet they spend 100s of millions on campaigns trying to defeat him, When their businesses didn’t do nearly as well under Bush. I mean sure, Bush lowered their taxes, but the economy was so bad, they lost much more for a lack of profits, and new business, than than they gained. It doesn’t make a whole lot of sense, if you listen to their reasons. And they are not stupid. So, just what is their game? And pardon me for being hateful for just a second. But I think it is their desire to be not just Koch rich, but to be John D. Rockefeller rich. To have two egos like these birds, and to realize that by comparison to old John D. they are practically paupers! It must be awful for them! When Rockefeller died in 1937 his vast fortune was estimated at a whopping 340 billion dollars! This when the average wage in the Country was $37.00 dollars a week, and the average house cost around $1,100.00. It was legend he could drop a $100 dollar bill, and couldn’t be bothered to reach down and pick it up. And the Kochs, and other likeminded billionaires figure, that without impoverishing the rest of us, as rich as they are, they are never going to be that kind of Rockefeller rich. And have that kind of power over everyone around them. At least that makes more sense to me, than the balcony they are spewing about their taxes.

        • idamag

          They are like the kids who get antsy when their aging parents start spending money.

      • Gary Miles

        Not quite sure which government your speaking of, Medicare (Feds) is hardly a subsidy. Everyone who makes a living pays into the program an everyone collecting SS pay into it. Medicare is nothing more than Government run health insurance for the elderly. Considering the cost of regular health insurance, it helps the elderly, especially those on a fixed income. That is a “separate” tax, in addition to income tax. Plus, those enrolled and using the program (which is mandatory when one reaches the age of eligibility), upon receiving SS they pay a premium, much like most do with regular insurance.. So, I’d have to disagree that Medicare is a subsidy (I think it is how they wanted Obamacare to work, the young pay ahead for those sin need now).

        Obama’s plan to spend a mere 60 billion in 10 years on subsidized college isn’t what he claims (not much of anything he says it what it says) as the numbers he claims to help and the cost of each equals more like 32 billion each year. Even if that’s off, all it will do is raise the cost of college even further than government guaranteed loans have already done. If those who agree with it are willing to foot the bill, they may, just leave the rest of us out of the mix. (Did you notice he wants to TAX college savings accounts as well?). Poor kids don’t have chance these days. And yes, I blame government interference on a vast majority of their lack of opportunities.

        I think there are some good things that government does, but mostly I don’t. Many of the alphabet agencies are not needed and overfunded. But, we can talk about that for weeks, it won’t solve a thing. I’m not sure how people see the 18 trillion dollar debt, one that cannot ever be paid off. Or if they understand that the government DON’T print it’s own money, and can’t just keep doing that to pay the bills. I don’t know how your budget works out, but I’m not in debt and haven’t been for many years. But I do know the power in only spending what you make and not making debt you can’t pay. The housing bubble should have been a valuable lesson to all governments. Most didn’t get it and they will soon have to deal with it. The first money to be stopped will be government employee retirements (which has already happened in some cities and towns) Then come layoffs, then comes the stoppage of services. Where all the assistance money so many people get will fit in is anyone’s guess. When that happens, which it will some day, I’ll be glad to be very far from any urban areas.

        This is a time when people wake up to what they have allowed to occur. Wake up hour isn’t far away, so, I plan on living without any of their assistance, as well as taking care of my elderly parents, who will no longer be getting SS or healthcare. Few people can comprehend life without government, most just cry that it will be lawless etc, which is far from reality. Once the initial shock subsides and the thugs are dealt with, life will continue as it mostly has, but far more difficult for many. We should all be working to get government OUT of as many lives as possible and to the extent possible, not asking them to take more and give more. Not likely to happen though. Oh well, I’ll be sitting back watching it all unfold on TV with no worries (except for my friends and family who get stuck in the middle). Do you what happens when a fiat currency loses it’s value?

        • charleo1

          What was I just saying about all the negativity? You
          claim you’re an optimist? You’re optimistic about the coming collapse of civilization, for evidently hundreds of reasons. And who knows, right? But, I’m betting on success. In fact, I see from reading your comment, there is a freedom you don’t realize you have! One the liberals haven’t managed to take away. Medicare is not mandatory. Check it out. You can send back your Socialist gov. run medical care any time you choose. You remember what Reagan said about it? Said it would end freedom, He did have a nice plan at the time he said that. One his Actor’s Guild Union provided. Now, before you opt out though, I would suggest you find two or three of your closest friends to join you in your search for freedom, and comparable premiums in the liberty nurturing, private sector health insurance market. Considering the cost of healthcare for the elderly, and all. Sure. And I guess you think the cost of healthcare is a picnic for the youthful? Family folk trying to save college money, and pay the average $24,000 dollar per year premiums. But, we can’t help them, and keep our freedoms? Like I said, people are very self oriented about taxes.

          • Gary Miles

            I should shorten my responses, as the focus usually focus’s on the end. No problem, I have been accused a few times at being a little long winded, LOL. The currency issue is just a economic fact. When a fiat currency is only backed by “the full faith of the US government” and then the Federal reserve floods the market with trillions of dollars, it (the dollar) will eventually lose it’s value. The only thing keeping it going is that other Central Banks are flooding their markets as well. Plus, having the petro dollar has helped a lot as well (the world’s reserve currency not withstanding). The petro dollar is going away as the BRIC’s are trading oil in other currencies, as is Iran. Libya wanted too as well, we know what happened there. When the “full faith of the US government” has gone from 9 trillion in debt to 18 trillion in debt in six years, one has too question where the faith is coming from.

            The good news, the rest of the world will deal with the same problems as us if things go South with our currency. You do know what happens when too many dollars make it’s way out of Wall Street on into the public will cause, don’t you? The beginning is inflation. Let’s hope that’s the end too. Hyperinflation would not be good at all.

            I will look into opting out of Medicare, as I will never need it. It may take some time, as nothing happens fast with the Feds.

          • idamag

            Medicare is not mandatory. You have a time period to sign up for it and if you do not, you will have to wait to apply again. I had private insurance for five years after I retired. The private insurance decided to drop the retirees. They had to petition Medicare to accept us.

  • tallen387

    Oregon gets credit as being “more progressive” by virtue of having no sales tax (except on gasoline and lodging, if you want to be picky), but its income tax is actually almost perfectly flat. A lot of my friends in Oregon routinely pay more to the state in income tax than they do to the federal government.

    There once was a ‘reverse’ deduction for what you paid to the feds, but those days are over.

    So don’t think of Oregon as some sort of progressive paradise.

    • ExRadioGuy15

      I live in Oregon…our state tax code is a lot more Progressive than you think, or did your Oregon friends forget to tell you that, in the last legislative session, a “soak the rich” tax was passed and now has been implemented?!?
      Nice projection there, buddy
      BTW: the reason why the wealthy in this state generally accept the “soak the rich” tax is BECAUSE the federal tax code is “upside down”, where the wealthy and big corporations pay a lower percentage of taxes than the middle class and smaller companies. If the federal tax code went back to being Progressive, the state of Oregon wouldn’t need to “soak the rich” with a tax.
      Remember that an “Upside Down” tax code is highly Fascist and simply redistributes wealth upwards (Republican thinking); flat or sales taxes are Regressive, meaning that the wealthy and big corporations can afford to pay it (Libertarian thinking) and a Progressive tax code has been the only type of taxation that has actually worked in making things fairer for everyone. Are you saying that we should have an Upside Down or Regressive tax code?!? Think carefully about your answer.

      • ExRadioGuy15

        Oh, and before you give your answer, let’s take a look at a comparison between a Progressive tax code and an Upside Down one using two states in this country…
        Kansas is run by Republicans and has an Upside Down tax structure. They’re running huge deficits and having to make big budget cuts to balance the budget.
        California is run by Democrats with a supermajority in the Assembly and the Senate (for the first time in state history) and has a Progressive tax code. Within a year of the Progressive tax code being implemented, the state went from having a huge deficit to a really large surplus.
        So, which type of tax code do you think works best?

        • ExRadioGuy15

          One last thing: the reason our federal tax code is Upside Down isn’t because the rate is too actuality, the rate isn’t the problem…the problem is that the code is loaded down with thousands of exemptions, loopholes and deductions that reduce the tax LIABILITY of the wealthy and big corporations, thereby significantly reducing or completely eliminating the amount of taxation those two groups of “people” pay. We can thank the GOP and the Bush 43 Administration for that. If those policies were repealed, our annual federal budget deficit would reverse from a half-trillion dollars in the hole to a trillion-dollar surplus that could be used to start paying off the national debt.

          • Gary Miles

            You are dillusional and know nothing about economics or the tax system. All your doing is repeating some whackball pundit’s BS from MSNBC. How about showing where you get your idiocy?

          • 788eddie

            Why do you think a major corporation such as General Electric (GE) paid ZERO in corporate taxes in 2010? (This is easy enough to verify.)

            Somehow, it just doesn’t seem right to me. And when they pay nothing, people like you and me have to make up the difference.

            As you may suggest, I probably no little or nothing about economics or the tax system. It just doesn’t seem right or fair for that matter.

          • Gary Miles

            I have read about GE in 2010. I’ve read some about it and it had to do with write offs involved in the change away from incandescent bulbs (government mandated). Fortunately for you and I, we don’t have to make up for anything, as our individual taxes are only based on our wages and tax tables. There is no “making up” for what others don’t pay. However, many in your clan claim that corporations aren’t individuals and shouldn’t be treated the same. I guess in some ways you get your wish, as corporations get many tax benefits when government forces a change in what they produce. The people get to pay for that change at the store, no tax write offs. I wouldn’t be to concerned about not knowing much about taxes, few people can figure out that mess. Maybe a flat tax with no write offs would solve the problem.

          • tallen387

            Oregon imposes an additional 0.9% for incomes above $125,000. The 9% bracket runs from just under $9,000 out to $125,000. That’s flat enough for my taste.

      • idamag

        I have friends who moved to Oregon. They went from a low income, here in Idaho, to a triple-digit income in Oregon. They don’t complain, to me, about taxes. I live in one of the reddest states, in the Union. We have the dubious honor of more people on minimum wage than any other state. High paying jobs are always attracted to other states. Businesses, like Walmart, loves us. I actually supported a sales tax because we were told it was going for education. We live in a state that passes legislation to protect animal abusers. My state takes $1.95 from the Federal Government for every $1.00 they pay. The richest man, in Idaho, superseded Simplot, who polluted air and water for years. Vandersloot took the entire legislation on his jet plane and entertained them. He wanted a bill passed from (the why doesn’t this government keep its nose out our business). He got it. It is now illegal in the state of Idaho to leave a job and take a job doing the same thing somewhere else.

  • Gary Miles

    I have heard far to often how the GOP are obstructionists, the party of NO, etc. I just wish that would continue because all the Feds do is muck things up, both sides. But, I like destroying lies and BS propaganda, which is the mantra of Progressivism in politics today. For all those who claimed the GOP are obstructionists, you are now going to learn the truth. So beware. Then you can proceed to prove me wrong (which is unlikely). Here are FACTS:

    Only 12 days into 2015’s legislative session in the Senate, Mitch McConnell’s reforms to better operate the Senate have taken effect. The hallmark of the Harry Reid Senate was his totalitarian grip upon procedure – in all of 2014, for example, there were only 15 roll call votes on the Senate floor for legislative amendments. Reid simply did not want to allow debate and did not want to have his members take uncomfortable votes that would go on the record – especially in an election year.

    Yesterday, McConnell’s new Senate surpassed that number. There have been 19 votes on legislative amendments in the last three days alone – 10 on amendments from Democrats, including Sen. Bernie Sanders’ push to recognize climate change.

    Well now, how exactly are the GOP obstructing the Senate again? Or maybe the obstructionists are really the Democrats because their more concerned about saving their cushy government job than doing what their supporters want them to do. Damn, the Democrats aren’t any different than the GOP after all.

    • charleo1

      The difference in the Parties is not determined by the increase, or decrease in obstruction, or lack of bipartisanism. But by what is being obstructed. To say I want to further worsen the plight of the Middle Class, and the poor, by repealing healthcare reform. Rather than raise the funds if necessary, by taxing the group realizing 95% of the economic gains, needs to be obstructed. To ignore the fact, it has become beyond the ability of millions to afford healthcare. And offer no remedies to address that indisputable fact. For the sole purpose of protecting the richest 1/2 of 1%, is not something I want my representatives coming to consensus with. What I do support is the public coming to terms with a failed economic mindset, and returning to an economy that works for everyone. And not just for the small group at the top, pumping billions into the political process to reach conclusions that are demonstrateably injurious to vast majority. Yes, Senator Sander’s attempt to set a baseline for future conversations on global climate change, were allowed, but ultimately defeated. As the meaningless proclamation agreed on was that climate change did in fact exist. But, it’s causation being linked to man’s release of carbon emissions, was as yet undecided. Akin to admitting the house is indeed on fire. But leaving as controversial whether the guys continuing to pour gasoline on the fire, were, or had ever contributed to the event. Some progress.

      • idamag

        Or, suppose you are loyal to special interests at the cost to the middle class.Who, then protects the people who pay the wages of the representatives of the 1%. If a group has enough money, then can run propaganda that makes their group look good and all other look bad. There is only so much money printed. It used to be backed by silver and gold. When those certificates got hoarded by the few at the expense of the many, there was not enough gold and silver certificates circulating and money had to be printed that was not silver or gold certificates. Instead of looking at the problem, the Government was blamed.if ,because of rising costs and unfunded wars, they needed more tax money. The lawmakers in bed with special interests told them to get it from the middle class. My picture is Congress is like the ladies of the night on the street corner. Special interest pays for their favors.

  • Lucretzia

    the gop plan is to make mid and lower income people pay for the working of gov’t while the rich and corps get away with paying nothing. that’s it, in a nutshell. I’ve seen it happen at both the fed and state level where goppers hold the levers of power. all they do is shift the tax burden from those who can pay it to those who can’t.