Top 1 percent pay lower tax rates than other residents in most states: study

A new analysis finds that the wealthiest families in most states pay lower tax rates than everyone else.

The new study by the Institute on Taxation and Economic Policy analyzed the tax systems in all 50 states and Washington, D.C., by looking at how each of seven different income groups pay state and local tax rates.

The study ultimately found that the lower someone’s income, the higher their effective and local tax rate overall.

“On average, the bottom 20 percent of taxpayers face a state and local tax rate about 60 percent higher than the top 1 percent of households,” the analysis said.

In 41 states, 1% of households have a lower tax rate than everyone else, according to the analysis. The study found that in 42 states, the top 1% of earners pay less than the bottom 20%, and in 46 states the top 1% of earners are taxed at a rate lower than 60% of the middle class.

The bottom 20 percent of the population is subject to the lowest tax rate among income brackets only in Washington, D.C., and six states: New Mexico, New Jersey, New York, Vermont, Minnesota, and Maine. The study found that 34 states tax low-income families at higher rates than any other state.

Taxing the wealthy at a lower rate than low-income families could hinder the state’s ability to raise revenue, the analysis warned.

In other words, not only do the rich, on average, pay a lower effective state and local tax rate than lower-income people, but they also collectively contribute a smaller share of state and local taxes than their share of total income. Study of countries.

“This limits states’ ability to raise revenue, especially as inequality grows. Research shows that when income growth is concentrated among the wealthy, state revenues grow more slowly, especially in states that rely more on taxes that fall disproportionately on low-income families.” Low and middle income.