According to a new study, middle-income families pay one-third more of their earnings in state and local taxes than do the richest Americans. The disparity is even worse for families in the bottom one-fifth of the income scale. The poorest families see 81 percent more of their earnings swallowed up by state and local taxes than do the most affluent.
Those are some of the sobering conclusions of the study made by Citizens for Tax Justice, an organization supported by unions and religious and social action groups.Robert S. McIntyre, director of the group, said, "The biggest problem is over-reliance on regressive sales and excise taxes rather than on progressive, ability-to-pay income taxes."
The survey, which included the 50 states and the District of Columbia, found that only Vermont and Delaware have tax systems that are even slightly progressive, meaning that they are based on ability to pay.
The 10 states thought to have the least-fair taxes require middle-income families to pay up to three times as much of their earnings as the rich.
What the eight states considered to have the worst tax systems - South Dakota, Nevada, Texas, Florida, Washington, Tennessee, Wyoming and New Hampshire - have in common is no broad personal income tax. Pennsylvania and Illinois, the other two states found to be most regressive in taxing, have flat, low-rate income taxes.
Nevada was considered to have the worst tax system of all because its poorest families' income earmarked for state and local taxes is 5 1/2 times that for the richest families.
According to the report, it is only in Vermont, Delaware, Hawaii, Maryland and Minnesota that the richest 1 percent pay an equal or greater share of income in local and state taxes as that paid by the poorest fifth of families.
Utah does not rank at either the top or bottom of this study, but shares some of the problems of the worst-ranking states.
Since most Utahns find themselves in the top-ranking category for income tax - due to the effects of inflation and the many years since tax rates were changed - the system almost amounts to a flat tax in which lower and middle income levels are taxed at the same rate as higher incomes.
Utah also relies heavily on the sales tax, which hits low-income levels harder than it does the rich - meaning that our system is undeniably regressive.
Unless state income tax rates are adjusted - a proposal that comes up nearly every year - it is only a question of time before Utah will be considered one of the most regressive tax systems in the country. Utah lawmakers should consider tax reform a priority in the next legislative session.