Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

The Institute on Taxation and Economic Policy's new study found that Delaware had the least regressive tax system.  (Photo:  Jimmy Emerson, DVM/flickr/cc)

How Regressive Local Taxes Are Rewarding the Rich

New report finds 'fundamentally unfair' tax system in nearly every state

Andrea Germanos

Here's something nearly every state in the nation has in common: a regressive state tax system that is exacerbating the wealth divide.

So finds the newest edition of Who Pays: A Distributional Analysis of the Tax Systems in All Fifty States from the non-partisan Institute on Taxation and Economic Policy (ITEP).

The organization looked at sales and excise taxes, property taxes and income taxes across all 50 states, and found that, on average, the poorest 20 percent of households pay more than double (10.9 percent) the effective tax rate paid by the top 1 percent (5.4 percent).

"The problem with our state tax systems is that we are asking far more of those who can afford the least," Meg Wiehe, ITEP state policy director, said in a press statement.

States' heavy reliance on consumption (sales and excise) taxes to generate revenue contributes to a "fundamentally unfair" system by which lower- and middle-income households pay a greater percentage of their income, the report states.

The organization placed on its Terrible 10 list the states that have the greatest gap between tax rates for low- and upper-income households—Washington, Florida, Texas, South Dakota, Illinois, Pennsylvania, Tennessee, Arizona, Kansas and Indiana. Washington state has the dubious distinction of being ranked with the most unfair state and local tax system in the country, as it taxes the poorest residents at 16.8 percent but the top 1 percent just 2.4 percent.

Delaware ranked at the opposite end, having the least regressive tax system. That, the report states, is "not because any one of its taxes is exceptionally progressive, but because it relies so heavily on a modestly progressive income tax and relies very little on regressive sales and excise taxes."

"In recent years, multiple studies have revealed the growing chasm between the wealthy and everyone else," stated Matt Gardner, executive director of ITEP. "Upside down state tax systems didn’t cause the growing income divide, but they certainly exacerbate the problem."

Gardner says state policymakers should address the issue by enacting tax reform policies.

Click here to see how your state ranks.


Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.

This is the world we live in. This is the world we cover.

Because of people like you, another world is possible. There are many battles to be won, but we will battle them together—all of us. Common Dreams is not your normal news site. We don't survive on clicks. We don't want advertising dollars. We want the world to be a better place. But we can't do it alone. It doesn't work that way. We need you. If you can help today—because every gift of every size matters—please do. Without Your Support We Simply Don't Exist.

'Policy of Death': Amazon Guardians Sue Ecuador's President Over Oil, Mining Decrees

"We are fighting to defend our territory, our rivers, our forest, our fish, and our animals," one Indigenous leader explained. "Without our forest and without water, we cannot live."

Brett Wilkins ·


'Just Cancel the Debt,' Advocates Say as Biden Admin Develops Strategy for Restarting Student Loan Payments

Student debt cancellation "is good economic policy that will change the lives of millions of families," said Rep. Ayanna Pressley.

Julia Conley ·


Green Public Spending a 'Win-Win Opportunity' for Climate and Workers, Global Study Shows

"It's really a no-brainer for the federal government to prioritize green investments to put our economy back on track," said one advocate. "It's good politics and good policy."

Kenny Stancil ·


After CIA Plot Revealed, Press Freedom Coalition Says DOJ Must Drop Assange Case

"A precedent created by prosecuting Assange could be used against publishers and journalists alike, chilling their work and undermining freedom of the press," said the groups.

Julia Conley ·


'Needlessly Provocative': Austin Rebuked for Again Opening NATO Door to Ukraine and Georgia

"The Biden administration now faces a stark choice: commit to fight for Ukraine, creating a serious risk of war with Russia, or admit that NATO expansion has come to an overdue end."

Brett Wilkins ·

Support our work.

We are independent, non-profit, advertising-free and 100% reader supported.

Subscribe to our newsletter.

Quality journalism. Progressive values.
Direct to your inbox.

Subscribe to our Newsletter.


Common Dreams, Inc. Founded 1997. Registered 501(c3) Non-Profit | Privacy Policy
Common Dreams Logo