Taxing the Poor

The Regressive Nature of State-Local Tax Systems

By Fred Kammer, S.J.

In the news lately are calls by Governor Bobby Jindal of Louisiana and other governors to eliminate their state personal and corporate income taxes and to substitute higher sales taxes in plans that will remain “revenue neutral” (namely, no additional income, just shifting tax burdens). To assess such plans morally, one needs to look first at the current state-local tax burdens of state populations. Then we can assess the impact and morality of proposed changes.

Current State-Local Tax Systems

First, a new report from the non-partisan Institute on Taxation and Economic Policy (ITEP) entitled Who Pays? [1] provides the baseline for the analysis of current state-local tax impacts on families of various income groups. The national average of the respective tax burden on non-elderly residents for the 50 states and the District of Columbia is reflected in Chart 1. [2]

As the study notes in its introduction, “The study’s main finding is that nearly every state and local tax system takes a much greater share of income from middle- and low-income families than from the wealthy. That is, when all state and local income, sales, excise and property taxes are added up, most state tax systems are regressive.”

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