11.19.09

Texas taxes hit poor & middle class Texans the hardest

Posted in Around The State, Commentary, Taxes at 11:24 am by wcnews

A new study released yesterday called Who Pays?, by the Citizens for Tax Justice (CTJ), found that State & Local Taxes Hit Poor & Middle Class Far Harder than the Wealthy.

By an overwhelming margin, most states tax their middle- and low-income families far more heavily than the wealthy, according to a new study by the Institute on Taxation & Economic Policy (ITEP).

“In the coming months, lawmakers across the nation will be forced to make difficult decisions about budget-balancing tax changes—which makes it vital to understand who is hit hardest by state and local taxes right now,” said Matthew Gardner, lead author of the study, Who Pays? A Distributional Analysis of the Tax Systems in All 50 States. “The harsh reality is that most states require their poor and middle-income taxpayers to pay the most taxes as a share of income.”

Nationwide, the study found that middle- and low-income non-elderly families pay much higher shares of their income in state and local taxes than do the very well-off

The DMN has an article on the study and it’s findings on Texas, Poor Texans shoulder heavy tax burden. The article does the usual thing of finding the left v. right takes on the subject, but finishes with this from the study.

The institute’s study said the media and elected officials often refer to states such as Texas as “low-tax” states without considering who benefits the most within those states.

In Texas, the study found that state and local taxes eat 12.2 percent of incomes of the bottom 20 percent of earners – families with less than $18,000 of income.

For the middle 20 percent of earners, those making between $31,000 and $51,000, the state-local tax bite was 8.5 percent. And the top 1 percent, who make $463,000 or more, pay just 3.3 percent of income in state and local taxes.

“No-income-tax states like Washington, Texas and Florida do, in fact, have average to low taxes overall,” the study said. “Can they also be considered ‘low-tax’ states for poor families? Far from it.” [Emphasis added].

Essentially Texas is a low tax state for the wealthy, but not for most of the people that live and work here. Here’s the specific fact sheet for Texas [.pdf] from the report. Of course this is something that the CPPP has been pointing out for quite some time.

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