(Nov. 19) -- The tax code is unfair and it's the poor and the middle class who are getting the raw end of the deal.

Those are some of the conclusions of a new study released by the Institute on Taxation and Economic Policy, a nonpartisan research group. The report found that after itemized deductions, the richest 1 percent of Americans pay taxes at an average rate of 5.2 percent of their income. Middle-class residents, on average, pay taxes at a rate of 9.4 percent, and the poorest 20 percent pay at a rate of 10.9 percent.

"In effect, what we have is an upside-down system in which the more you earn, the less you pay in taxes," said Matthew Gardner, executive director of ITEP and the principal author of the study. "I don't think anyone would intentionally set out to design a tax code that way."

According to Gardner's findings, the 10 states where "regressive" taxation most significantly tilts in favor of the rich are Washington, Florida, South Dakota, Tennessee, Texas, Illinois, Arizona, Nevada, Pennsylvania and Alabama.

In Washington, for instance, the poorest 20 percent of residents pay taxes at a rate nearly six times higher than those of the state's richest 1 percent.

Vermont, Delaware and New York, meanwhile, are states with relatively flat, fair tax practices, the study found.

The study's goal was to try to inform future tax policy by creating an understanding of how differing state approaches benefited varying income levels, Gardner said.

"We want to shed light on how tax systems work and help provide a benchmark for judging the current systems," he said, though he stressed that ITEP was not making any specific policy recommendations.

The study's figures were calculated by analyzing and merging the overall affect of the three most common forms of taxes: income, property and sales. In states with no income tax, for instance, sales taxes and fees often account for a larger percentage of state revenue. In general, the report found that income taxes tend to be fairer than property or sales taxes because they graduate depending on salary. Sales taxes, on the other hand, tend to disproportionately target the poor and lower-middle class, because over time those fixed costs account for a much higher percentage of wages than they do for the well-off.

The report comes at a time when cities and states across the country are enacting a host of new taxes and surcharges to try to cover budgetary shortfalls brought on by the recession. In New York, Gov. David Patterson has proposed an "iPod tax" that would add a surcharge on every music download. In California and Pennsylvania, tuition hikes at state colleges and universities are being implemented. Oregon is debating whether to raise income taxes on corporations and the wealthy.

On the federal level, raising taxes remains a taboo subject, but Congress has moved to close tax loopholes for offshore accounts in the hopes of recouping billions of dollars in potential revenue.

Amid this backdrop, Gardner said he hopes his study will help illustrate who is bearing the largest tax burden in the country. "The answer for just about every state," Gardner said, "is the poor and the lower to middle classes."

That is what I have been saying for a long time now.  

That is the reason so many have no income left to pay Federal income tax after state and local gets thru taxing them.

barbara, how much do you think  all the bail outs of the likes of gs chrysler,GM, C,AIG,BAC,and many others hurt the poor of this country?  all of this money came from tax payers,and must be paid back someday.

rogo, the poor were uneffected. they were hurting long before the recession and they will hurt long after it. the poor will always suffer at the hands of those who steal from them. problem is that what gets stolen from them is far more valuable than money, and much more difficult to get it back.

Rogo,  those were loans and are being paid back by the recipients with interest, not by the taxpayers.

I really don't understand why Florida would be on that list.  We don't have any income tax.  The only taxes we have are RE and sales.  Both of those are based on how much you spend.  Our sales tax is only 6% and real estate taxes are quite moderate.  If you buy an expensive house in an expensive area, you will pay higher taxes.  I live in a nice gated and maintained family community in a house that would easily cost 800k in New Jersey and pay less than $4000 a year including non ad valorem fees and have a boatload of services.  I paid way more than that for a 300k house in Jersey with absolutely no services.  We had a voluntary fire dept for crying out loud.  When we had a small fire at our house, the neighboring fire company came to put it out.  Our house would have burnt down if not for them.

  These are not actual figures just numbers used as an example to demonstrate Lisa.  

Sales tax is considered regressive and much harder on the poor because.

Say your sales tax on just basic needs a year just to pay for absolute essentials, food, etc. for everyone regardless of rich or poor is 5,000 and this would just be the minimum a person could survive on,  and you earn 5,000 a year you have nothing left and all of your wages went to sales tax, but if you earn 15,000 a year you would still have 10,000 left from your wages.

So sales tax that is the same rate regardless of income is harder on those that earn less because there are certain expenses like food etc that must be bought regardless of how small or large an income is. 

PA is also on that list, Lisa. But the article is misleading. PA does have a 6% sales tax on everything BUT food and clothing, and the poor mostly spend their money on food and clothing. That's why it's called a LUXURY tax here... because if you can afford to buy more than just food or clothing in PA, then you must be rich, lol. Compare that to WV's 3% tax on everything including food and clothing, and it seems to me that's more unfair to the poor than what we have here in PA.

Doesn't PA have a flat income tax Alexste ?    That would explain the regressive listing for PA.

I assumed PA was on there since every municipality also has its own income type tax.  I think the only other state like that is Indiana (I think)

I was wondering what taxes are "fair?"

Nan, it is very entertaining to see the replies and the reasoning and explaining away the glaring inaccuracies of the article. as for the mecca of fair taxation ny, those poor people are taxed beyond belief, but you really have to live and do business there to get the full appreciation of the ny fairness. I think the whole study was just taken from a cheat sheet as not much study obviously went into it! Wa, Nv. Fl. SD. and Tx. have no state income tax, yet by these idiots reasoning no tax on anyone favors the rich, reasoning like this, being quoted and argued goes a long way to explain how the government got into the shape it is in.

Iceman they do have state and property taxes and I don't know about the others but Texas has 60  yes that is 60  different taxes, fees, and assessments that more than make up for no income tax. 

And it is fairly simple math Iceman, a tax that is the same amount regardless of income is always much harder on those that make less and the lower their income is the harder it is on them.

You know that same old sing song sang to a person who say only make 10.000  a year.   Tax them half of that and then tell them to be good people and be independent and take care of themselves on the 5,000 a year that is left. 

You ought to try it sometime, and if you have been there at some time or another in your lifetime I am guessing that just like everyone else that worried daily about having enough money to buy food that you felt the taxes were a burden you could do without, just like those that earn enough that don't have to worry about having enough food just to survive,  but could spend more for luxuries if they didn't have to pay taxes.

Fair tax is the same percentage for all. Progressive tax, like we have now, is not a fair tax. It taxes you more for higher income.

But, seemingly, even this is not good enough for socialists.

surveybob:

Fair tax is the same percentage for all. Progressive tax, like we have now, is not a fair tax. It taxes you more for higher income.

But, seemingly, even this is not good enough for socialists.

 

So which do you prefer? Doesn't seem right to overly tax the wealthy since they work hard for it. Not right to tax the poor since they don't have something. Higher taxes for the middle people? Better government spending?

I am in Florida and I have never paid state taxes.  So I can say for sure that there is no state taxes unless there is some obscure law I don't know about.  I only pay real estate taxes and they are very very moderate.  Maybe they are using old numbers or something to figure out property taxes.  idk

Survebob the percentage of taxes when local, state, and Federal are all added is too high for lower incomes to be able to pay the same percentage that higher incomes pay.  They just don't earn enough to be able to pay the same percentage. 

Minimum wage would have to be raised quite a bit to enable these people to pay the same percentage or the percentage would have to be lowered by a large amount for everyone.

You can't take 50 % of a person's pay that barely make enough to survive.

So I don't understand your statement, it does not even seem possible let alone Fair.

 

ah, pantsonfire off on your usual tangent I see! the thread Nan posted sited 3, get it, THREE taxes , INCOME, PROPERTY, AND SALES...big letters so you do not have to squint!! and I really bet there are a lot of heads of households that are working for minimum wages worried about property taxes even with no state income tax....NOT

The only fair tax is one where everybody pays the same amount ... maybe $100/year and that is all the government can spend in a year.  Would solve everything. 

J828:

surveybob:

Fair tax is the same percentage for all. Progressive tax, like we have now, is not a fair tax. It taxes you more for higher income.

But, seemingly, even this is not good enough for socialists.

 

So which do you prefer? Doesn't seem right to overly tax the wealthy since they work hard for it. Not right to tax the poor since they don't have something. Higher taxes for the middle people? Better government spending?

 

That would be great Magoo, but I don't see it ever happening.    Although even just 100 dollars a year for some people is more than what they have, but for most people that would not be a problem.

I don't know if our infrastructure, defense, and just basics, let alone everything else could be maintained on that amount though. Somehow I don't think so.