Tax burdens across America

The taxes you pay and your social standing, change depending on the state you live in.

Data shows that middle and lower classes pay more taxes than upper classes around the U.S. Thanks to the information collected by the Institute on Taxation and Economic Policy (ITEP) (2018), Jenna Ross (2020) was able to compare the comparison between social classes and states at the time of paying taxes, for The Visual Capitalist.

The state of Washington has the greatest inequality gap between social classes: The lower class, which comprises 20% of the population, pays 6 times more taxes than the top 1% of wealthy families. This last is polarized by California, where they have the most equitable tax system; poor families pay 0.48 times more taxes paid by the rich. Overall, the system is still very regressive, as on average the poorest 20% pay 1.54 times more in taxes than the top 1%. 

Main Causes

There are two main reasons why this lack of equality exists; 1.How the state designs each tax, and 2.The state’s reliance on different tax sources. It’s better to see how each tax works. 

The Sales & Excise Taxes applies only to spent income, and exempt saved income. Families with higher household income are able to save more than families with lower income (who are practically unable to save). Some states include food as a sales tax base, and in some low-income families, their biggest expense goes to food and groceries.

On Property Taxes, for the average household their home means most of their wealth. Therefore most of their wealth is taxed. But for wealthier households, there are stock portfolios, business equity, and other assets, which are exempt from property taxes. So: what happens with people who do not own a home? The landlord most likely collects the rent along with the taxes he must pay on the property. Since income comprises a much larger share of the expenses for poorer families, this makes the property tax even more biased and discriminatory. 

The system

This system affects the middle class but affects, even more, the poorer classes. They don’t have a lot of means to be able to save for the future. And adding on to that injustice the upper class does not pay equitable taxes on their income, so, therefore, the states do not grow at a faster pace which means there is a lack of opportunities for the lower classes.

The  change & solution

By implementing these points, states can create a much more equitable system for all classes.

  • Graduated income tax rates
  • Additional tax over a high-income threshold (e.g $1 million)
  • Limits on tax breaks for upper-income taxpayers
  • Targeted low-income tax credits
  • Lower reliance on regressive consumption taxes

Ross, J. (2020). Visualizing Unequal State Tax Burdens Across America. Retrieved February 2020, from

Weihe, M., Grundman, D., Christensen Gee, L., Gardner, M., Davis, C., & Davis, A. (2018). Who pays?: A distributional analysis of the tax systems in all 50 states (6th ed.). Washington D.C., D.C.: Institute on Taxation & Economic Policy.

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