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Chart from report on state tax equality
Illinois is like every other state in that it taxes
low- and middle-income people at a higher rate than it does the rich.
In addition to demonstrating just how out of touch and disdainful of economically struggling Americans Mitt Romney is, the "47 percent" videotape has spurred some good discussions of the taxes that most of that maligned group pays.

The attack-concept behind what Romney thought were secret comments is that half the population is lazily dependent on government handouts provided by the other half because the damned liberals have forced open the wallets of those who-work-hard-for-a-living.

The-layabouts-don't-even-pay-taxes is the always implicit and frequently explicit focus of the attack that Romney didn't invent but was happy to give voice to before an audience of wealthy donors. They paid the equivalent of one household's median annual income for a chance to see and hear the candidate up close behind closed doors. His  point of view has one major flaw: It does not intersect with reality.  

In fact, a new report from the Institute for Taxation and Economic Policy highlighted by Pat Garafalo concludes that every state levies higher tax rates on low- and middle-income households than on the richest one percent:

The tax systems of virtually every state are pushing poor families deeper into poverty.  [...]

The fact 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. This “tax the poor” strategy is problematic because hiking taxes on low-income families pushes them further into poverty and increases the likelihood that they will need to rely on safety net programs. From a state budgeting perspective, this “soak the poor” strategy also doesn’t yield much revenue compared to modest taxes on the rich. It’s no wonder that so many states with regressive tax structures are facing long-term structural budget deficits. They‘re continually imposing higher taxes on people without much money.

Only the District of Columbia taxes the top one percent more than the lowest 20 percent.
Some of the worst offenders are Florida, where the top 1 percent pays a 2.1 percent tax rate while the bottom 20 percent of households pay 13.5 percent; Illinois, 4.1 percent and 13 percent, respectively; Nevada, 1.6 percent and 8.9 percent, respectively; Texas, 3 percent and 12.2 percent, respectively; and South Dakota, 1.9 percent and 11 percent, respectively. Washington state though, is the worst, where the richest 1 percent pay a 2.6 percent tax rate while the poorest 20 percent pay a whopping 17 percent in taxes.
As the authors of the ITEP report point out, state tax systems can fight poverty with the proper tools. Some states provide one or more of four cost-effective low-income tax credits ITEP finds valuable in fulfilling this objective. They are the Earned Income Tax Credit, property tax circuit breakers, targeted low-income tax credits and child-related tax credits. But even where all of these options are on the books, the rich still pay lower state and local tax rates than those for whom every dollar counts.

This structural unfairness has been a major contributing factor to the lowered revenues that have given right-wingers a twisted justification for eliminating public-sector jobs they label as unaffordable in budgets pinched by recession.

The solution is simple enough: more progressive tax systems at the local and state level. But those have been vigorously resisted, just as right-wingers have worked hard to reduce the progressivity of federal income taxes over the past 30-plus years.

Originally posted to Meteor Blades on Fri Sep 21, 2012 at 09:34 AM PDT.

Also republished by Daily Kos Economics.

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