State Taxes and Poverty

More Regressive State Taxes Mean More Poverty

Discussion:

Perhaps surprisingly, every state's tax system is regressive. Even in the least regressive state (Delaware), the people in the bottom 20% pay more of their income to taxes than the people in the top 1% do (5.5% vs. 4.8% for Delaware). In the most regressive state (Washington state), people in the bottom 20% pay 16.8% of their income to state taxes while people in the top 1% pay only 2.4%.

Unsurprisingly, the states with more regressive tax systems tend to have more of their population stuck in poverty. It is important to note that the correlation is not overwhelming. There are some states with very few people in poverty and some states with many people living in poverty in each of the brackets. However, the pattern made by the averages is clear- the states with the most regressive tax systems have, on average, 1.5% more of their population stuck in poverty than the states with the least regressive tax systems.

The reason that regressive taxation correlates with poverty is obvious- the more money the poor have to spend on taxes, the less money they have to invest in things like education, transportation, computers, child rearing, and so forth to get themselves or their children out of poverty. Furthermore, the less the rich pitch in to keep the foundations of their states strong, the less opportunities there are for the poor to lift themselves out of poverty.

It is also important to note that liberal politics do not always materialize as less regressive taxation, nor do conservative politics always seem to lead to more regressive taxes. Both the most regressive state and the least regressive state are blue and each party has states among both the five most regressive and the five least regressive states.

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More Regressive State Taxes Mean More Poverty

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