Policy Documents

Comments on Who Pays? A Distributional Analysis of the Tax Systems in All 50 States

Elizabeth Malm –
February 20, 2013

The Institute on Taxation and Economic Policy (ITEP) released a report last month titled Who Pays? A Distributional Analysis of the Tax Systems in All 50 States. The study attempts to examine the overall level of regressivity of the tax systems of the fifty states and Washington, D.C. and presents state and local effective tax rates (total state and local taxes paid as a percentage of income) for each state’s five income quintiles. The report finds that nearly all states have regressive state and local tax systems.

The report also surveys the features of each state and local tax system, characterizing each feature as either regressive or progressive. Some of the tax system characteristics that ITEP regards as regressive are narrow income tax brackets, lack of a state income tax, and high reliance on sales and excise taxes. Progressive characteristics include little reliance on consumption taxes and graduated income tax rate structures.

Here we present three issues with ITEP’s conclusions and policy recommendations, in addition to their methods of presentation.