The state that easily handed President Obama a victory last November while passing voter-approved referendums legalizing same-sex marriage and marijuana consumption also happens to have the nation’s highest tax burden on the poor.
Poor families in Washington state pay 16.9 percent of their total income in state and local taxes, more than any other state in the nation, according to a new report from the nonprofit Institute on Taxation and Economic Policy, which advocates for progressive tax policies.
Washington takes the top spot by a sizable lead. For the poor in Illinois, 13.8 percent of their income goes to paying state and local taxes. In Florida, those taxes eat up 13.3 percent of the income of the poor. The share in Hawaii is 13 percent, followed by Arizona at 12.9 percent.
Tax policy can do a lot of things—spur good economic activity and discourage the bad—but ITEP argues it can also be used to fight poverty.
“Any time when one in six americans are living in poverty it’s important to ask what our public policies can do to make that better,” says ITEP Executive Director Matt Gardner. “It’s important to remember that state tax codes can play a role in mitigating poverty as well.”
New Census data released on Thursday showed that while poverty rates showed no change in 43 states last year, they remained high. Even in the best-performing states, such as New Hampshire, Alaska and Maryland, a tenth of the population still lives in poverty. The rate was highest in Mississippi, where nearly a fourth of the state—24 percent—were living in poverty last year.
ITEP argues that states can implement and expand four simple, effective tax strategies to ease the tax burden on states’ poorest residents. Some 26 states have enacted a state Earned Income Tax Credit based on the federal version, which ITEP encourages states to expand or consider implementing. Eighteen states have “true” property tax “circuit breakers,” which are designed to offset the burden of property taxes that are high relative to income. Other targeted low-income credits and child-related credits would also reduce the burden on the poor, ITEP argues.
“There has been a groundswell of poorly thought-out proposals to hike taxes on poor people at the state level,” Gardner said. “The good news is that a lot of states have zeroed in on these [good proposals].”
While ITEP criticized states across the board for increasing the tax burden on the poor over time, the report cites three states that have done relatively well. Vermont, for example, is home to one of the least regressive tax systems in the nation, ITEP finds. Delaware’s system isn’t very progressive, but its reliance on income taxes and low use of consumption taxes created a system that’s “only slightly regressive overall.” And New York and the District of Columbia have “close-to-flat” tax systems.