First to the exhaustive state-by-state study Who Pays? by the Institute on Taxation & Economic Policy
Key piece in intro:
Economists have widely discredited trickle-down economic theories espoused for more than three decades, but that hasn’t stopped new generations of supply-side theorists from repackaging those philosophies and pushing for lower state tax rates for wealthy individuals, businesses and corporations. In fact, recent years have brought tax proposals and changes in multiple states that would overwhelmingly benefit the highest income households under the guise of stimulating economic growth. This report doesn’t seek to rebut ideological claims; rather it is an in-depth analysis of all taxes that all people pay at the state and local level.
This study assesses the fairness of each state’s tax system by measuring state and local taxes paid by non-elderly taxpayers in different income groups in 2015 as shares of income for every state and the District of Columbia. The report provides valuable comparisons among the states, showing which states have done the best — and the worst — job of providing a modicum of fairness in their overall tax systems. The Tax Inequality Index (Appendix B) measures the effects of each state’s tax system on income inequality and is used to rank the states from the most regressive to the least regressive.
The bottom line is that every state fails the basic test of tax fairnessThe District of Columbia is the only tax system that requires its best-off citizens to pay as much of their incomes in state and local taxes as the very poorest taxpayers, but middle-income taxpayers in DC pay far more than the top one percent. In other words, every single state and local tax system is regressive and even the states that do better than others have much room for improvement[emphasis added]
So, that is the top-line message. And, along with the war against wages in the workplace (principally, the attacks against unions), this is THE TOOL used to prosecute broad class warfare: whatever services are left in society after the political establishment slashes and burns our basic social network (often in the name of the stupid obsession over "deficit reduction") are paid for disproportionately by the very workers getting hammered in their pocketbooks at work.
Take an ugly bow:
Ten states —Washington, Florida, Texas, South Dakota, Illinois, Pennsylvania, Tennessee, Arizona, Kansas, and Indiana— are particularly regressive. These “Terrible Ten” states tax their poorest residents— those in the bottom 20 percent of the income scale — at rates up to seven times higher than the wealthy. Middle-income families in these states pay a rate up to three times higher as a share of their income as the wealthiest families.
It is worth noting that a majority of the states have been largely run by Republicans governors and/or barely Democratic governors and/or legislatures run by Republicans. And, so, one can assume that, as the statehouse picture has gotten even darker in the wake of the last election, that more states will vie for a place among the "Terrible Ten".
What makes a state so terrible?:
• Four of the ten states do not levy a personal income tax — Florida, South Dakota, Texas, and Washington. An additional state, Tennessee, only applies its personal income tax to interest and dividend income.
•Five states do levy personal income taxes, but have structured them in a way that makes them much less progressive than in other states. Pennsylvania , Illinois and Indiana use a flat rate which taxes the income of the wealthiest family at the same marginal rate as the poorest wage earner. Arizona has a graduated rate structure, however there is little difference between the bottom marginal rate and top marginal rate. Kansas’ graduated rate structure only has two brackets, applying the top rate starting at $30,000 for married
• Six of the ten most regressive tax systems — those of Washington, South Dakota, Tennessee, Texas, Arizona and Florida — rely very heavily on regressive sales and excise taxes. These states derive roughly half to two-thirds of their tax revenue from these taxes, compared to the national average of 34 percent in fiscal year 2011-2012.
Bernie Sanders, take a proud bow for your state:
Vermont’s tax system is among the least regressive in the nation because it has a highly progressive income tax and low sales and excise taxes. Vermont’s tax system is also made less unfair by the size of the state’s refundable Earned Income Tax Credit (EITC) — 32 percent of the federal credit.
Why is this bad economically?:
The vast majority of states allow their very best-off residents to pay much lower effective tax rates than their middle- and low-income families must pay — so when the richest taxpayers grow even richer, these exploding incomes hardly make a ripple in state tax collections. And when the same states see incomes stagnate or even decline at the bottom of the income distribution it has a palpable, devastating effect on state revenue. A recent Standard & Poor’s report found that the more income growth goes to the wealthy and
incomes stagnate or decline at the bottom, the slower a state’s revenue grows, especially if the state relies more heavily on taxes that disproportionately fall on low- and middle-income households. Hitching your state’s funding of investments to those with a shrinking share income is not a path to a sustainable, growing revenue stream.
Moreover, shrinking revenues and overreliance on regressive taxes prevent states from investing in the priorities that will bolster the prospects of low- and middle-income residents: education, workforce development, infrastructure improvements, and adequate healthcare. State tax structures that rely on trickle-down theories of economic growth, balance budgets on the backs of working families rather than asking the wealthy to do more, and fail to improve the wellbeing of the majority of that state’s residents will fail to be competitive in the long run. Shortsighted tax cuts can be a long-term drag on development. [emphasis added]
The above two paragraphs seem obvious to the rationale person. It is a measure of ideological blindness that such an obvious economic point is ignored, willfully, and, thus, it means all this rhetoric about competitiveness is, well, rhetoric.
It's worth reading the rest. Here's a pretty cool feature: you can go here and check out your own state.
I also got a great report from the Fiscal Policy Institute Report just on New York. I'll just highlight, for the sake of brevity, just two pieces.
On New York's income tax burden on regular people:
Looked at another way, the top one percent in the city—tax filers with incomes over
$600,000—received 35 percent of all income in 2011 but paid only 27 percent of local taxes. The first four income quintiles—the “bottom 80 percent” with incomes under $71,000—paid a greater share of city taxes than their share of income. This disparity reflects the regressivity of sales and property taxes and the fact that rental properties
(lower-income households are much more likely to rent) bear a much higher effective property tax than do owner-occupied housing.
The biggest contribution to the national argument come swhen FPI blows up--again--the canard that higher taxes on business and the wealthy drive away jobs and rich people. Nonsense:
In his recent review of the literature on the relationship of state and local taxes to interstate migration, state tax policy expert Michael Mazerov noted:
The vast majority of academic research using sophisticated statistical techniques concludes that differences in state tax systems and levels do not have a significant impact on interstate migration. Seven economists (or groups of economists) have published studies on state taxes and migration in peer review economics journals since 2000. Six of the seven studies concluded that taxes do not drive interstate moves. Eight additional studies... that were not published in academic journals have been released in the same period; six of the eight found either that state income taxes had no effect on migration or that the effect was small and inconsistent.
Based on his extensive review of the latest literature and his own analysis of IRS data on
interstate migration, Mazerov concluded:
Differences in tax levels among states have little to no effect on whether and where people move, contrary to claims by some conservative economists and elected officials. For decades, Americans have been moving away from the Northeast, the industrial Midwest, and the Great Plains to most of the southern and southwestern states regardless of overall tax levels or the presence of anincome tax in any of these states. They’ve moved in large part for employment opportunities in the Sunbelt states and, secondarily, for less expensive housing, and, for many retirees, a warmer, snow free climate.
[emphasis added]

The above saying is not correctly attributable to Marx but it hits the right note.

  • Often attributed to Lenin or Stalin, less often to Marx. According to the book, "They Never Said It", p. 64, the phrase derives from a rumour that Lenin said this to one of his close associates, Grigori Zinoviev, not long after a meeting of the Politburo in the early 1920s, but there is no evidence that he ever did. Experts on the Soviet Union reject the rope quote as spurious.