Wealthy in Florida are among most undertaxed in nation

2015’s Most & Least Fair State Tax Systems

With taxes being top of mind for many American voters as political hopefuls sell their tax-reform ideas to the public, the personal finance website WalletHub released its annual report on the 2015’s Most & Least Fair State Tax Systems.

Tax systems vary dramatically across states and localities. Some states don’t have a sales tax; others don’t tax income. Many families face high property-tax burdens whereas others enjoy generous tax credits. Such diversity in taxation policies begs the question: Which tax systems are most fair?

To find the answer, WalletHub analyzed the 50 states based on the fairness of their state and local tax systems. We used the results of our nationally representative survey that assessed what Americans think a “fair” state and local tax system looks like. Our analysts then ranked the states based on how closely their actual tax systems matched public perception.

Other Key Findings

• The poor are most overtaxed in Washington, Hawaii and Illinois; the wealthiest 1 percent are most undertaxed in Wyoming, Nevada and Florida.
• The middle class is most overtaxed in Arkansas, New York and Mississippi.
• Most Americans think “fair” state and local tax systems impose higher taxes on higher-income households than on lower-income households.
• Conservatives and liberals generally agree on what a “fair” tax system looks like. However, conservatives are more supportive of slightly higher taxes on the poor and lower taxes on the wealthy.
• Current state and local tax systems are, on average, extremely unfair. While most Americans — liberals and conservatives — think a progressive tax system is most fair, virtually every state has regressive state and local tax structures.
• Both “blue” states and “red” states are found to overtax the poor and undertax the rich, relative to what most Americans consider “fair.”

For the full report and to see where your state ranks, please visit:
https://wallethub.com/edu/most-least-fair-tax-systems/6598/   

State and Local Taxes: What’s Fair?

What do Americans think is a fair amount to pay in state and local taxes? The chart below shows results from our national survey, asking respondents from different income levels how much they think is fair to pay. Answers ranged from a low of 2.5 percent tax for households earning $5,000 annually to a high of 16.36 percent tax for households making $2.5 million per year. There is a clear upward trend: respondents think state and local tax systems are fair when higher-income households pay a greater percentage of their income in taxes than lower-income households.

See where all the states rank, and find much more data at the full report, here.

Tags: Banking & Finance