For most, the federal income tax probably does not rank as a great achievement of the 20th century. But it is efficient and mostly fair, thanks to its progressive rates. Few realize, however, that state and local taxes are so strongly regressive that they cancel out much of the progressivity of the federal tax.
This conclusion comes from the Institute for Taxation and Economic Policy, a Washington, D.C.¿based research group. It conducted a state-by-state analysis of the tax burden on families headed by those younger than 65 years of age--namely, their total tax as a percentage of their income. (Elderly families were excluded because state tax systems often treat them differently.) It found that those in the lowest 20 percent income bracket paid at a rate 2.2 times that of the top 1 percent, whereas the middle 20 percent paid at a rate 1.8 greater.
This article was originally published with the title Undercutting Fairness.