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February 03, 2012 5:01 PM Regressively Worse

By Ed Kilgore

The mistake made most often in discussion of tax burdens for this or that segment of the population is to focus on federal income taxes and ignore payroll taxes. Probably the second most frequent mistake is to focus on federal taxes and ignore state and local taxes.

As Kevin Drum notes today, the data on state tax burdens, as illustrated by a new report from the Corporation for Enterprise Development, shows a sea of regressivity, particularly in states that rely disproportionately on consumption taxes and property taxes that are levied at flat rates on assets that are disproportionately limited for those at or near the bottom of the income scale. I’m not sure the rankings Kevin cites are truly definitive, in that they may not reflect targeted tax credits, sales tax exemptions, or other offsets aimed at cushioning the burden. But the overall picture is a grim confirmation of the fact that the limited progressivity of federal taxes must be weighed against the unwillingness or inability of most of the states to follow suit.

This is a useful reminder at a time when conservatives are so hell bent on making federal taxes considerably more regressive to liberate those poor, overtaxed job creators to whom the rest of us entirely owe our daily bread. Proposals to make federal income taxes “flatter” will simply make overall levels of taxation regressively worse.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • Howard on February 03, 2012 5:10 PM:

    Fundamentally, when you look at the total federal, state, and local tax burden, we already have a flat tax system.

  • Peter C on February 03, 2012 5:37 PM:

    The regressivitiy of the state taxes is another reason that the 'state's rights' tenet is so strong in Conservative thought. When the states do it, they take the burden off the 1%.

  • DAY on February 03, 2012 5:39 PM:

    Unlike the Federal Government, the states are not allowed to print money to pay for services- cops, roads, hospitals, etc.
    In the early days of this nation they could- and did.

    Like the Python's Norweigan Blue, I am pining for the days of Ben Franklin, here in the COMMONWEALTH of Penns Woods. . .

  • N. Bates on February 03, 2012 7:58 PM:

    Actually, the mistake made most often (and least recognized as a mistake) is to pretend that payroll taxes aren't "federal taxes." Yes, they are: a defined deduction by the federal government from one's income. I know, because of custom and intellectual laziness, that it is widely and lazily accepted that "federal income taxes" are just the percentage withheld that does not include FICA etc, but FICA etc fit the *actual definition* of federal + tax aside from any mere usage conventions - and operationally, they are "federal taxes."

  • golack on February 03, 2012 10:28 PM:

    Yeah, and when the POG's want to compare taxes, they only include Federal income taxes--and like to throw in "retirement benefits" to the mix on the income side to get the federal tax rate. Apparently that way those stock options and investment revenue don't count.

    And reporters parrot those numbers...

    Since payroll taxes don't count, remove all limits on them..