Tax

A new study shows taxes don't fall equally in Michigan.



The report says Michigan's poor and middle-income families shelled out a bigger chunk of their incomes to pay state and local taxes than their wealthy counterparts.



The Institute on Taxation and Economic Policy is branding "Terrible Ten" for its tax system. The other nine are Alabama, Florida, Illinois, Nevada, Pennsylvania, South Dakota, Tennessee, Texas and Washington.



Institute executive Robert McIntyre says Michigan is one of only six states that have a flat-tax income tax and also has high sales and excise taxes. Michigan's income tax rate was 4.1 percent last year, on every income level.





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An Analysis of the Tax Systems in all 50 States



By an overwhelming margin, most states tax their middle- and low-income families far more heavily than the wealthy, according to a new study by the Institute on Taxation & Economic Policy.



Nationwide, middle-income families pay almost 10 percent of their earnings in state and local taxes and poor families pay more than 11 percent. But the richest people effectively pay only 5.2 percent of their income in state and local taxes.



Since 1989, state and local taxes have risen on low- and middle-income taxpayers, but have fallen on the very wealthiest.



Ten states — Washington, Florida, Tennessee, South Dakota, Texas, Illinois, Michigan, Pennsylvania, Nevada, and Alabama — are particularly regressive. These “Terrible Ten” states ask poor families — those in the bottom 20 percent of the income scale — to pay up to 5.5 times as great a share of their earnings in taxes as do the wealthy. Middle-income families in the “Terrible Ten” states pay up to 3.5 times as high a share of their income as the wealthiest families.



The least regressive states are Delaware, Montana, Vermont and California. These states have progressive personal income taxes and/or low reliance on sales and excise taxes.

Source: http://www.ctj.org/itep/whopays.htm