A new study called “Who Pays?” says that wealthy Kansans pay less than half the tax rate that the poorest in the state pay.
The study, released by the Institute on Taxation and Economic Policy, says the overall tax rates by income group are 10.3 percent for the bottom 20 percent in Kansas, 8.9 percent for the middle 20 percent, and 3.9 percent for the top 1 percent.
The national rates are 11.1 percent for the bottom 20 percent, 9.4 percent for the middle 20 percent, and 5.6 percent for the top 1 percent. The report is online at www.whopays.org.
The 10 states whose tax systems are tilted most heavily toward high earners are Washington, Florida, South Dakota, Illinois, Texas, Tennessee, Arizona, Pennsylvania, Indiana, Alabama. Kansas falls not far behind those states with the most regressive tax systems.
Kansas reduced income tax rates in 2012, making the overall system became more regressive, with low- and middle-income families absorbing the bulk of the shifting tax burden.
“Many wealthy people who benefit from these tax breaks won’t put that money back into the economies of Kansas communities,” said Annie McKay, executive director of the Kansas Center for Economic Growth. “The resulting loss in revenues will make it impossible to maintain our education system, our roads and bridges or our quality of life – that hurts our chances to attract and grow businesses.”
The income tax in particular is being targeted for elimination by self-described tax reformers across the country, including in Kansas, and Who Pays? shows that of the 10 most regressive states, four do not have any taxes on personal income, one state applies it only to interest and dividends and the other five have a personal income tax that is flat or virtually flat across all income groups.
The data in Who Pays? also demonstrates that states commended as “low tax” are often high tax states for low- and middle- income families.
The fourth edition of Who Pays? measures the state and local taxes paid by different income groups in 2013 (at 2010 income levels, including the effect of tax changes enacted through Jan. 2, 2013) as shares of income for every state and the District of Columbia. The report is available online at www.whopays.org.