(The Center Square) – Florida has the most regressive tax system in the U.S. according to a new study by a Washington think tank.
“Low-income families pay almost five times as much as the wealthy,” says the study by the Institute on Taxation and Economic Policy.
After Florida, the next most regressive tax codes are in Washington, Tennessee, Pennsylvania, Nevada, South Dakota, Texas, Illinois, Arkansas and Louisiana, the study found.
It cites a “heavy reliance on sales and excise taxes” as the leading factor in states with the most regressive tax systems. Florida has no personal state income tax.
“States with the least regressive state and local tax systems derive, on average, more than 39% of their tax revenue from income taxes, above the national average of 29%,” the study says.
States with no income tax do not necessarily have low taxes overall, the study concludes.
“While this characterization holds true for high-income families, these states levy some of the nation’s highest tax rates on the poor,” it states. “This is indicative of a broader pattern. Nationally, we find evidence that states with lower taxes for their highest-income earners tend to have higher taxes for their lowest-income residents.”
States such as New Mexico and Massachusetts that have moved into the list of top 10 least regressive states have done so by passing higher taxes on the wealthy, according to the study.
“New Mexico advanced 18 spots through reforms to refundable credits and more robust taxation of top earners,” the study said. “Massachusetts improved its ranking by 10 spots in just over a year, primarily through voter approval of a higher income tax rate on millionaires.”
However, having no income tax also helps attract people to move to Florida, say supporterss of the state’s tax system.
“If the state were to implement an income tax, it’s possible it would actually lose tax revenues because it would no longer attract businesses, high income residents, and certain labor seekers who contribute to the state via the sales and property taxes,” wrote Logan Padgett of the James Madison Institute.
Florida’s per capita spending is among the nation’s lowest, Padgett added.
“This limited spending has helped the state maintain a budget that doesn’t require the extra revenues that would be gained from an income tax,” she wrote.
