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Big Tax Bills for the Poor, Tiny Ones for the Rich

By       Message David Sirota     Permalink
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Reprinted from In These Times

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American politics are dominated by those with money. As such, America's tax debate is dominated by voices that insist the rich are unduly persecuted by high taxes and that low-income folks are living the high life. Indeed, a new survey by the Pew Research Center recently found that the most financially secure Americans believe "poor people today have it easy."

The rich are certainly entitled to their own opinions -- but, as the old saying goes, nobody is entitled to their own facts. With that in mind, here's a set of tax facts that's worth considering: Middle-and low-income Americans are facing far higher state and local tax rates than the wealthy. In all, a comprehensive analysis by the nonpartisan Institute on Taxation and Economic Policy (ITEP) finds that the poorest 20 percent of households pay on average more than twice the effective state and local tax rate (10.9 percent) as the richest 1 percent of taxpayers (5.4 percent).

ITEP researchers say the incongruity derives from state and local governments' reliance on sales, excise and property taxes rather than on more progressively structured income taxes that increase rates on higher earnings. They argue that the tax disconnect is helping create the largest wealth gap between the rich and middle class in American history.

"In recent years, multiple studies have revealed the growing chasm between the wealthy and everyone else," Matt Gardner, executive director of ITEP, said. "Upside-down state tax systems didn't cause the growing income divide, but they certainly exacerbate the problem. State policymakers shouldn't wring their hands or ignore the problem. They should thoroughly explore and enact tax reform policies that will make their tax systems fairer."

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David Sirota is a full-time political journalist, best-selling author and nationally syndicated newspaper columnist living in Denver, Colorado. He blogs for Working Assets and the Denver Post's PoliticsWest website. He is a Senior Editor at In These Times magazine, which in 2006 received the Utne Independent Press Award for political coverage. His 2006 book, Hostile Takeover, was a New York Times bestseller, and is now out in paperback. He has been a guest on, among others, CNN, MSNBC, CNBC and NPR. His writing, which draws on his (more...)

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