Fixing Our Budget Deficits: A Plan for Action

December 01, 2009

As state and local governments slice and dice their budgets – making mincemeat of critical public services – it’s the poorest among us who bear the heaviest burden. That’s because working families and the unemployed depend on those services the most. Yet all kinds of public services (like libraries and social service agencies) are shrinking or being eliminated because of this economic and jobs crisis.

It doesn’t need to be that way. A new report, “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States” by the Institute on Taxation and Economic Policy, suggests that the wealthiest among us are not carrying their fair share of the tax burden.

The reason, as the report points out, is that sales and property taxes take a bigger bite from low- and middle-income families than they do from the wealthy. For the rich, income taxes are more significant. But in states with either no income tax or flat income tax rates (including Florida, Washington and Illinois), the disparity is great. And it’s just unfair.

“The harsh reality is that most states require their poor and middle-income taxpayers to pay the most taxes as a share of income,” says Matthew Gardner, lead author of the report.

That’s why lawmakers seeking solutions to their budget crises need to spread the tax burden equitably. Those with the highest incomes should pay their fair share. This report points the way.

Want to know more? Download a fact sheet for your state. If you want to know how to use the report in your own tax reform efforts, please contact AFSCME’s Research and Collective Bargaining Services Department: (202) 429-1215.