A reality based independent journal of observation & analysis, serving the Flathead Valley & Montana since 2006. © James Conner.
Get rich. According to the 2015 Who Pays? report by the Institute for Taxation and Economic Policy, the top one percent in Montana pay 4.7 percent of family income in taxes, while the bottom 20 percent pay 6.1 percent. In no state do the top one percent pay more than the bottom 20 percent — all 50 states have regressive tax systems — but Montana has the fourth least regressive system. Washington, which has a crushing sales tax but no income tax, is the most regressive.
Here’s an ITEP graph of the breakdown for Montana:s
Neil Buchanan, who writes at Dorf on Law, notes:
The bottom line of the report is that state taxes are, indeed, “mostly regressive.” Indeed, if you take each state’s tax system as a whole, there is not a single state in the country that is running a progressive tax system. According to the study, this year the bottom 20% of income-earners nationwide will pay an average of 10.9% of their pretax incomes in state and local taxes, while the top 1% will pay 5.4% on average. As I noted in my 2010 Dorf on Law post, the combined impact of federal and state taxes adds up to a proportional system, in which the poorest and richest all pay the same rates of taxes. (That is bad enough, but there are further reasons beyond the scope of this post to believe that the measured tax rates for upper-income people are seriously overstated.)
Amazingly, not a single state has a progressive tax system. Delaware is the least regressive, with the bottom 20% paying 5.5% and the top 1% paying 4.8%. That is still regressive, of course. The most regressive state is Washington, where the tax rates are 16.8% for the bottom fifth, and 2.4% for the top 1% of earners. To Washington’s credit, the Democrats there are at least trying to make their state’s taxes less regressive, but the best way to do so is by adopting a state income tax, which voters there rejected in a ballot initiative a few years ago.
The next time Mitt Romney or another Republican complains that 47 percent of Americans are freeloaders who pay no federal income tax, remind him that at the state level, more of a poor family’s income goes to taxes than does the income of a wealthy family. In every state.
