“Who Pays?” (PDF) from the Institute on Taxation and Economic Policy offers an interesting look at regressive state/local taxation:
Several points:
— Questions about whether things should be done at the state or federal level aren’t just about abstract constitutional views; state revenue sources are regressive.
— There is no reason that consumption tax revenue needs to be raised as a regressive retail sales tax. You can instead do a income tax with a progressive rate structure in which taxable income is defined as “income minus savings.”
— Property taxes are regressive, but much less regressive than sales taxes. Consequently, measures to cap property taxes are a kind of fake assistance to the middle class that actually helps the top 20 percent.
— Conservative intellectuals like to complain about the federal deduction for state and local taxes, but conservative politicians will never eliminate it since this is a form of tax break for rich people.
That’s all I’ve got.
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