In a latest report, the non-public finance web site WalletHub detailed the proportion of earnings excessive, medium and low American earners spend on earnings tax, property taxes and gross sales and excise taxes.
WalletHub got here up with estimates of the state-specific tax burden on residents at three earnings ranges — excessive ($150,000), medium ($50,000) and low ($25,000) — in every of the 50 U.S. states and the District of Columbia. Researchers used information from the Institute on Taxation and Financial Coverage’s 2024 report, which revealed tax burden estimates at seven factors within the state-specific earnings distribution.
In an effort to evaluate tax burdens for households on the similar earnings degree throughout the U.S., they match a regression mannequin to estimate the connection between earnings and tax burden for every state and the District of Columbia. They used log transformations to enhance mannequin match and deployed this mannequin to generate predicted tax burdens on the earnings ranges they examined.
The evaluation confirmed that in most states, low- and middle-income households pay a much bigger share of earnings than rich households do. Partially, it’s because many states lack a graduated private earnings tax and depend on consumption taxes.
In 10 of the states with essentially the most favorable tax burden for top earners, their much less prosperous counterparts shell out extra of their earnings on taxes.
See the gallery for the 12 states through which excessive earners pay the smallest proportion of their earnings on taxes, in keeping with WalletHub.