Finance
Visualizing Unequal State Tax Burdens Across America
Visualizing Unequal State Tax Burdens Across America
What percentage of your income goes into Uncle Sam’s pocket?
Your answer will vary depending on how much you earn. Data shows that low and middle-income families pay a much greater share of their income towards state and local taxes than wealthy families.
Today’s visualization uses data from the Institute on Taxation and Economic Policy (ITEP) to map the effective tax rates—or taxes paid as a share of family income—across income groups at the state and local level.
Crunching the Numbers
The data reflects the effect of tax changes enacted through September 10, 2018, using 2015 income levels (the latest year for available, detailed income data). Both single and married tax filers are included, while elderly taxpayers, dependent filers, and those with negative incomes are excluded.
Taxes Included
The report includes the state and local taxes for all 50 states and the District of Columbia. Taxes are broken into 3 broad groups:
- Consumption taxes – general sales taxes and specialized excise taxes
- Property taxes – including taxes on homes, businesses, and motor vehicles
- Income taxes – paid by individuals and businesses
Federal taxes are not considered.
Editor’s note: It’s worth noting that federal personal income tax has progressive rates, with the lowest earning bracket at 10% and the highest earning bracket at 37% in 2019. At a national level, property taxes are not charged and there is a very low reliance on excise taxes—both of which tend to be regressive as outlined below.
Income Included
The report includes both taxable and tax-exempt income such as worker’s compensation benefits. It also includes estimates for the amount of unreported income.
Which States Have the Most Unequal Tax Burdens?
Across the U.S., there is a wide disparity in how taxes affect different income groups. Here’s how it all breaks down, ranked in order of tax system inequality*:
Total State and Local Taxes As a Share of Income
By State and Income Group
RANK | STATE | LOWEST 20% | MIDDLE 60% | TOP 1% |
---|---|---|---|---|
1 | Washington | 17.8% | 10.4% | 3.0% |
2 | Texas | 13.0% | 9.4% | 3.1% |
3 | Florida | 12.7% | 7.7% | 2.3% |
4 | South Dakota | 11.2% | 8.4% | 2.5% |
5 | Nevada | 10.2% | 7.1% | 1.9% |
6 | Tennessee | 10.5% | 8.1% | 2.8% |
7 | Pennsylvania | 13.8% | 10.8% | 6.0% |
8 | Illinois | 14.4% | 12.2% | 7.4% |
9 | Oklahoma | 13.2% | 10.3% | 6.2% |
10 | Wyoming | 9.6% | 6.9% | 2.6% |
11 | Arizona | 13.0% | 9.3% | 5.9% |
12 | Indiana | 12.8% | 10.4% | 6.8% |
13 | Ohio | 12.3% | 10.6% | 6.5% |
14 | Louisiana | 11.9% | 9.8% | 6.2% |
15 | Hawaii | 15.0% | 11.5% | 8.9% |
16 | New Hampshire | 9.1% | 7.1% | 3.0% |
17 | North Dakota | 10.3% | 7.7% | 4.5% |
18 | Alabama | 9.9% | 8.6% | 5.0% |
19 | New Mexico | 10.6% | 10.0% | 6.0% |
20 | Arkansas | 11.3% | 10.4% | 6.9% |
21 | Iowa | 12.4% | 10.5% | 7.7% |
22 | Michigan | 10.4% | 9.2% | 6.2% |
23 | Kansas | 11.4% | 10.4% | 7.4% |
24 | Mississippi | 10.2% | 9.8% | 6.7% |
25 | Kentucky | 9.5% | 10.5% | 6.7% |
26 | Alaska | 7.0% | 4.3% | 2.5% |
27 | Georgia | 10.7% | 9.5% | 7.0% |
28 | Missouri | 9.9% | 9.1% | 6.2% |
29 | Connecticut | 11.5% | 11.6% | 8.1% |
30 | Massachusetts | 10.0% | 9.3% | 6.5% |
31 | North Carolina | 9.5% | 9.1% | 6.4% |
32 | Rhode Island | 12.1% | 9.3% | 7.9% |
33 | Virginia | 9.8% | 9.3% | 7.0% |
34 | Wisconsin | 10.1% | 10.4% | 7.7% |
35 | Colorado | 8.7% | 8.6% | 6.5% |
36 | Nebraska | 11.1% | 10.2% | 8.7% |
37 | West Virginia | 9.4% | 8.8% | 7.4% |
38 | Idaho | 9.2% | 8.4% | 7.2% |
39 | South Carolina | 8.3% | 8.3% | 6.8% |
40 | Utah | 7.5% | 8.4% | 6.7% |
41 | Oregon | 10.1% | 8.8% | 8.1% |
42 | Maryland | 9.8% | 10.6% | 9.0% |
43 | Montana | 7.9% | 6.7% | 6.5% |
44 | New York | 11.4% | 12.5% | 11.3% |
45 | Maine | 8.7% | 9.3% | 8.6% |
46 | New Jersey | 8.7% | 10.2% | 9.8% |
47 | Minnesota | 8.7% | 9.8% | 10.1% |
48 | Delaware | 5.5% | 5.8% | 6.5% |
49 | Vermont | 8.7% | 9.4% | 10.4% |
50 | District of Columbia | 6.3% | 9.8% | 9.5% |
51 | California | 10.5% | 8.9% | 12.4% |
* The ITEP Tax Inequality Index measures the effects of each state’s tax structure on income inequality. In states that rank high for inequality, incomes are less equal after state and local taxes are applied than before. On the flip side, states with the most equality are those where incomes are at least somewhat more equal after state and local taxes are levied than before.
Washington has the most unequal tax burdens. Proportional to their income, Washington taxpayers in the bottom 20% pay almost 6x more than those in the top 1%.
At the other end of the scale, California has the most equal tax system. As a share of their income, the state’s poorest families pay only 0.84x what the wealthiest families pay.
Overall, however, the vast majority of tax systems are regressive.
On average, the lowest 20% of income earners pay 1.54x more of their income in taxes compared to the top 1%.
The Main Causes
Two main factors drive a tax system’s (lack of) equality: how the state designs each tax, and the state’s reliance on different tax sources.
To better explain how this works, let’s take a closer look at each type of tax.
Sales & Excise Taxes
These taxes apply only to spent income, and exempt saved income. Since families with a higher household income are able to save a much larger percentage of their income, and the poorest families can barely save at all, the tax is regressive by nature.
The particular types of items that are taxed affect fairness as well. Quite a few states include food in their sales tax base, and low-income families spend the majority of their income on groceries and other necessities.
Not only that, excise taxes are levied on a small subset of goods that typically have a practical per-person maximum. For example, one person can only use so much fuel. As a wealthy family’s income increases, they generally do not continue to increase their spending on these goods.
States rely on these taxes more than any other tax source, which only exacerbates the problem.
Property Taxes
For the average household, the home makes up the majority of their total wealth—meaning most of their wealth is taxed. However, the wealth composition of richer families skews much more heavily towards stock portfolios, business equity, and other assets, which are exempt from property taxes.
While these types of assets are subject to taxes like capital gains and dividends, the distinction is that these taxes are levied only on earned gains. In contrast, property taxes are owed simply as a result of owning the asset.
What about those who don’t own homes? Landlords generally pass on the cost of property tax to renters in the form of higher rent. Since rent comprises a much higher share of expenses for poorer families, this makes property tax even more inequitable.
Income Taxes
State income taxes are typically progressive. This means effective tax rates go up as income goes up. Here’s how the U.S. averages break down:
- Low-income families: 0.04%
- Middle-income families: 2.1%
- Top 1%: 4.6%
However, certain policy choices can turn this on its head. Some states have a flat rate for all income levels, a lack of deductions and credits for low-income taxpayers, or tax loopholes that can be beneficial for wealthier income groups.
Nine states charge no income tax at all, garnering reputations as “low tax” states—but this is true only for high-income families. In order to make up for the lost revenue, states rely more heavily on tax sources that disproportionately affect the lowest earners.
Evidently, states with personal income taxes have more equitable effective tax burdens.
Tackling Systemic Issues
Regressive state tax systems negatively impact the after-tax income of low and middle-income families. This means they have less to spend on daily expenses, or to save for the future.
Not only that, because wealthier families aren’t contributing a proportional share of tax dollars, state revenues grow more slowly.
For states looking to create a more equitable tax system, states with progressive systems offer some guidance:
- Graduated income tax rates
- Additional tax over a high-income threshold (e.g $1 million)
- Limits on tax breaks for upper-income taxpayers
- Targeted low-income tax credits
- Lower reliance on regressive consumption taxes
By implementing such policies, governments may see more tax equality—and more tax dollars for programs and services.
Hat tip to reddit user prikhodkop, whose visualization introduced us to this data.
China
De-Dollarization: Countries Seeking Alternatives to the U.S. Dollar
The U.S. dollar is the dominant currency in the global financial system, but some countries are following the trend of de-dollarization.

De-Dollarization: Countries Seeking Alternatives to U.S. Dollar
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The U.S. dollar has dominated global trade and capital flows over many decades.
However, many nations are looking for alternatives to the greenback to reduce their dependence on the United States.
This graphic catalogs the rise of the U.S. dollar as the dominant international reserve currency, and the recent efforts by various nations to de-dollarize and reduce their dependence on the U.S. financial system.
The Dollar Dominance
The United States became, almost overnight, the leading financial power after World War I. The country entered the war only in 1917 and emerged far stronger than its European counterparts.
As a result, the dollar began to displace the pound sterling as the international reserve currency and the U.S. also became a significant recipient of wartime gold inflows.
The dollar then gained a greater role in 1944, when 44 countries signed the Bretton Woods Agreement, creating a collective international currency exchange regime pegged to the U.S. dollar which was, in turn, pegged to the price of gold.
By the late 1960s, European and Japanese exports became more competitive with U.S. exports. There was a large supply of dollars around the world, making it difficult to back dollars with gold. President Nixon ceased the direct convertibility of U.S. dollars to gold in 1971. This ended both the gold standard and the limit on the amount of currency that could be printed.
Although it has remained the international reserve currency, the U.S. dollar has increasingly lost its purchasing power since then.
Russia and China’s Steps Towards De-Dollarization
Concerned about America’s dominance over the global financial system and the country’s ability to ‘weaponize’ it, other nations have been testing alternatives to reduce the dollar’s hegemony.
As the United States and other Western nations imposed economic sanctions against Russia in response to its invasion of Ukraine, Moscow and the Chinese government have been teaming up to reduce reliance on the dollar and to establish cooperation between their financial systems.
Since the invasion in 2022, the ruble-yuan trade has increased eighty-fold. Russia and Iran are also working together to launch a cryptocurrency backed by gold, according to Russian news agency Vedmosti.
In addition, central banks (especially Russia’s and China’s) have bought gold at the fastest pace since 1967 as countries move to diversify their reserves away from the dollar.
How Other Countries are Reducing Dollar Dependence
De-dollarization it’s a theme in other parts of the world:
- In recent months, Brazil and Argentina have discussed the creation of a common currency for the two largest economies in South America.
- In a conference in Singapore in January, multiple former Southeast Asian officials spoke about de-dollarization efforts underway.
- The UAE and India are in talks to use rupees to trade non-oil commodities in a shift away from the dollar, according to Reuters.
- For the first time in 48 years, Saudi Arabia said that the oil-rich nation is open to trading in currencies besides the U.S. dollar.
Despite these movements, few expect to see the end of the dollar’s global sovereign status anytime soon. Currently, central banks still hold about 60% of their foreign exchange reserves in dollars.
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