New data show Missouri has the 35th most regressive state and local tax system in the country.
The Institute on Taxation and Economic Policy found that the bottom 20% of earners pay three times more in taxes than the top 1%.
Carl Davis, Research Director for the Institute on Taxation and Economic Policy, said the state’s reliance on property taxes to fund government means some families are paying more to keep a roof over their heads.
“It can make it more difficult to put food on the table, to keep the lights on, all these basic expenses,” Davis explained. “It really can create financial stress in the household.”
Davis pointed out that for those making less than $35,000 a year, nearly 9% of their income goes to state and local taxes, while those earning more than $700,000 pay less than 3%.
Nationwide polls show Americans believe those who make more should pay more, including support for the Billionaire Minimum Income Tax, which would require the wealthiest households to pay a minimum tax of 20% on all their income. Reports show some skirt income taxes altogether.
Davis argued states’ regressive tax systems are driving a wedge between the ‘haves’ and ‘have-nots.’
“They reserve their lowest tax rates for people who already have the most,” Davis stressed. “The result is even more inequality than where we started.”
Davis noted that tax systems are a policy choice and it is up to the public and their elected officials to decide whether to continue the status quo. He added that Missouri could look to states like Vermont and Maine, which not only offer refundable tax credits but also reserve their lowest overall tax rates for low-income families. Critics of such plans contend they are a form of wealth redistribution and punish the wealthy.
