The Surprising Truth About Who Really Shoulders the Tax Burden

by M G · 2010-04-19 13:49:00 UTC
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I'm pretty sure this myth of poor people as non-taypaying freeloaders has been pretty well debunked on this site, but a new study on the subject was too important not to write about. The report, from the nonpartisan California Budget Project, found that the state's lowest-income residents pay the highest percentage of their income in state taxes.

Let that sink in for a second. All this griping about the unfair tax burden on the rich, while (at least in California, though I strongly suspect many other states have created the exact same situation) it's the poor who shoulder a disproportionate share of the state's financial load. And truthfully, it's not even close: the wealthiest one percent of Californians paid 7.8 percent of their income (which averaged $2.2 million) in taxes in 2008. The poorest families paid 11.1 percent of their income (average $13,000). My fellow blogger Charlotte Hill wrote last week that studies show poor Americans pay about the same percentage of their income in federal income tax as wealthier ones do, so it's not as if some dramatic disparity there is off-setting the discrepancy on the state level.

The study cites several major reasons for poor Californians' disproportionate tax burden. For one, the state government cut the dependent tax credit last year. That means that thousands of families who were considered too poor to pay taxes a year earlier suddenly were required to file. The report's authors found that a two-parent, two-child family began to pay state income taxes when their income reached $51,335 in 2008; a year later, they only had to make $36,325 before they were told to pay up.

As if the evidence wasn't conclusive enough that poor people are hardly freeloading, there's another juicy little nugget in the study: more than 2,000 people with incomes over $200,000 got off without paying any income taxes in 2007, a number that has more than tripled in the last 10 years.  So before rich politicians blame poor people for mooching off the government, they'd be wise to remember that the people most likely to need government services are also paying a higher percentage of their income to fund them.

Photo credit: alancleaver_2000

M G was most recently a staff reporter for The Washington Post, covering philanthropy and nonprofits, education and the war in Iraq.
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