The Institute on Taxation and Economic Policy released a report that ranks Wyoming in the top 10 states with the most regressive tax policies.
According to ITEP, a state has a regressive tax structure when lower-income populations pay a greater percentage of their income in taxes than residents in wealthier income brackets.
In the report, “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States,” Wyoming came in at number 10 in the list behind states like Washington, Texas, South Dakota, and Nevada.
Nate Martin, director of Better Wyoming, a progressive non-profit, said in a statement on the report that the “ultra-rich” were paying a fraction of the tax rates the rest of us do.
“It’s surprising to me that this isn’t more upsetting to people here, but it’s probably just because they don’t realize that this huge gap exists,” Martin said.
Every state without a personal income tax, except Alaska, were in the top 10. This is due to the report’s methodology, which penalizes flat tax rates.
Since people who make less money spend a higher portion of their income on sales tax, they are technically paying a higher percentage on taxes. Wealthier people invest and save more of their money, and regular purchases are a smaller portion of their total income, so the total amount of their income paid to taxes is less.
For this reason, states like California, the District of Columbia, and New York have the most equitable tax rates, according to the report.
A household making $580,600 or more will pay about 0.6 percent in sales and excise taxes in Wyoming. Those households in the bottom 20 percent, which have an income less than $26,100, will pay 6.7 percent.
Property taxes differences between incomes were fare more equitable. The top 1 percent of families in terms of income pay about 1.9 percent of the total household income on property taxes, whereas a family making $26,100 will pay 2.9 percent.
In total, the top 1-percent households will spend about 2.6 percent on all state and local taxes. Compare that to 9.6 percent for a household income in the bottom 20 percent.
The report did not say that Wyoming’s tax policy has the progressive feature of excluding groceries from sales taxes. But it considers a lack of personal income or corporate tax to be regressive, as well as the lack of a levy on estates and inheritances.
Accusations that the wealthy are not paying their “fair share” of taxes has moved to the forefront of American economic discourse.
Using 2013 figures from the Congressional Budget Office, economics professor Mark Perry determined on a federal level, the lowest household income quintile received $8,800 in transfer payments, which is benefits from federal, state and local governments including Social Security, Medicare, Medicaid, unemployment insurance, and food programs.
Excluding these transfers, the same group received about 34.6 percent of their income in benefits after paying their federal taxes. In other words, they had a negative 34.6 percent tax rate.
The highest household income quintile paid 21.8 percent of its income in taxes, which resulted in a total payment of $57,700 toward government transfer payments.
Using figures from the Tax Policy Center, Perry determined that the top 400 individual personal income tax payers in 2014 paid more in taxes than the entire bottom 50 percent of taxpayers in the nation.