7 states that tax the poor the most
As the adage goes, in life, there are only two sureties -- death and taxes. If you're poor and find yourself living in one of these seven states, you'll see your pocketbook shrinking far faster than in the rest of the country.
That's because these seven states have highly regressive -- as opposed to progressive -- tax structures in place. While you're welcome to dive into the weeds on the difference between the two, the bottom line is this: Regressive taxes take a larger percentage of money away from those with less to spend, while progressive taxes -- like federal income taxes in America -- increase with the amount of cash you bring in.
The states that follow have a number of different ways of hitting the poor the hardest.
Excise taxes -- which take a certain amount of specific types of purchases, such as gasoline -- necessarily extract a large portion of a poor person's budget.
The same thing can be said for states that rely heavily on sales taxes: That extra cash you pay on a gallon of milk means a lot more to someone just barely making ends meet -- a notable example as most states don't tax groceries, but some of these do to help make up for losses from other sources that aren't taxed.
Many of these states do not offer refundable credits, which often ease the tax burden for the poorest residents.
According to the Institute on Taxation and Economic Policy (ITEP), here are the seven worst offenders when we're talking about the working-age population. Specifically, these are the seven states where inequality increases to the greatest degree from pre-state-tax income to post-state-tax incomes, as calculated by ITEP's formula.
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