Republican presidential nominee Mitt Romney may be almost right in claiming that 47 percent of Americans "pay no income tax," but the poorest Americans pay a far higher state and local tax rate than those in the top 1 percent.
In fact, 46 percent of U.S. households paid no federal income tax last year, and it is misleading to focus on just the federal income tax, one of the few progressive parts of the U.S. tax system. Rather, a look at often regressive state and local tax rates throws cold water on the idea that the poor don't pay their fair share.
Nearly every U.S. state taxes the poor more than the rich, according to a 2009 report by the Institute on Taxation and Economic Policy. Overall, the poorest 20 percent of households paid an average 10.9 percent of their incomes in state and local taxes in 2007, while the top 1 percent on average paid just 5.2 percent of their incomes in state and local taxes, according to the study.
Most state and local tax systems are regressive, the study found: that is, tax rates become higher as income becomes lower. This regressiveness hits the middle class, too: The middle 20 percent of families paid a 9.4 percent state and local tax rate in 2007, according to the study.
State income taxes are the most progressive part of state and local tax systems, according to the study: that is, when it comes to state income taxes, richer people pay a higher tax rate than poor people. Sales and excise taxes, on the other hand, are very regressive, and property taxes are somewhat regressive. This combination forces poor people to pay a higher share of their income in state and local taxes than the rich.
Total U.S. taxes are barely progressive, as shown in this table and chart from Citizens for Tax Justice. The bottom 99 percent pays a 27.5 percent total tax rate on average, while the top 1 percent pays an average 29 percent tax rate, according to 2011 data from Citizens for Tax Justice.
(Hat tip: ThinkProgress.)