The personal finance website WalletHub has released its annual report on 2015’s Most & Least Fair State Tax Systems.
The site noted that tax systems vary dramatically across states and localities. While some states lack a sales tax, others don’t tax income. Whereas many families face high property-tax burdens in certain jurisdictions, others may enjoy generous tax credits.
States with the Fairest Tax Systems
3. South Carolina
States with the Least Fair Tax Systems
WalletHub analyzed each of the 50 states based on the fairness of their state and local tax systems. The site also used the results of a nationally representative survey that assessed what Americans think a “fair” state and local tax system looks like. Its analysts then ranked the states based on how closely their actual tax systems matched public perception.
According to its research, Wallethub believes the poor are most overtaxed in Washington, Hawaii and Illinois, while the wealthiest 1 percent are most undertaxed in Wyoming, Nevada and Florida. The middle class is most overtaxed in Arkansas, New York and Mississippi.
Based on WalletHub’s survey, most Americans think “fair” state and local tax systems impose higher taxes on higher-income households than on lower-income households. Conservatives and liberals generally agree on what a “fair” tax system looks like. However, conservatives are more supportive of slightly higher taxes on the poor and lower taxes on the wealthy.
Current state and local tax systems are, on average, extremely unfair, according to the site. While most Americans—liberals and conservatives—believe a progressive tax system is most fair, virtually every state has regressive state and local tax structures. Both “blue” states and “red” states are found to overtax the poor and undertax the rich, relative to what most Americans consider “fair.”
For the full report and to see where each state ranks, click here.