5. Arizona
In Arizona, the poor pay 12.9% of their income in taxes, compared with 4.7% for the wealthy. Arizona does have an income tax, but it has a relatively low top rate of 4.54% compared with a sales tax that send 6.6% to the state and another 2.56% on average to local governments. Property taxes are also in the lower half of the nation, benefiting high-value property owners disproportionately.
4. Hawaii
The poor pay 13% of their income in taxes in Hawaii, although the state has relatively high taxes across the board. Even tourists end up paying at least their fair share of taxes, with a double-digit percentage hotel tax imposed on Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT) , Hyatt Hotels Corporation (NYSE:H) , and other hotel chains, which they then pass on to their guests. The wealthy in Hawaii pay an average tax rate of 8%, the highest of the states on this list, because of extremely high marginal rates on income taxes that range as high as 11%. The sales tax is relatively reasonable at 4%, but the key problem is that the sales tax applies to grocery purchases, which hits the poor especially hard.
3. Florida
The poor in Florida pay taxes equal to 13.2% of their income, compared with just 2.3% for its wealthiest citizens. With no income tax and a 6% sales tax, Florida is among the more regressive of the states, and a recent increase in the exemption for business from corporate income tax adds to relative burden that the poor bear in the Sunshine State.
2. Illinois
Illinois taxes its poor at a rate of 13.8%, versus 4.9% for the wealthiest 1%. Illinois has an income tax, but it has a flat rate, and the sales tax of 6.25% rises to more than 8% when you include typical local taxes. Illinois even charges a sales tax on grocery items, although they qualify for a lower rate than the sales tax on most purchases.
1. Washington
Washington is by far the most regressive state in the nation, with the poor paying 16.9% of their income in taxes, while the figure for the richest citizens is 2.8%. Washington not only has no income tax but has one of the highest sales taxes in the country, with a 6.5% state rate combining with 2.36% more from local governments.
Is taxing the poor unfair?
As you can see, states that rely on sales taxes more than income taxes tend to be harsher on the poor, who have to pay a greater percentage of their incomes on living expenses that are often subject to sales tax. With other states offering less regressive taxes for their poorer citizens, the poor face the difficult choice of leaving their homes for more favorable treatment or having to pay up in order to stay put.
The article These 6 States Tax the Poor the Hardest originally appeared on Fool.com.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.
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