As the race for the 2016 elections takes off, WalletHub turned its attention to state and local tax systems to determine where citizens are paying the fairest rates.
WalletHub compared the tax structures in each state to responses from a survey of 1,050 taxpayers about what they think a fair tax system looks like.
Respondents agreed that as a household’s annual income increases, it should pay taxes at a higher rate. Respondents agreed that the poorest households, those that earn $5,000 per year, should pay a state and local tax rate of 2.5%. Respondents said a fair tax rate for $2.5 million households would be 16.4%.
When looking at fair tax rates according to respondents’ political persuasion, the same trend appears; respondents agree that lower-income households should pay a lower tax rate than higher-income households. The disagreement is in the actual rate.
At lower annual incomes, economically conservative respondents assigned a fair tax rate that was higher than the one noted by liberals. Liberals said households that earn only $5,000 a year should pay just 1.7% in taxes, while conservatives said they should pay 3.1%. However, at the $50,000 per year level, liberals pegged a higher rate as fair compared with conservatives: 7.6% versus 7% according to conservatives. That trend continued up to the $2.5 million level, where liberals felt an 18.7% rate was fair, while conservatives thought 14.6% was appropriate.
“Although conservatives appear to support higher taxes on the poor and lower taxes on the rich, the general trend is the same: All Americans believe a fair state and local tax system imposes higher tax rates on wealthy households than on lower- and middle-income households,” WalletHub wrote in the report.