Categories: U.S. and Canada

Taxes hit the 99% the hardest

The past few years have seen a multitude of protests on income inequality, decrying how the 1% makes so much more than the 99% and how this injustice creates vast inequality, social divisions and growing class anger.

Taxes — local, state and federal — fall disproportionately hardest on people with smaller incomes. But the whole structure of the tax system in the United States is so complicated and so fragmented that it is hard to see what is going on.

On Jan. 14, the Institute on Taxation and Economic Policy released its fifth “Who Pays?” report on state and local taxes. Its conclusion is stark: On average, the tax rate for the poorest 20 percent of U.S. residents is twice that of the richest 1 percent. (

The way many states have configured their tax system — where the percentage of income paid in taxes doesn’t depend on one’s income and the state depends on consumption taxes — makes this problem worse.

There are 10 states where the poorest 20 percent pay up to seven times as much of their income in taxes as the 1%. Washington state is the most regressive, followed by Florida, Texas, South Dakota, Illinois, Pennsylvania, Tennessee, Ari­zona, Kansas and Indiana.

Another egregious aspect of the U.S. tax system is that income obtained from wealth goes under the rubric of capital gains and is more lightly taxed than income earned by working. Almost all wealth income belongs to the top 10 ­percent.

Many of the attempts to make these tax systems fairer and less burdensome have helped, but at the cost of making an already complicated system more so. Calls for simplifying it generally lead to putting more of a burden on the lowest paid.

Other taxes on the poor

Not everyone may pay federal income taxes, but they certainly pay payroll taxes on all their income — that is, Social Security and Medicare taxes. However, someone making more than $500,000 a year pays these taxes on only about 20 percent of their income, since these taxes are capped at $118,500 in 2015.

There is a federal excise tax, currently $0.184, on every gallon of diesel oil and gasoline sold in the U.S.

Allowing mortgage interest payments to be a tax deduction, a major benefit for homeowners, is another way the federal tax system works against poorer people, many of whom rent because they don’t have the money to buy.

The 50 states and the District of Columbia each have their own tax code, and each state has its own city and local governments, some of which have their own tax codes.

Each state also has its own excise taxes on fuel, cigarettes, alcohol and tobacco, which affect low-wage earners more than the better off, since they are flat taxes. Sales taxes are another form of taxation with a disproportionate effect on low-wage earners.

G. Dunkel

Published by
G. Dunkel

Recent Posts

Palestinian Resistance breaks morale of Israel’s military

Eleven members of the Israel Occupation Forces died June 15 in a blast of a…

June 19, 2024

Workers World congratulates Nicaragua on 45th anniversary of the Sandinista Revolution

Long before the Sandinista National Liberation Front liberated Nicaragua from the Somoza dictatorship and Yankee…

June 19, 2024

The legacy of Juneteenth

The following article was originally posted at on June 20, 2022. Juneteenth 2024 marks…

June 19, 2024

Leonard Peltier parole hearing update

The Leonard Peltier Official Ad Hoc Committee posted this statement from Peltier’s attorneys on June…

June 19, 2024

People’s Pride Coalition demands: Cut ties to pro-Israel weapons maker!

Thousands of people turned out on June 2 for the annual Pride festival and parade…

June 19, 2024

PFLP calls for international committee to investigate crimes against Palestinian detainees

The following statement on Zionist crimes and horrific violations in the "Sde Teman" camp against…

June 17, 2024