The Elusive Tax Code: From Rates to Burdens

The complexity of income tax calculation remains a daunting enigma for many Americans, a puzzle obscured by dense jargon and intricate laws. At the heart of this puzzle are two crucial concepts: tax rates and tax burdens. While tax rates define the percentage of income a taxpayer owes, such rates vary with income levels. On the other hand, tax burden encapsulates the total tax payment, encompassing state, federal, and local taxes. Unfortunately, this burden isn’t evenly dispersed across the nation, particularly when it comes to the wealthiest and the poorest segments of society.

A Detailed Analysis of Tax Burdens

Undertaking a comprehensive investigation, GOBankingRates meticulously scrutinized state, federal, and local financial data to unveil the contrasting tax burdens on the affluent and less privileged groups as single filers and married joint filers in each state. The study harnessed information from the U.S. Census Consumer Expenditure Survey and the Bureau of Labor Statistics Consumer Expenditure Survey. Employing an in-house income tax calculator, the research team pinpointed the effective and marginal tax rates based on the average income for these distinct cohorts in every state. Particularly striking was the study’s assessment of annual state expenditures, duly multiplied by the average combined sales tax to calculate the total sales tax expenditure linked to each state.

The Imbalance of Tax Burden

The quintessential truth remains that the top 20% income bracket invariably carries the heftier tax burden. Nevertheless, juxtaposed against the bottom 20%, these affluent individuals still retain substantial wealth compared to their less fortunate counterparts. Each dollar allocated to taxes for the bottom 20% weighs far more heavily on their financial well-being. For instance, if a state stipulates a 27.50% tax burden for single filers, this does not imply that the top 20% pay 27.50% more than the bottom 20%. Rather, it signifies that they contribute 27.50% more of their income compared to the bottom 20%.

State-by-State Tax Analysis

Alabama

• Single filing for richest 20%
  • Average annual income of richest 20%: $213,012
  • Total taxes paid: $69,320
  • Tax burden: 32.54%
• Single filing for poorest 20%
  • Average annual income of poorest 20%: $11,401
  • Total taxes paid: $1,252
  • Tax burden: 10.98%

Difference of tax burden: 21.56%

• Married filing jointly for richest 20%
  • Average annual income of richest 20%: $213,012
  • Total taxes paid: $57,825
  • Tax burden: 27.15%
• Married filing jointly for poorest 20%
  • Average annual income of poorest 20%: $11,401
  • Total taxes paid: $968
  • Tax burden: 8.49%

Difference of tax burden: 18.65%

Alaska

• Single filing for richest 20%
  • Average annual income of richest 20%: $254,899
  • Total taxes paid: $75,761
  • Tax burden: 29.72%
• Single filing for poorest 20%
  • Average annual income of poorest 20%: $20,172
  • Total taxes paid: $2,175
  • Tax burden: 10.78%

Difference of tax burden: 18.94%

• Married filing jointly for richest 20%
  • Average annual income of richest 20%: $254,899
  • Total taxes paid: $60,828
  • Tax burden: 23.86%
• Married filing jointly for poorest 20%
  • Average annual income of poorest 20%: $20,172
  • Total taxes paid: $1,543
  • Tax burden: 7.65%

Difference of tax burden: 16.21%

The Great Tax Divide: A Deep Dive into State Tax Burdens

A Stark Contrast: Income Disparities and Tax Burdens

As the sun sets on Wall Street, illuminating a tumultuous financial landscape, the intricate dance between income brackets and tax burdens takes center stage. In this theatrical production, the stagehands are the statistics, shining a spotlight on the stark contrast between the richest and the poorest in our society.

California Schemes: Golden State Inequalities

Picture perfect scenes of the Pacific Ocean sometimes belie the harsh realities of income inequality and tax burdens in the Golden State. From the bustling streets of Los Angeles to the serene beaches of San Diego, the contrast between the affluent and the impoverished is as clear as the California sky.

Colorado’s Canvas: Painting a Picture of Tax Disparities

Amidst the towering peaks of the Rocky Mountains, Colorado’s tax landscape paints a vivid picture of inequality. From the bustling streets of Denver to the tranquil towns of Aspen, the financial disparities between the wealthy and the struggling are as vast as the state’s expansive wilderness.

Connecticut Chronicles: Financial Disparity in the Constitution State

From the historic streets of Hartford to the picturesque shores of Mystic, Connecticut’s financial narrative weaves a tale of stark contrasts. As the Constitution State grapples with income disparities, the burden of taxes falls heavier on some, creating a rift that mirrors the rocky coastline.

Delaware Diaries: Tax Tales from the First State

Amidst the sandy shores of Rehoboth Beach and the vibrant cityscape of Wilmington, Delaware’s financial story unfolds. In the First State, while some bask in economic prosperity, others find themselves weighed down by the heavy burden of taxes, creating a tale of two extremes.

Florida Fables: Sunshine State Disparities

Under the warm glow of the Florida sun, a narrative of financial disparity emerges. From the vibrant streets of Miami to the serene landscapes of Sarasota, the stark contrast between the affluent and the struggling is as palpable as the humid air in the Sunshine State.

The Tale of State Tax Burden Disparities Amongst Wealth Brackets

Let’s dive into an intriguing story of our times – the discrepancy in state tax burdens borne by individuals across different wealth brackets. Imagine a land where the wealthiest 20% are levied a tax burden contrasting starkly with their less affluent counterparts. States like Georgia, Hawaii, Idaho, Illinois, Indiana, and Iowa play central characters in this financial drama.

Georgia: Land of Contrasting Tax Burdens

Like a seesaw, the scales of tax burden in Georgia tip dramatically between the richest and poorest 20%. The affluent elite, boasting an average income of $253,577, face a significant tax burden of 35.21%, contrasting sharply with the meager 11.28% borne by the less privileged souls earning around $15,412 annually.

Hawaii: Where Taxes Paint a Vivid Divide

Picture Hawaii, a paradise marred by tax burden disparities. The wealthiest 20%, with an average income of $297,132, shoulder a hefty 40.59% tax burden, while their counterparts in the lowest bracket are burdened with a mere 14.79%. The gap stands at a staggering 25.79%, painting a vivid picture of financial inequality.

Idaho: A Taxing Tale of Two Brackets

In the picturesque setting of Idaho, the rich and poor navigate vastly contrasting tax burdens. The wealthiest 20%, with an average yearly income of $229,521, face a 33.95% tax burden, while the impoverished 20%, earning $18,560 per year, bear a much lower 11.66% burden.

Illinois: Riches and Poverty Reflected in Taxes

The financial landscape of Illinois mirrors a tale of contrasting burdens. The affluent top 20%, enjoying an average income of $275,167 annually, are slapped with a 35.62% tax burden, whereas the poorest 20% scrape by with a much lower 13.57% burden.

Indiana: Bridging the Tax Gap

Indiana, the heartland of America, sees a closer gap in tax burdens between the rich and poor. The wealthiest 20%, earning $218,385 annually, face a 31.08% burden, while the bottom 20% bear a 11.69% burden – a 19.39% difference creating a sense of precarious equilibrium.

Iowa: Divergence in Tax Fates

Finally, in Iowa, contrasting tax fates befall the rich and the poor. The affluent top 20%, with an average income of $226,830, shoulder a 34.14% burden. In contrast, their impoverished counterparts, earning less than a fifth of their income, face less than half the tax burden at 13.45%.

As we traverse through these territories of wealth and tax obligations, a poignant question arises – is this fiscal divide a fair interpretation of the American dream? The numbers paint a stark reality, like a canvas split between the opulent and the struggling. The landscape of tax laws seems to amplify the chasm between the haves and have-nots.

Disparities in State Tax Burdens Revealed: Uncovering the Financial Divide

Kansas: Cutting through the Financial Fog

• For the wealthiest 20% filing jointly, the average yearly income stands at $232,612. Those in this bracket shoulder a hefty tax burden of 34.06%, reflecting stark financial landscapes.
• In sharp contrast, the poorest 20% filing singly report an average annual income of $15,724. Yet, their tax burden plummets to a mere 11.25%, underscoring a glaring economic disparity.

Notably, the gap in tax burden between these two extremes amounts to a staggering 22.81%, a chasm echoing the financial cliffs in the Sunflower State.

Kentucky: Navigating the Fiscal Seas

• The top 20% in the singles category boast an average yearly income of $212,554. Their tax burden weighs in at a formidable 32.05%, illustrating the sharp peaks and valleys of fiscal distribution.
• Conversely, the bottom 20% of single filers report a modest average annual income of $11,942. Their tax burden, a mere 11.11%, shines a light on the economic crevasses that exist within the Bluegrass State.

The stark contrast between these tax burdens amounts to a notable 20.94%, unveiling the financial divide etched into the hills of Kentucky.

Louisiana: Untangling the Financial Knots

• Among the wealthiest 20% filing singly, the average annual income stands at $205,286. With a tax burden of 31.15%, the financial disparities between Louisiana residents come sharply into focus.
• However, for the least affluent 20% in the singles category, the average yearly income amounts to $10,691. Their tax burden, a mere 9.50%, paints a vivid picture of the financial valleys in the Pelican State.

Notably, the contrast in tax burdens between these opposite ends reaches 21.65%, highlighting the stark financial disparities within the borders of Louisiana.

Maine: Paving a Path through Financial Terrain

• For the top 20% of single filers in Maine, the average yearly income tallies at $231,939. Their tax burden amounts to a substantial 35.14%, underscoring the rugged financial terrains that residents traverse.
• Conversely, the lowest 20% of single filers report an average annual income of $15,968. Their tax burden, standing at a mere 9.75%, lays bare the economic cliffs in the Pine Tree State.

The stark difference in tax burdens between these polar ends totals a significant 25.39%, shedding light on the financial topography unique to Maine.

Maryland: Charting the Course in Fiscal Seas

• Among the richest 20% filing singly in Maryland, the average annual income stands at $308,921. Their tax burden, towering at 37.17%, highlights the sweeping financial landscapes exhibited in the Old Line State.
• On the contrary, the poorest 20% in the singles category report an average annual income of $19,444. Their tax burden, a paltry 14.42%, unveils the financial divides etched into the terrains of Maryland.

Remarkably, the gap in tax burdens between these disparate ends amounts to a staggering 22.74%, revealing the financial divides intricately woven into the financial tapestry of Maryland.

The State of Taxation in Various U.S. States

Massachusetts:

• Analysis for the wealthiest 20% of the population showed an average annual income of $351,952 with a total tax payment of $134,752, carrying a 38.29% tax burden. In contrast, the poorest 20% earned $16,996 yearly, paid $2,465 in taxes, and bore a lighter burden of 14.50%. This stark contrast highlights a significant disparity of 23.79% in tax obligations.
• For married couples filing jointly, the top 20% reported the same average income as single taxpayers at $351,952 but paid $109,142 in taxes, with a slightly lower tax burden of 31.01%. The bottom 20% showed similar disparities, earning $16,996 annually, paying $2,150 in taxes, and carrying a 12.65% tax burden, indicating a 18.36% gap in taxation between the rich and poor.

Michigan:

• The analysis for Michigan displayed a significant contrast in tax burdens between the wealthiest and poorest segments of the population. The top 20% reported an average income of $230,959, with a tax burden of 32.82%. In comparison, the bottom 20% earned $14,784 and had a tax burden of 12.53%, revealing a 20.28% difference in tax obligations.
• Married couples filing jointly showcased similar discrepancies, with the richest 20% carrying a 27.31% tax burden and the poorest 20% burdened by an 11.90% tax rate, denoting a 15.41% gap in taxation levels.

Minnesota:

• Seemingly fairer taxation emerged in Minnesota, where the wealthiest 20% bore a tax burden of 37.90%, while the poorest 20% reported a significantly lower 11.81% burden. The difference in taxation between these segments amounted to 26.09%, signaling a more equitable tax structure.
• Similarly, married couples in the top 20% experienced a 30.44% tax burden, whereas the lowest 20% faced a mere 7.65% burden. This 22.79% variance illustrates a more progressive tax setting that aims at equitable distribution.

Mississippi:

• Mississippi’s tax system portrayed a substantial difference in taxation between the richest and poorest 20%. The wealthiest contributors reported an annual income of $184,924 and paid $57,236 in taxes, equating to a 30.95% tax burden, while the poorest section with an average income of $10,171 had a tax burden of 7.65%, presenting a significant gap of 23.30%.
• Married couples in Mississippi mirrored this divide, with the top 20% bearing a tax burden of 25.88% and the lowest 20% shouldering a mere 7.65% burden, marking an 18.23% difference in tax obligations.

Missouri:

• Missouri’s tax structure revealed disparities between the wealthiest 20% and the poorest 20%, with the former carrying a 32.73% tax burden and the latter a 7.98% burden, signifying a significant 24.74% difference in tax obligations.
• For married couples in Missouri, the top 20% faced a 27.00% tax burden, while the bottom 20% experienced a 7.65% burden, presenting a 19.35% disparity in tax responsibilities.

Montana:

• In Montana, the top 20% of earners bore a tax burden of 34.75%, contrasting sharply with the 9.93% burden carried by the lowest 20%, illustrating a 19.05% differing tax obligations.
• For couples filing jointly in Montana, the wealthiest 20% faced a 27.69% tax burden, while the least affluent 20% carried a 9.14% burden, pointing to a considerable 18.55% difference in taxation.

Analyzing Tax Burden Disparities Across US States

Nebraska

Nebraska’s tax landscape paints a vivid picture of financial discrepancies among its residents. For the top 20% filing as single, the average annual income stands at a staggering $234,995. However, this wealth comes at a price as they bear a hefty tax burden of 34.77%. Contrasting this, the poorest 20% in the single filing category struggle with an average income of $16,346, facing a significantly lighter tax burden of 10.75%. The glaring 24.01% difference in tax responsibilities showcases a stark contrast in financial well-being within the state.

Nevada

In the glitzy state of Nevada, income inequality is glaringly apparent. The top 20% filing as single face an average annual income of $247,917, with a substantial tax burden of 29.36%. On the contrary, the poorest 20% navigating the single filing category endure an average yearly income of $16,162 and a more bearable tax burden of 9.08%. The 20.28% difference in tax obligations underlines the stark financial divisions prevalent in Nevada.

New Hampshire

Heading to New Hampshire, we witness a contrasting tale of fiscal scenarios. The wealth gap is evident, with the top 20% filing as single boasting an annual income averaging $288,945, bearing a tax burden of 31.25%. In contrast, the poorest 20% in the single filing category grapple with an average income of $21,841, facing a relatively lighter tax burden of 11.31%. The substantial 19.94% tax burden difference elucidates the economic disparities in the Granite State.

An In-depth Analysis of State Tax Burdens Across Different Income Brackets

North Carolina

Presenting some intriguing figures, the state of North Carolina showcases a stark contrast between the tax burdens carried by its richest and poorest residents. In the realm of single filers, the disparity in average annual income between the top 20% and the bottom 20% is palpable, with the wealthiest bearing a tax burden of 33.56% as opposed to a modest 9.21% for the least affluent. Furthermore, when considering married couples filing jointly, the discrepancy in tax obligations between the most and least prosperous is equally notable, at a variance of 24.35%.

North Dakota

Turning our attention to North Dakota, a similar pattern emerges in the tax landscape. The top 20% of single filers face a tax burden of 31.17%, while their counterparts in the bottom quintile shoulder a burden of 9.17%. Notably, the gap in tax responsibilities becomes more pronounced for married couples filing jointly, standing at a notable 21.99% difference between the wealthiest and the least affluent couples.

Ohio

In Ohio, single filers again reflect the trend seen in other states, with the top 20% experiencing a tax burden of 31.59%, compared to a mere 7.89% for the bottom 20%. As for married couples filing jointly, the discrepancy stands at 23.70%, underlining the significant disparity in tax obligations between the richest and poorest brackets.

Oklahoma

Across the plains of Oklahoma, the story of tax disparities continues. For single filers, the wealthiest 20% grapple with a tax burden of 31.98%, while their counterparts in the bottom quintile bear a burden of 8.69%. The gap widens for married couples filing jointly, standing at a substantial 23.29% difference in tax obligations between the most and least financially privileged pairs.

Oregon

Finally, in the scenic state of Oregon, a familiar narrative unfolds. The top 20% of single filers navigate a tax burden of 39.05%, contrasting starkly with the 14.88% burden carried by the bottom 20%. For married couples filing jointly, the disparity is evident, with a 24.17% difference in tax obligations between the wealthiest and least affluent pairs.

State Tax Burdens Revealed: An Unveil of Financial Disparities

The Keystone State

• Top Tier Singles:
  • Avg. Income of Top 20%: $255,764
  • Total Taxes Paid: $83,982
  • Tax Burden: 32.84%
• Lowest Earning Singles:
  • Avg. Income of Bottom 20%: $15,303
  • Total Taxes Paid: $1,786
  • Tax Burden: 11.67%

Tax Burden Discrepancy: 21.17%

The Ocean State

• Wealthiest Singles:
  • Avg. Income of Top 20%: $266,185
  • Total Taxes Paid: $93,316
  • Tax Burden: 35.06%
• Impoverished Singles:
  • Avg. Income of Bottom 20%: $15,526
  • Total Taxes Paid: $1,563
  • Tax Burden: 10.06%

Gap in Tax Burden: 24.99%

The Palmetto State

• Wealthiest Singles:
  • Avg. Income of Top 20%: $226,183
  • Total Taxes Paid: $78,126
  • Tax Burden: 34.54%
• Least Affluent Singles:
  • Avg. Income of Bottom 20%: $13,906
  • Total Taxes Paid: $1,391
  • Tax Burden: 10.00%

Disparity in Tax Burden: 24.54%

The Mount Rushmore State

• Top Income Singles:
  • Avg. Income of Top 20%: $220,281
  • Total Taxes Paid: $61,741
  • Tax Burden: 28.03%
• Poorest Singles:
  • Avg. Income of Bottom 20%: $15,826
  • Total Taxes Paid: $1,408
  • Tax Burden: 8.90%

Differential in Tax Burden: 19.13%

The Volunteer State

• Most Prosperous Singles:
  • Avg. Income of Top 20%: $226,707
  • Total Taxes Paid: $64,289
  • Tax Burden: 28.36%
• Least Fortunate Singles:
  • Avg. Income of Bottom 20%: $14,667
  • Total Taxes Paid: $1,204
  • Tax Burden: 8.21%

Disparity in Tax Burden: 20.15%

The Lone Star State

• High Earning Individuals:
  • Avg. Income of Top 20%: $261,583
  • Total Taxes Paid: $78,612
  • Tax Burden: 30.05%

Tackling Tax Disparities: A State-by-State Analysis

Utah

In Utah, the dichotomy in tax burdens is stark. Single filers from the richest 20% face a hefty 35.18% tax burden, while their counterparts in the poorest bracket carry a much lighter load at 16.56%. The disparity between these two groups amounts to a significant 18.63%. Even among married couples filing jointly, the gap persists, with the wealthiest shouldering a 29.06% burden, in contrast to the 12.16% burden on the least affluent – creating a sizable 16.90% gap. These figures paint a vivid picture of inequality in tax obligations in the Beehive State.

Vermont

The verdant state of Vermont also grapples with tax discrepancies. The top 20% of single filers face a hefty 35.12% burden, as opposed to the meager 11.95% levy on the bottom quintile, resulting in a glaring 23.18% difference. The trend extends to married filers; while the wealthiest couples bear a 28.62% burden, their less affluent counterparts shoulder an 8.53% burden – outlining a significant 20.09% gap in taxation. These statistics unveil noteworthy disparities within the Green Mountain State’s tax system.

Virginia

The historic state of Virginia is no stranger to tax inequities, with the top 20% of single filers facing a substantial 37.27% burden, while their low-income equivalents contend with an 11.95% burden – marking a considerable 25.32% gap. Similarly, the gap persists for married couples filing jointly, with the affluent facing a 30.45% burden compared to the modest 7.86% burden on the poorest quintile, leading to a notable 22.59% disparity. These data underscore the significant contrasts in tax allocations among Virginians.

Washington

In Washington, the top 20% of single filers shoulder a substantial 32.40% tax burden, while the poorest quintile bears a moderate 10.66% levy – highlighting a discernible 21.74% difference. Married couples face a similar scenario, with the wealthiest couples shouldering a 25.48% burden compared to the 7.65% burden on the poorest couples – showcasing a distinctive 17.83% gap in tax obligations. These figures illuminate the taxing reality within the Evergreen State.

West Virginia

Amid the Appalachian beauty of West Virginia, tax burdens reveal disparities. The top 20% of single filers face a 32.39% burden, contrasting sharply with the 10.76% burden on the poorest quintile – marking a notable 14.25% disparity. For married couples, a similar trend emerges, with the wealthy bearing a 27.49% burden in contrast to the 10.76% on the less affluent – outlining a striking 16.73% gap in tax responsibilities. These numbers shed light on the tax landscape in the Mountain State.

The Unequal Yoke of Taxation: A State-by-State Analysis

Wisconsin: A Tale of Two Tax Burdens

When it comes to the tax man’s touch, the state of Wisconsin tells a tale as old as time — one of two extremes. The richest 20% in the Badger State bear a hefty burden, with an average annual income of $229,656 leading to a total tax payment of $76,621. In sharp contrast, the poorest 20% struggle under a significantly lighter load, with an average income of a meager $17,032 resulting in a tax payment amounting to $1,772. The stark contrast in the tax burden becomes evident; a staggering 22.96% disparity separates the two ends of the financial spectrum.

Wyoming: Where Tax Weights Aren’t Equal

Out in the wild and rugged state of Wyoming, the tax landscape is characterized by glaring disparities. For the wealthiest 20%, with an average annual income of $214,972, the burden is palpable — a total tax payment of $59,636. Conversely, the poorest 20% find a lighter load to carry, with an average income of $15,900 resulting in a modest tax payment of $1,421. The gap in tax burdens stands at 18.80%, painting a picture of inequality that’s stark against the backdrop of the Cowboy State’s wide-open spaces.

Alexandria Bova contributed to the reporting for this article.

Methodology: For this study, GOBankingRates analyzed state, federal, and local data to find the tax burden on the rich and the poor for single filers and married joint filers in every state. GOBankingRates sourced the average income of the poorest 20% (bottom quintile) and average income of the richest 20% (top quintile) in every state as sourced from the US Census Consumer Expenditure Survey for income by quintiles, the overall cost of living index for each state as sourced from the Missouri Economic and Research Information Center, the national average overall expenditure cost for the poorest 20% (bottom quintile), the national average overall expenditure cost for the richest 20% (top quintile) as sourced from the Bureau of Labor Statistics Consumer Expenditure Survey by Quintiles, the 2023 federal income tax brackets and rates, 2023 state income tax brackets and rates, the 2023 state and local tax rates all three tax-related data was sourced from TaxFoundation. GOBankingRates used in-house calculations to find marginal tax rates, effective tax rates, and total tax paid for federal income tax, state income tax, FICA tax, and local sales tax rates. The overall cost of …

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The Tax Burden on the Rich and Poor in Every State

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