How is this fair? Highest Texas income earners only taxed roughly 3.1 percent

The top 1 percent of earners in Texas are taxed at an effective rate of 3.1 percent, compared to the state’s 9.7 percent tax rate on the middle 20 percent of income earners, according to a new 24/7 Wall St. analysis.

The study, which used data from a 2018 report by the Washington-based Institute on Taxation and Economic Policy (ITEP), did not include federal taxes paid. Texas ranked ninth on the study’s list of the most tax-friendly states for the rich.

On average, the top 1 percent of earners in the state take in $1.6 million annually, according to 24/7 Wall St.

Nationwide, the top-earning 1 percent of families pay 7.4 percent of what they make toward state and local levies, the ITEP study concluded. The middle 20 percent of U.S. earners, in contrast, paid more – 9.9 percent.

States with no income tax – or a very low income tax – tended to be the most friendly to wealthy individuals, 24/7 Wall St. reported. That’s because those states tend to rely more on more regressive taxes, placing more of a burden on poorer households, the study found.


Which States Are the Most Tax-Friendly to the Wealthy?

Rank State Effective Tax Rate for Top 1% of Income Earners Effective Tax Rate for Middle 20% of Income Earners Average Income for Top 1% State and Local Revenue From Sales Taxes State and Local Tax Revenue From Income Taxes
1 Nevada 1.9% 7.6% $1.7 million 39.4% 0%
2 Florida 2.3% 8.1% $2.3 million 34.1% 0%
3 South Dakota 2.5% 8.9% $1.5 million 39.6% 0%
4 Alaska 2.5% 4.3% $1.1 million 8.3% 0%
5 Wyoming 2.6% 7.5% $2 million 25.2% 0%
6 Tennessee 2.8% 8.5% $1.3 million 41.5% 1.5%
7 Washington 3% 11% $1.6 million 46.4% 0%
8 New Hampshire 3.0% 8.1% $1.5 million 0% 1.4%
9 Texas 3.1% 9.7% $1.6 million 35.4% 0%
10 North Dakota 4.5% 8.5% $1.3 million 25.6% 7%
11 Alabama 5% 9% $955,600 30.7% 23.2%
12 Arizona 5.9% 9.4% $1.1 million 38.7% 16%
13 Pennsylvania 6% 11.1% $1.3 million 17.2% 26.2%
14 New Mexico 6% 10.2% $845,400 37.8% 17.4%
15 Louisiana 6.2% 10% $1 million 41% 15.7%
16 Oklahoma 6.2% 10.7% $1.1 million 33.3% 22.1%
17 Missouri 6.2% 9% $1.2 million 27.3% 28.6%
18 Michigan 6.2% 9.2% $1.3 million 22.6% 24.2%
19 North Carolina 6.4% 9.4% $1.1 million 25% 30.3%
20 Colorado 6.5% 8.9% $1.5 million 26.5% 25.4%
21 Ohio 6.5% 10.7% $1.1 million 28.2% 25.6%
22 Massachusetts 6.5% 9.3% $2.5 million 13.8% 32.7%
23 Montana 6.5% 7.1% $1.1 million 0% 29.7%
24 Delaware 6.5% 5.6% $1 million 0% 25.8%
25 Utah 6.7% 8.2% $1.3 million 24.8% 29.6%
26 Kentucky 6.7% 11.1% $935,400 20.4% 33.3%
27 Mississippi 6.7% 10.8% $802,200 30.6% 16.7%
28 Indiana 6.8% 11.1% $1 million 28.4% 25.5%
29 South Carolina 6.8% 8.1% $992,300 22.1% 22.7%
30 Arkansas 6.9% 10.8% $1.1 million 37.5% 23.5%
31 Virginia 7% 9.2% $1.4 million 13.8% 31.9%
32 Georgia 7% 9.8% $1.2 million 24.1% 27.7%
33 Idaho 7.2% 8.1% $1 million 26.5% 25.8%
34 Kansas 7.4% 10.6% $1.3 million 32.1% 17.1%
35 West Virginia 7.4% 8.5% $702,400 18.4% 25.8%
36 Illinois 7.4% 12.6% $1.7 million 19.3% 19%
37 Wisconsin 7.7% 10.1% $1.2 million 19.8% 27.1%
38 Iowa 7.7% 10.7% $960,000 22.8% 23.9%
39 Rhode Island 7.9% 9.5% $1.1 million 16.6% 21%
40 Oregon 8.1% 9.1% $1.1 million 0% 41.7%
41 Connecticut 8.1% 12.2% $3.2 million 14.5% 29.2%
42 Maine 8.6% 9.6% $877,200 19.6% 22.4%
43 Nebraska 8.7% 10.8% $1.1 million 22.4% 23.1%
44 Hawaii 8.9% 11.6% $984,200 37.2% 22.9%
45 Maryland 9% 10.6% $1.5 million 12.4% 37.8%
46 New Jersey 9.8% 10.1% $1.9 million 15.4% 22.2%
47 Minnesota 10.1% 9.7% $1.5 million 17.1% 31.9%
48 Vermont 10.4% 10.1% $993,600 10.4% 19.8%
49 New York 11.3% 12.4% $2.5 million 16.7% 32.7%
50 California 12.4% 8.3% $2.2 million 21.9% 33.8%

Source: 24/7 Wall St.; Institute on Taxation and Economic Policy

This article was first published by The Center Square.



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