Should the poor pay more?

In Oklahoma, who pays the highest percentage of their income in taxes? Those with the lowest incomes do, according to the Institute on Taxation and Economic Policy (ITEP). The state’s sales, excise and property taxes, which fall disproportionately on the lowest income families, are the primary cause of low- and middle- income households paying a higher proportion of their income in taxes.

ITEP’s newly updated study, Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, measures state and local taxes paid by different income groups. The study reveals that families with incomes over $400,000 pay just over 5.5 percent of their incomes in state and local taxes, while families with incomes under $50,000 pay between nine and 10 percent. For a single parent with a minimum wage income, one tenth of his or her income will go to taxes. OK Policy put out a press release commenting on the report’s findings. The Tulsa World article on the report generated several hundred comments on the paper’s website, many of them debating who does, and should, pay taxes.

The chart below shows the shares of family income affected by state and local taxes for non-elderly taxpayers for 2007:


Is it fair? The Who Pays? report says,

Fairness is, of course, in the eye of the beholder. Yet almost anyone would agree that the best-off families should pay at a tax rate at least equal to what low- and middle-income families pay.

Tax fairness means that everybody should pay a balanced share of taxes. In tax systems, it is important for taxpayers in similar financial conditions to pay similar amounts in taxes. But, it is just as important for taxpayers who are better off to pay at least the same proportion of income in taxes as those who are less well off.

Why do the poor pay a higher percentage? According to OK Policy’s Online Budget Guide, a tax is regressive if those with low incomes pay a larger share of income in taxes than those with higher incomes. Almost any tax on necessities, such as the sales tax, is regressive because lower income people must spend a larger share of their income on these necessities and thus in taxes. Plus, sales taxes are levied at a flat rate, so everyone pays the same taxes on their groceries whether they have high incomes or make minimum wage.

What can we do about it? Despite the disproportionate nature of Oklahoma’s sales, excise and property taxes, the state has made some progress over the past decade to equalize the impact of taxes on low- and middle-income families. As a recent OK Policy blog post discussed, a new report from the Center on Budget Policy and Priorities finds that as a result of a number of policy changes enacted in recent years – including an increase in the standard deduction and the creation of a state Earned Income Tax Credit (EITC) and state child tax credit – Oklahoma families below the poverty level are no longer subjected to the state income tax.

This is important progress, but addressing the continued inequities in our tax system should remain a priority in the years ahead. Among the options for future tax reform that would create a more balanced tax system are increasing the state EITC, strengthening the sales tax credit that offsets the sales tax on groceries, increasing the personal exemption, stretching out our tax brackets to allow more initial income to be taxed at lower rates, and providing a property tax credit for renters.

(ITEP is a non-partisan research and education organization focused on government taxation and spending policies.)


Former Executive Director David Blatt joined OK Policy in 2008 and served as its Executive Director from 2010 to 2019. He previously served as Director of Public Policy for Community Action Project of Tulsa County and as a budget analyst for the Oklahoma State Senate. He has a Ph.D. in political science from Cornell University and a B.A. from the University of Alberta. David has been selected as Political Scientist of the Year by the Oklahoma Political Science Association, Local Social Justice Champion by the Dan Allen Center for Social Justice, and Public Citizen of the Year by the National Association of Social Workers.

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