Property taxes do as well, since homes and vehicles are usually the only types of property subject to tax, and the only types of property typically owned by individuals and families in the lower half of the income distribution. Sales and excise taxes certainly fit this description, since consumption takes up a much larger share of income for poor and middle class taxpayers. Most of the taxes states and localities typically impose are regressive – they require low- and moderate-income taxpayers to devote a larger share of their incomes to paying taxes than upper-income taxpayers. The fairness of a state’s tax system is largely determined by two factors: the mix of different taxes it levies and the design of each of those taxes. This policy brief examines the contributions of progressive income taxes toward better state tax policy, explains why claims about their negative impact on economic growth are unfounded, and describes several reforms states could adopt to address some of the problems wrongly attributed to progressive income taxes. Such proposals, if acted upon, would make it all but impossible for state tax systems to produce revenue in a fair and sustainable fashion. Accordingly, some of these critics have called for the outright repeal of the income tax, while others have suggested making it significantly less progressive. A few vocal critics have pointed to state personal income taxes as the source of a variety of fiscal and economic problems- arguing that it has enabled wasteful spending, fueled the volatility of revenue collections, or even stifled job-creation.
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