While the bottom fifth of earners pay more than 10 percent of their income in state and local taxes, the top 1 percent pays closer to 5 percent, the Institute on Taxation and Economic Policy estimates. Percentage of income is, of course, only one way to measure the tax burden in sheer dollar terms, the wealthy pay far more than the poor. Still, the Keystone reports authors, Greg LeRoy and Stephen Herzenberg, argue that a less regressive tax structure is the answer to state budget woes, in what is basically a sophisticated pitch for a millionaires tax. Its time to have a clear debate about the impact of inequality on public finance, Mr. LeRoy said.
Taxing the top fifth of earners at the same rate as the middle class would bring in $200.5 billion to state and local coffers, the report says. Taxing just the top 1 percent at the same rate as the middle class would bring in $88.5 billion, 10 times the amount needed to restore five years worth of cuts to higher education. The report also breaks it down state by state, saying that Texas and Florida, at the top of the list, would raise about $40 billion each if they taxed the top 20 percent at the middle-class rate, while Kansas and North Carolina would raise about $2 billion each.
