That’s the questions an NBER working paper by Fleck, Heathcote, Storesletten, and Violante goals to reply. Utilizing a wide range of survey and administrative knowledge, the authors attain the next 8 conclusions:
(i) The federal tax and switch system is progressive.
(ii) State and native tax and switch programs are near proportional, on common.
(iii) There may be substantial heterogeneity in tax ranges and tax progressivity throughout states.
(iv) States which are funded largely by gross sales and property taxes are likely to have regressive tax programs and low common tax charges. States which are funded largely by revenue taxes are likely to have progressive tax programs and excessive common tax charges.
(v) Regressive states are concentrated within the South and entice extra inter-state web migration, particularly of high-income migrants.
(vi) State progressivity has remained broadly secure between 2005 and 2016.
(vii) Incorporating company revenue and enterprise taxes decreases common state progressivity however will increase federal progressivity.
(viii) Together with spending on public items and providers as a switch has a big optimistic influence on measured progressivity.
Which states have probably the most progressive tax system? Alaska, Minnesota, DC, California and New Mexico prime the record.
Which states have probably the most regressive tax system? Illinois, Nevada, New Hampshire, Tennessee and Texas lead.
Progressivity is clearly illustrated by evaluating California and Texas. Each states have a progressive revenue tax. Nevertheless, revenue tax makes up a a lot bigger share of funding in California than Texas and the California tax code is far more progressive. State transfers are additionally progressive in each states, however California has a lot bigger transfers as a share of its finances than does Texas. Conversely, gross sales, excise and property taxes are regressive in each states, however Texas depends far more on these funding mechanisms. Attributable to a mixture of those funding mechanisms, total Texas has a extremely regressive tax system whereas California’s is very progressive.
Far more attention-grabbing element may be discovered within the full paper right here.
