New York Times editorial, State and Local Taxes Are Worsening Inequality:
Economic inequality is on the rise in Illinois, and the state government is part of the problem. Illinois taxes low-income families at much higher rates than high-income families, asking the most of those who have the least.
Low-income households in Illinois pay about 14 cents in state and local taxes from every dollar of income, while the state’s most affluent households pay about 7 cents per dollar.
That gap between the poor and the wealthy in Illinois is one of the largest in any state, but the poor pay taxes at higher rates in 45 of the 50 states, according to a 2018 study by the Institute on Taxation and Economic Policy.
It’s a bipartisan phenomenon. The institute’s list of the 10 states with the most regressive tax systems — the states doing the most to increase inequality through taxation — also includes conservative Tennessee and Texas, purple Nevada and Florida, and liberal Washington.
Now Illinois is trying to take its name off the list. The state plans to hold a referendum next year on a constitutional amendment that would authorize the state to tax higher incomes at progressively higher rates — the system used by the federal government and 32 states. ...
Opponents of progressive taxation warn that wealthy people and businesses will flee to other states, and that those with the most money are the most mobile. People can vote with their feet, and some do prefer low-tax states like Florida. But a quick look at the list of states with progressive tax structures should make clear that plenty of rich people choose to stay put. ...
The potential cost of losing a few millionaires also needs to be weighed against the benefits of equitable taxation. By imposing a somewhat larger burden on high-income households, states can significantly improve the material circumstances of lower-income households and slow the troubling expansion of economic inequality.
At the very least, states ought to stop making things worse.
(Hat Tip: Nancy Olson and Michael Talbert.)