States want to tax the rich less. They're taxing your purchases more.
US states are increasingly relying on sales taxes while reducing income and corporate taxes to attract businesses and workers. This shift has sparked debate over the regressive nature of sales taxes compared to income-based taxation.
Why it matters
Changes in state tax structures directly impact wealth distribution and the cost of living for low-income residents.
States have shifted toward sales taxes as a source of revenue. Hispanolistic/Getty Images Since 1990, states have raised sales taxes while lowering income and corporate taxes Income tax cuts can attract workers, but sales tax hikes risk creating budget shortfalls. Sales taxes hit low earners harder, clashing with public calls to tax the wealthy more. As many voters clamor for higher taxes on the ultrawealthy and corporations , many states have moved in the opposite direction: lowering taxes on high earners and raising them on everyday goods . A new analysis from the Institute on Taxation and Economic Policy shows how tax rates have changed since 1990. Top income tax rates have generally fallen, while sales and consumption taxes have increased. That's meant taxes shifting from higher earners and corporations to what residents are buying. This reflects a shift in how lawmakers think about tax policy.
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