Which State Has the Fairest Tax Structure?

November 23, 2018

Most people recognize taxes are necessary for the government and society to function. It is interesting to study how states tax their citizens and what constitutes a fair tax structure. Look through these findings and consult Los Angeles Tax Advisors to find out more about the taxes in California.

Based on Household Income

According to a national survey, Americans agree higher income households should pay more in taxes than lower-income households. The top five states considered to have the fairest tax structure are:

• Montana
• Oregon
• South Carolina
• Delaware
• Idaho

Not surprisingly, these states also have much lower sales and excise taxes than the majority of other states. California is also towards the top of the list at number 17. Encino tax consultants can help you figure out everything you need to know about taxes in California.

Less Dependent on Sales and Excise Tax

Each state varies on the type of taxes it is most dependent on. These types of taxes include:

• Property Tax
• Sales and Excise Tax
• Personal and Corporate Income Tax
• Other

Because everyone in a state pays the same amount of sales and excise tax regardless of income, states where this type of tax is higher tend to be ranked as less fair.

Distribution of the Tax Burden

Unfortunately, there are some states where the top one percent of the population is undertaxed, states where the middle class or middle 20-40 percent of the population are overtaxed and states where the bottom 20 percent are the most overtaxed. The following three states are in the top 10 on the lists of   both the undertaxed top one percent and the overtaxed bottom 20 percent:

• Washington
• Florida
• Texas

This is a large reason why, out of 50 states, these are considered three of the lowest states with the fairest tax structure.

It can be tough to figure out whether you’re being taxed appropriately. When you have questions about how taxes are distributed or what they are based on in California, a Los Angeles accounting firm can help. Contact accounting and tax professionals for advice on tax and money management issues.