HOUSTON: Read latest issue of newletter; Texas taxes hit poor hardest

The November issue of Let Justice Roll Down Like Waters, the newsletter of the Coalition of Working People and the Poor, has now been published. It’s posted on the website of Houston Peace and Justice Center (www.hpjc.org).

The link that will take you directly to the newsletter is
http://www.hpjc.org/images/stories/November_2009_newsletter_web.pdf Simply copy this address into your browser and click the Enter key.

Because there are photographs, it will take a little while to download the eight-page file (probably less than a minute, but that will depend on the speed of your modem). So be patient. It’s worth it.

Contents of this issue:

Cover story: Update on health care reform efforts
Photo spread: single payer health care advocates appear at Houston City Council Feds extend unemployment benefits; TX Gov. Perry turns down money Earned Income Tax Credit helps low income workers; spread the word Latest federal data on poverty in U.S.; it grew before recession hit Coalition’s mission statement
List of organizational members and membership form

It costs nothing to become a CWPP member. Our strength is in our numbers, both organizations and individuals. So please use the form to join if you aren’t currently a member. You will be collaborating with, among many others, Harris County AFL-CIO, Catholic Archdiocese’s Office of Justice and Peace, Houston Area Urban League, Children’s Defense Fund, and CRECEN.

Here is some more relevant news:


By an overwhelming margin, most states tax their middle- and low-income families far more heavily than the wealthy, according to a new study by the Institute on Taxation & Economic Policy. To see the report, press release, and state-by-state fact sheets, visit: http://www.itepnet.org/whopays

“In the coming months, lawmakers across the nation will be forced to make difficult decisions about budget-balancing tax changes-which makes it vital to understand who is hit hardest by state and local taxes right now,” said Matthew Gardner, lead author of the study, Who Pays? A Distributional Analysis of the Tax Systems in All 50 States. “The harsh reality is that most states require their poor and middle-income taxpayers to pay the most taxes as a share of income.”

Nationwide, the study found that middle- and low-income non-elderly families pay much higher shares of their income in state and local taxes than do the very well-off:

• The average state and local tax rate on the best-off one percent of families is 6.4 percent before accounting for the tax savings from federal itemized deductions. After the federal offset, the effective tax rate on the best off one percent is a mere 5.2 percent.
• The average tax rate on families in the middle 20 percent of the income spectrum is 9.7 percent before the federal offset and 9.4 percent after-almost twice the effective rate that the richest people pay.
• The average tax rate on the poorest 20 percent of families is the highest of all. At 10.9 percent, it is more than double the effective rate on the very wealthy.

The “Terrible Ten” Most Regressive Tax Systems

Ten states–Washington, Florida, Tennessee, South Dakota, Illinois, Michigan, Pennsylvania, Nevada, and Alabama–are particularly regressive. These “Terrible Ten” states ask poor families-those in the bottom 20% of the income scale-to pay almost six times as much of their earnings in taxes as do the wealthy. Middle income families in these states pay up to three-and-a-half times as high a share of their income as the wealthiest families.

“Virtually every state has a regressive tax system,” noted Gardner. “But these ten states stand out for the extraordinary degree to which they have shifted the cost of funding public investments to their very poorest residents.”

The report identifies several factors that make these states more regressive than others:
• The most regressive states generally either do not levy an income tax, or levy the tax at a flat rate;
• These states typically have an especially high reliance on regressive sales and excise taxes;
• These states usually do not allow targeted low-income tax credits such as the Earned Income Tax Credit; these tax credits are especially effective in reducing state tax unfairness.

“For lawmakers seeking to make their tax systems less unfair, there is an obvious strategy available,” noted Gardner. “Shifting state and local revenues away from sales and excise taxes, and towards the progressive personal income tax, will make tax systems fairer for low- and middle income families. Conversely, states that choose to balance their budgets by further increasing the general sales tax or cigarette taxes will make their tax systems even more unbalanced and unfair.”


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