Mesa Needs More Money > City of Mesa Proposed Hikes in Utility Rates

Mesa OMB Presentations & Reports
Date: March 20, 2017
To: Interested Parties
From: Candace Cannistraro, Office of Management and Budget Director
Subject: Fiscal Year 2017/2018 Utility Rate Recommendations 
The following information has been compiled and placed on file with the Mesa City Clerk in Compliance with Arizona State statute. 

Here's how Mesa compares with other cities
For Solid Waste - to the right
Mesa had the highest estimated amounts for fees
Rates were increased by 4.2% for water, 5.0% for wastewater, and 4.3% for solid waste in July 2016. 
An annual rate increase is being proposed for each year through 2017.

For Water and Waste Water it looked like this, with Mesa again having the highest estimated amounts for fees

Source: City of Tempe Manager's Office




The attached information outlines recommended electric, natural gas, solid waste, wastewater and water utility rates, components, fees and/or charges to be presented to the City Council in association with the introduction of the utility ordinances on May 8, 2017. 

This will be followed by the public hearing on May 22, 2017 as stated in the Notice of Intention to Adjust Utility Rates to be published on April 15, 2017.  
Discussions of these proposals with the Audit and Finance Committee on March 6, 2017 and the full City Council at the study session on April 13, 2017 are/will be available online at the City of Mesa website, Mesaaz.gov, under City Hall, council agendas and minutes. 
The purpose of this report is to provide staff recommendations for utility rate adjustments. The rate adjustments are recommended to be effective July 1, 2017 and are consistent with the revenue requirements of the Proposed Budget Plan for Fiscal Year 2017/18. 
The forecasted expenses for each utility are compared to the forecasted revenues based on the current rates. The increases in revenues needed to accommodate the increased costs for each utility are: 
Utility Revenue
Electric $180,000
Natural Gas $467,000
Water $4,491,000
Wastewater $2,846,000
Solid Waste $1,490,000 
TOTAL = $9,474,000 

The method of implementation of rate adjustments can vary from year to year based on the needs and goals of the individual utilities. The impact on individual customers can vary based on the method of implementation and the customer consumption

For FY 2017/18, the following rate adjustments are being recommended: 
Solid Waste: All residential rates, bulk item pick-up and appliance collection: 3.5% increase Front-load rates: Overall 2.5% increase
Roll-Off Green Waste Rate: 4.9% increase 
Electric: Residential customers: system service charge increase of $1.25 per month  Residential customers: no adjustment to the energy usage charge
Non-residential customers: no adjustment to any components 

Gas:  All customers: system service charge increase of $0.75 per month 
All customers: no adjustment to the usage charge
Water: 3.5% increase across most customer classes and rate components 
Residential usage charge – tier 3: 6.5% increase & tier 4: 9.5% increase
Interdepartmental (Large Turf): no adjustment
Restructure of residential services demand tiers – implement year three of five-year plan 
Wastewater: 4% increase across most customer classes and rate components Interdepartmental: no adjustment 

BACKGROUND AND DISCUSSION 
Each utility is operated as a separate business center.
As such, rate schedules are adjusted annually in a manner consistent with costs of capital, as well as the fixed and variable costs of operation and maintenance within each utility. Reserve balances are combined in the Enterprise Fund and are managed to maintain a targeted ending reserve balance of at least 8-10% of the following year’s estimated expenditures throughout the forecast period. The reserve balance allows for the smoothing of rate adjustments. This smoothing avoids large rate increases and minimizes the impact to customers in any single year. 
The Forecast Analysis Model (Attachment 3) includes projections of growth.
The Water, Wastewater, and Solid Waste utilities have a citywide service area and are expected to grow by an average of about 1.5% per year during the forecast.
With the inclusion of the Magma service area, the Natural Gas utility is expected to grow by 1,067 accounts next fiscal year.
The Electric utility, with a smaller and largely built out service area when compared to the other utilities, is expected to grow by 140 accounts next fiscal year.

The  Forecast Analysis Model also includes expenditures that are increased by inflationary factors in future years. Some inflationary factors are unique to the individual utilities, such as those used for chemicals or purchased water. Other citywide expenditure pressures that are included in the forecast are listed below. 
Capital Investment 
The City continues to place a high priority on infrastructure investment to attract and service future development.
The proposed capital improvement program (CIP) includes the planning for an expansion of a water reclamation plant and the design and construction of a new water treatment plant and associated distribution infrastructure.
The bond funding authorization for these projects was approved by Mesa voters in November 2014. The debt service on utility revenue bonds is funded through the utility rates paid by customers. The City issues bonds on an as-needed basis in order to minimize the interest cost. Anticipated future debt service has been included in the forecast and rate recommendations. 
The City refunded and defeased existing Enterprise Fund debt in FY 2016/17.  The refunding and defeasance created a one-time savings of approximately $11.6M. 
Review of the transfer to the General Fund 
Based on direction from the City Council, the transfer to the General Fund is reviewed annually. The amount of the transfer throughout the forecast period is adjusted based on a consumer price index (CPI) inflation.
The adjustment for FY 2017/18 is an increase of $2.6 million, moving from $103.9 million to $106.5 million.  

Investigative Report: Mesa FireFighter PACs

In 2015 and 2016, firefighter union political-action committees across the state donated hundreds and sometimes thousands of dollars to mayoral or city council candidates
In total, 31 firefighter union PACs donated more than a quarter-million dollars to 59 city council and mayoral candidates in Arizona. More than half of the donations went to 10 individuals, eight of whom are active or retired firefighters, according to an Arizona Republic analysis of local and state campaign finance data.
Source: AZ Republic from Jessica Boehm

Here in Mesa - as reported in numerous posts on this blog before the Mesa City Council elections campaigns - IAFF [and police] union PACs 'donated' money to the campaigns of
> Shelly Allen was defeated by Jeremy Whittaker
> Mark Freeman was elected, with the help of an endorsement by Russell Pearce
> Jerry Lewis was defeated by Ryan Winkle
> Kevin Thompson will be finishing his current term
Firefighter unions were some of the largest political-action committee donors in local elections across the state in 2015 and 2016. They spent nearly seven times as much money as police association PACs. And for some candidates, they were the main source of political money.
MORE QUESTIONS ARE NOW GETTING ASKED about the power and legality of city employees so actively involved in electing council members — the people who will decide matters such as their wages and department budgets.
This chart shows how much city candidates received from firefighter union political-action committees during the 2015-2016 election cycles. Only candidates who received $2,000 or more are included
Source: Municipal campaign finance data
Here's the link> https://infogr.am/6afbf939-51d4-4e9a-828d-cd901185aa24



 

Mesa-based Severtson Launches New Giant QuickFold Screenline

Press Release
Mesa, Arizona, March 27, 2017 - Severtson Screens (www.severtsonscreens.com), a global leader in innovative and quality projection screens for the cinema, commercial, pro AV, and home theater markets, is proud to announce the launch of the new Giant QuickFold Screen Line during CinemaCon 2017, held in Las Vegas, Nev. from March 28-30 at Caesars Palace, booth #2516A.

"Our new QuickFold screens are easily portable that can be set up and taken down quick and easy," explained Toby Severtson, president and CEO of Severtson Corp. "What makes them so unique and practical are the virtually limitless applications. It can be customized up to 500-inches (41.7 ft.) diagonally, making them the ideal solution for multi-purpose auditoriums, such as in commercial, university/school, house of worship, museum, and pro AV situations that require large commercial or cinema-sized screens, but not in a permanent static installation."

About Severtson Screens
Mesa, Ariz.-based Severtson Screens, which celebrated its 30th anniversary in 2016, is an award-winning global leader in innovative and quality projection screens in the home theater, pro AV, and cinema markets. Its low rejection rate coupled with the high quality of all its products has made Severtson Corporation the industry standard for quality and customer service worldwide. From its unlikely origins in the family kitchen to today's three modern production facilities, Severtson Corporation has remained committed to the principles of innovation and uncompromising quality that have made them who they are today.
Severtson Corporation is a member of the Giant Screen Cinema Association. They have manufactured cinema screens for theaters in countries all over the world, including the United States, Mexico, Canada, Korea, Japan, Brazil, Indonesia, Singapore, Spain, Germany, France, New Zealand, Australia, Netherlands, Thailand, Scotland, China, Russia, and many more.

City of Mesa Looking for Money: Tax Amnesty Program

Between recent reports and presentations at the open-to-the-public [and rarely seen in attending] Mesa City Council meetings, as well as projected deficits in unfunded public employee liabilities, increases in the city employee healthcare and benefits package, shortfalls in revenues and operating/maintenance costs of city-owned facilities - and who know knows what else? -  City Manager Chris Brady is now having to look for more money somewhere to clean up and scrub the books any way he can to bring in revenue.

There Receivables Balance [an accounting term] as of last year July 31, 2016  and not yet collected is a TOTAL = $2,925,558.15.   

Russian Thinker Dostoevsky Inspires Opinion Piece in NYTimes

50 years ago, in another time and place, your MesaZona blogger was a sophomore at Georgetown University in Washington, DC. We had a dress code [jacket-and-tie for classes] and requirements every semester for 4 years for Philosophy courses no matter what your major was. We learned to think and study as an academic discipline the fundamental nature of knowledge, reality, and existence across centuries of the human experience on this planet, including original religious texts like The Bible and The Q'uran, writings of Confucius, the teachings of Buddhism and The Way of The Tao. In advanced classes in high school we read 1,001 Arabian Nights, The Bhagavad Vita, Chaucer, Shakespeare, Dickens, the Iliad & The Odyssey, Edward Albee, Arthur Miller, and George Orwell. . . Heavy stuff, huh?

All that goes to show you can't turn your back on history or we'll be forced to re-live it. Case in point the thinker and novelist to the right:
Fyodor Dostoevsky
Novelist, short story writer, journalist
His subjects: Psychology, philosophy, religion
Literary movement: Realism

His notable works include:
Notes from The Underground, Crime and Punishment,The Idiot, Demons and The Brothers Karamazov

Notes From The Underground, published in 1864, still has a sardonic edge and philosophical bite that grabbed onto Corsica Bradatan in this opinion piece published today in the New York Times, in a series called The Stone, a forum for contemporary philosophers and other thinkers on issues both timely and timeless. The series moderator is Simon Critchley, who teaches philosophy at The New School for Social Research  

Our Delight in Destruction

“I, for example,” says the nameless narrator in Fyodor Dostoevsky’s “Notes From Underground (1864),” “would not be the least bit surprised if suddenly, out of the blue, amid the universal future reasonableness, some gentleman of ignoble or, better, of retrograde and jeering physiognomy, should emerge, set his arms akimbo, and say to us all: ‘Well, gentlemen, why don’t we reduce all this reasonableness to dust with one good kick, for the sole purpose of sending all these logarithms to the devil and living once more according to our own stupid will!’ That would still be nothing, but what is offensive is that he’d be sure to find followers: that’s how man is arranged.”

The musings of Dostoevsky’s hero certainly seem pertinent now — not just because of Donald Trump’s rise to the White House but also in light of the populist sentiment and politics emerging in other parts of the world. But for all their mocking, jovial tone, the underground man’s observations have more serious and far-reaching implications. For, after all, what he tells us here is the story of a disastrous historical blindness. . .

What if we’ve been caught in a blind spot?
“I’m certain that man will never renounce real suffering, that is, destruction and chaos,” proclaims Dostoevsky’s hero in one of his more philosophical moments.If man is a complex animal, mankind is an even more complicated beast, with many layers and regions, one more irrational than the next.

The human is a knot of contradictions and opposing drives: reason and unreason; wisdom and recklessness; faithlessness and mysticism; logic and imagination. . . Dostoevsky — socialist, political prisoner, addicted gambler, epileptic, reactionary thinker and visionary artist — did plenty abyss-gazing and his testimony is overwhelming. It is clear “to the point of obviousness,” he confesses in “A Writer’s Diary,” that “evil lies deeper in human beings than our socialist-physicians suppose; that no social structure will eliminate evil . . .

In the American election, reason gave way to fear, resentment, hate and spite . . .

What seemed to drive the support for Trump was darker and more complicated — the heart. And what makes this event particularly significant is not necessarily its political aspect (though that’s serious enough), but the fact that we find ourselves so poorly equipped to comprehend it. Thanks to the clumsy way in which we’ve been imagining ourselves, we are unprepared to digest it. Rarely has a failure of imagination been more humiliating.

 

Read more >> Our Delight In Destruction

 
 

Why Only the Happily Single Find True Love

Published on Mar 27, 2017

Views: 26,040

One of the key requirements for having a good chance of finding the right partner is not to mind too much being single.

UP NEXT ON THE NATIONAL AGENDA: Taxes: Who Pays?

Who Pays?,
A Distributional Analysis of the Tax Systems in All Fifty States (the fifth edition of the report), assesses the fairness of state and local tax systems by measuring the state and local taxes that will be paid in 2015 by different income groups as a share of their incomes. The report examines every state and the District of Columbia. It discusses important features of each state’s tax system and includes detailed state-by-state profiles that provide essential baseline data to help lawmakers understand the effect tax reform proposals will have on constituents at all income levels.
Go to this link to access the items below
http://www.itep.org/whopays/

Executive Summary

Full Report

Press Release (PDF)

New In 2017: Fairness Matters: A Chart Book

 

 

 

INTRODUCTION

Economists have widely discredited trickle-down economic theories espoused for more than three de­cades, but that hasn’t stopped new generations of supply-side theorists from repackaging those philoso­phies and pushing for lower state tax rates for wealthy individuals, businesses and corporations.
In fact, recent years have brought tax proposals and changes in multiple states that would overwhelmingly benefit the highest income households under the guise of stimulating economic growth.
Please Note: This report doesn’t seek to rebut ideological claims; rather it is an in-depth analysis of all taxes that all people pay at the state and local level.

This study assesses the fairness of each state’s tax system by measuring state and local taxes paid by non-elderly taxpayers in different income groups in 2015 as shares of income for every state and the District of Columbia. The report provides valuable comparisons among the states, showing which states have done the best — and the worst — job of providing a modicum of fairness in their overall tax systems. The Tax Inequality Index (Appendix B) measures the effects of each state’s tax system on income inequality and is used to rank the states from the most regressive to the least regressive.

The bottom line is that every state fails the basic test of tax fairness. The District of Columbia is the only tax system that requires its best-off citizens to pay as much of their incomes in state and local taxes as the very poorest taxpayers, but middle-income taxpayers in DC pay far more than the top one percent. In other words, every single state and local tax system is regressive and even the states that do better than others have much room for improvement.

Overall, effective state and local tax rates by income group nationwide are 10.9 percent for the bottom 20 percent, 9.4 percent for the middle 20 percent and 5.4 percent for the top 1 percent (see chart below). This means the poorest Americans are paying two times more of their income in taxes than the top 1 percent.

There are moral and practical reasons to be concerned about this.
Unfair tax systems not only exacerbate widening income inequality in the short term, but they also will leave states struggling to raise enough revenue to meet their basic needs in the long term.
In fact, a September 2014 Standard and Poor’s (S&P) study concludes that rising income inequality can make it more difficult for state tax systems to pay for needed services over time. The more income that goes to the wealthy, the slower a state’s revenue grows. Digging deeper, S&P also found that not all states have been affected in the same way by rising inequality.
States that rely heavily on sales taxes tend to be hardest hit by growing income inequality, while states that rely heavily on personal income taxes don’t experience the same negative effect.
 THE 10 MOST REGRESSIVE STATE AND LOCAL TAX SYSTEMS
Ten states — Washington, Florida, Texas, South Dakota, Illinois, Pennsylvania, Tennessee, Arizona, Kansas, and Indiana — are particularly regressive. These “Terrible Ten” states tax their poorest residents — those in the bottom 20 percent of the income scale — at rates up to seven times higher than the wealthy. Middle-income families in these states pay a rate up to three times higher as a share of their income as the wealthiest families.

What characteristics do states with particularly regressive tax systems have in common? Looking at the ten most regressive tax states, several important factors stand out:

• Four of the ten states do not levy a personal income tax — Florida, South Dakota, Texas, and Washington. An additional state, Tennessee, only applies its personal income tax to interest and dividend income.

• Five states do levy personal income taxes, but have structured them in a way that makes them much less progressive than in other states. Pennsylvania , Illinois and Indiana use a flat rate which taxes the income of the wealthiest family at the same marginal rate as the poorest wage earner. Arizona has a graduated rate structure, however there is little difference between the bottom marginal rate and top marginal rate. Kan­sas’ graduated rate structure only has two brackets, applying the top rate starting at $30,000 for married couples.

• Six of the ten most regressive tax systems — those of Washington, South Dakota, Tennessee, Texas, Ari­zona and Florida — rely very heavily on regressive sales and excise taxes. These states derive roughly half to two-thirds of their tax revenue from  these taxes, compared to the national average of 34 percent in fiscal year 2011-20.

 

 

State page for Arizona Go Here >> http://www.itep.org/whopays/states/arizona.php

 

THE KIND OF TAX MATTERS

State and local governments seeking to fund public services have historically relied on three broad types of taxes — personal income, property, and consumption (sales and excise) taxes.

Sales and excise taxes are very regressive. Poor families pay almost eight times more of their incomes in these taxes than the best-off families, and middle-income families pay more than five times the rate of the wealthy.

SALES AND EXCISE TAXES

Sales and excise taxes are the most regressive element in most state and local tax systems. Sales taxes inevi­tably take a larger share of income from low- and middle-income families than from rich families because sales taxes are levied at a flat rate and spending as a share of income falls as income rises. Thus, while a flat-rate general sales tax may appear on its face to be neither progressive nor regressive, that is not its practical impact. Unlike an income tax, which generally applies to most income, the sales tax applies only to spent income and exempts saved income. Since high earners are able to save a much larger share of their incomes than middle-income families — and since the poor can rarely save at all — the tax is inherently regressive.
The average state’s consumption tax structure is equivalent to an income tax with a 7 percent rate for the poor, a 4.7 percent rate for the middle class, and a 0.8 percent rate for the wealthiest taxpayers. Few poli­cymakers would intentionally design an income tax that looks like this, but many have done so by relying heavily on consumption taxes as a revenue source.
The treatment of groceries is the most important factor affecting sales tax fairness. Taxing food is a particu­larly regressive policy because poor families spend most of their income on groceries and other necessities. Of the 10 most regressive sales taxes in the country, five apply the tax to groceries in some form. A few states have enacted preferential tax rates for taxpayers perceived to have less ability to pay — for example, South Carolina’s sales tax rate is lower for taxpayers over 85 — but these special rates usually apply to tax­payers regardless of income level. Arkansas exempts some utilities for low-income taxpayers.
Sales taxes are usually calculated as a percentage of the price of a fairly broad base of taxable items. Excise taxes, by contrast, are imposed on a small number of goods, typically ones for which demand has a practi­cal per-person maximum (for example, one can only use so much gasoline). Thus, wealthy people don’t keep buying more of these goods as their income increases. Moreover, excise taxes are typically based on volume rather than price — per gallon, per pack and so forth. Thus better-off people pay the same abso­lute tax on an expensive premium beer as low-income families pay on a run-of-the-mill variety. As a result, excise taxes are usually the most regressive kind of tax.

 

Overall, state excise taxes on items such as gasoline, cigarettes and beer take about 1.6 percent of the in­come of the poorest families, 0.8 percent of the income of middle-income families, and just 0.1 percent of the income of the very best-off. In other words, these excise taxes are 16 times harder on the poor than the rich, and 8 times harder on middle-income families than the rich.
In addition to being the most regressive tax, excise taxes are relatively poor revenue-raising tools because they decline in real value over time. Since excise taxes are levied on a per-unit basis rather than ad valorem (percentage of value), the revenue generated is eroded by inflation. That means excise tax rates must con­tinually be increased merely to keep pace with inflation, not to mention real economic growth. Policy mak­ers using excise tax hikes to close fiscal gaps should recognize that relying on excise tax revenues means balancing state budgets on the back of the very poorest taxpayers — and that these revenues represent a short-term fix rather than a long-term solution.
LOW TAXES OR JUST REGRESSIVE TAXES?
This report focuses on the most regressive state and local tax systems and the factors that make them so. Many of the most regressive states have another trait in common: they are frequently hailed as “low-tax” states, often with an emphasis on their lack of an income tax. But this raises the question: “low tax” for whom?
No income-tax states like Washington, Texas and Florida do, in fact, have average to low taxes overall. How­ever, they are far from “low-tax” for poor families. In fact, these states’ disproportionate reliance on sales and excise taxes make their taxes among the highest in the entire nation on low-income families.

The table to the left shows the 10 states that tax poor families the most. Washington State, which does not have an income tax, is the highest-tax state in the country for poor people. In fact, when all state and local sales, excise and property taxes are tallied, Washington’s poor families pay 16.8 percent of their total income in state and local taxes. Compare that to neighboring Idaho and Oregon, where the poor pay 8.5 percent and 8.1 percent, respectively, of their incomes in state and local taxes — far less than in Washington .
Hawaii, which relies heavily on consumption taxes, ranks second in its taxes on the poor, at 13.4 percent. Illinois taxes its poor families at a rate of 13.2 percent, ranking third in this dubious category.
The bottom line is that many so-called “low-tax” states are high-tax states for the poor, and most do not of­fer a good deal to middle-income families either. Only the wealthy in such states pay relatively little.

THE ECONOMIC CASE FOR TAX FAIRNESS

Putting basic moral concerns aside, creating more fair state tax systems is an economic imperative. Over the last four decades the share of income and wealth accruing to those at the top of the income scale has skyrocketed, while wages and income for working and middle-class families have stagnated; today, the top 20 percent of Americans as a group earn more income than the bottom 80 percent combined. As a result, states that rely on regressive sales, excise and property taxes rather than income taxes have experienced faster revenue decline than states with more progressive tax structures.
The vast majority of states allow their very best-off residents to pay much lower effective tax rates than their middle- and low-income families must pay — so when the richest taxpayers grow even richer, these ex­ploding incomes hardly make a ripple in state tax collections. And when the same states see incomes stag­nate or even decline at the bottom of the income distribution it has a palpable, devastating effect on state revenue. A recent Standard & Poor’s report found that the more income growth goes to the wealthy and incomes stagnate or decline at the bottom, the slower a state’s revenue grows, especially if the state relies more heavily on taxes that disproportionately fall on low- and middle-income households. Hitching your state’s funding of investments to those with a shrinking share income is not a path to a sustainable, growing revenue stream.
Moreover, shrinking revenues and overreliance on regressive taxes prevent states from investing in the pri­orities that will bolster the prospects of low- and middle-income residents: education, workforce develop­ment, infrastructure improvements, and adequate healthcare. State tax structures that rely on trickle-down theories of economic growth, balance budgets on the backs of working families rather than asking the wealthy to do more, and fail to improve the wellbeing of the majority of that state’s residents will fail to be competitive in the long run. Shortsighted tax cuts can be a long-term drag on development.

CONCLUSION

The main finding of this report is that virtually every state’s tax system is fundamentally unfair. The overreliance on consumption taxes and the absence of a progressive personal income tax in many states neutralize whatever benefits the working poor receive from low-income tax credits. The bleak reality is that even among the 25 states and the District of Columbia that have taken steps to reduce the working poor’s tax share by enacting state EITCs, most still require their poorest taxpayers to pay a higher effective tax rate than any other income group.
The results of this study are an important reference for lawmakers seeking to understand the inequitable tax struc­tures enacted by their predecessors. States may ignore these lessons and continue to demand that their poorest citizens pay the highest effective tax rates. Or, they may decide instead to ask wealthier families to pay tax rates more commensurate with their incomes. In either case, the path that states choose in the near future will have a major im­pact on the well-being of their citizens — and on the fairness of state and local taxes.

 

 

 

 

 

 

 

 

 

 

 

 

 

EXECUTIVE SUMMARY

The 2015 Who Pays: A Distributional Analysis of the Tax Systems in All Fifty States (the fifth edition of the report) assesses the fairness of state and local tax systems by measuring the state and local taxes that will be paid in 2015 by different income groups as a share of their incomes.¹ The report examines every state and the District of Columbia. It discusses important features of each state’s tax system and includes de­tailed state-by-state profiles that provide essential baseline data to help lawmakers understand the effect tax reform proposals will have on constituents at all income levels.
The report includes these main findings:

• Virtually every state tax system is fundamentally unfair, taking a much greater share of income from low- and middle-income families than from wealthy families. The absence of a graduated personal income tax and overreliance on consumption taxes exacerbate this problem.

• The lower one’s income, the higher one’s overall effective state and local tax rate. Combining all state and local income, property, sales and excise taxes that Americans pay, the nationwide average effective state and local tax rates by income group are 10.9 percent for the poorest 20 percent of individuals and families, 9.4 percent for the middle 20 percent and 5.4 percent for the top 1 percent.

• In the 10 states with the most regressive tax structures (the Terrible 10) the bottom 20 percent pay up to seven times as much of their income in taxes as their wealthy counterparts. Washington State is the most regressive, followed by Florida, Texas, South Dakota, Illinois, Pennsylvania, Tennessee, Ari­zona, Kansas, and Indiana.

• Heavy reliance on sales and excise taxes are characteristics of the most regressive state tax systems. Six of the 10 most regressive states derive roughly half to two-thirds of their tax revenue from sales and excise taxes, compared to a national average of roughly one-third . Five of these states do not levy a broad-based personal income tax (four do not have any taxes on personal income and one state only applies its personal income tax to interest and dividends) while four have a personal income tax rate structure that is flat or virtually flat.

• State personal income taxes are typically more progressive than the other taxes that states levy (e.g property, consumption). Sales and excise taxes are the most regressive, with poor families paying almost eight times more of their income in these taxes than wealthy families, and middle income families pay­ing five times more. Property taxes are typically regressive as well, but less so than sales and excise taxes.

• Personal income taxes vary in fairness due to differences in rates, deductions, and exemptions across states. For example, the Earned Income Tax Credit improves progressivity in 25 states and the District of Columbia, while nine states undermine progressivity by allowing taxpayers to pay a reduced rate on capital gains income, which primarily benefits higher-income households.

• State consumption tax structures are highly regressive with an average 7 percent rate on sales and excise taxes for the poor, a 4.7 percent rate for middle-income people, and a 0.8 percent rate for the wealthiest taxpayers. Because food is one of the largest expenses for low-income families, taxing food is particularly regressive; five of the ten most regressive states tax food at the state or local level.

• Taxes on personal and business property are a significant revenue source for both states and locali­ties and are generally regressive in their overall effect, particularly for middle-income households. A homestead exemption (exempting a flat dollar or percentage amount of property value from a property tax) lessens regressivity. A property tax circuit breaker that caps the amount a property owner pays in property taxes based on their personal income can also reduce regressivity; none of the 10 most regres­sive states offer this tax break to low-income families of all ages.

• States commended as “low tax” are often high tax states for low- and middle-income families. The 10 states with the highest taxes on the poor are Arizona, Arkansas, Florida, Hawaii, Illinois, Indiana, Pennsylvania, Rhode Island, Texas, and Washington. Seven of these are also among the “terrible ten” because they are not only high tax for the poorest, but low tax for the wealthiest.

 

 

 

Source: http://www.whopays.org/