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It’s tax time again and that means pundits will trot out the stale claim that some Americans don’t pay any taxes and assert that the beleaguered rich are stuck paying more than their fair share. But when you look at the whole tax system you see a very different picture.
While some Americans don’t pay federal income tax (mainly because they earn poverty-level incomes), virtually everyone pays some form of tax. And most taxes (especially at the state and local level) hit the working poor and elderly hardest.
The omnibus tax bill New Mexico’s Governor just signed will make that injustice even worse.
The federal income tax is progressive—meaning those who earn the most pay the highest rate.
It’s designed this way because most state and local taxes are regressive—meaning those who earn the least pay the largest share of their earnings in these taxes.
State and local sales and excise taxes are examples of regressive taxes.
Those who earn very low incomes have to spend a greater percentage of it on necessities, many of which are taxed (like clothes, diapers, toiletries, etc.).
High income earners don’t spend all of their money, so sales taxes take up a much smaller share of their income.
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