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Nevada's Poorest People Pay State's Highest Taxes, Study Shows


Thursday, October 18, 2018   

CARSON CITY, Nev. – Nationwide, low-income people pay much higher rates of taxes than high earners, and Nevada's taxes are among the most unequal in the country, according to a new study.

The analysis, by the nonpartisan Institute on Taxation and Economic Policy, shows that on average, the poorest 20 percent of Americans spend about 50 percent more of their incomes on taxes than wealthy people do.

In Nevada, the difference is even greater.

Carl Davis, the institute’s research director and one of the study's authors, says Nevada's poorest taxpayers spend more than 10 percent of their income on taxes, but the highest earners pay barely 2 percent.

"There's a bigger gap between rich and poor after those taxes are collected than before,” he points out. “So it's driving apart incomes that are already very far apart at the low and high ends of income distribution."

Davis says major factors are sales tax and excise taxes, which get built into the prices of products such as beer or gasoline.

He says when states rely more on those flat taxes across the board, and rely less on taxes based on income, poorer people end up giving away bigger proportions of their paychecks and get pushed deeper into poverty.

Many politicians argue that reducing corporate and income taxes boosts the economy by attracting businesses.

But Davis says that's not what the research shows. In fact, the study finds California has the most equitable tax system nationwide, and also one of the strongest economies.

"So if high taxes on high-income people are supposed to suppress economic growth, it's certainly not playing out that way in California.," he points out.

The study calls the majority of state and local tax systems in the U.S. "fundamentally unfair," and says if issues of income inequality persist, states may have difficulty raising revenue over time.

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