Mar 10, 2010

The middle class and poor pay more in taxes than the richest 1 percent in Michigan

It will come as no surprise to most people that the middle class in Michigan pays the most in federal and state taxes, and the richest 1 percent pays the least.

That was conformed by a recent report by the Institute on Taxation and Economic Policy called “Who Pays? A distributional analysis of tax systems in all 50 states.” The report says middle income families – those making $15,000 to $32,000 annual pay and on average $23,300 annually – pay 9.9 percent in taxes. The top 1 percent of earners – those earning above $365,000 a year – pay just 6.4 percent.

Even the poorest in the state – those making less than $15,000 annually and on average $8,700 a year – pay 8.9 percent in taxes. To illustrate how regressive and unfair the sales tax is in Michigan, the poorest in the state pay the highest percentage of taxes of any income bracket in sales tax, and that tax is the highest percentage of any tax at 7.2 parent.

That’s why some groups like the Michigan League for Human Services (MLHS) is urging the sales tax to be extended to services, which are used more frequently by higher-income households.

The MLHS is also advocating a move to a graduated income tax to make the tax structure fairer. Michigan is only one of seven states with a flat income tax. The League is also advocating a review of Michigan’s overly generous tax exempts for pensions and to close loopholes on tax expenditures that no longer serve a useful public purpose as a way to balance the state budget and make the tax structure fairer.

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