Texas has the eight least fair tax system in the country.
That was one of the findings in WalletHub’s application of a nationally representative survey to rank which states had the most and least fair tax systems.
The survey reflected what 1,050 individuals considered to be a “fair” tax system. The top five states for tax fairness were Montana at No. 1, followed by Oregon, South Carolina, Delaware and Idaho.
WalletHub also took a more specific look at how dependent states are on certain taxes taxes. It found that on a scale from one to 50 – one being not dependent, 50 being very dependent – Texas rated 43 for property, 39 for sales/excise and 41 for other taxes.
Fairer Taxes in Blue States
Taxes appeared to be slightly fairer in blue states, where the average rank was 23.19 out of fifty, whilst red states ranked slightly lower with their average rank being 28.00.
Fairness was determined by looking at household income, and asking the respondents from different income brackets how much they felt was fair to pay.
There was a clear upward trend, with respondents stating that a 2.5 percent tax was acceptable for those with an annual household income of $5,000 and that 16.36 percent tax for those whose annual household income was $2.5 million was a reasonable rate.
Data averaged from the full sample shows a strong preference for a progressive state and local tax structure.
When political ideology was examined, those who self-identified as economically conservative did support higher tax percentages on the poor and lower tax percentages on the rich than those who identified as economically liberal, yet both economic conservatives and liberals stayed true to the general trend of stating that a fair local and state tax system imposes higher taxes on wealthier households than on lower- and middle-income households.
However, the trend of the average state and local tax structure is exactly the opposite of what those surveyed said was fair: as annual household income went up, the tax burden went down.