A report released today by the Iowa Fiscal Partnership says lower-income households in Iowa pay a much greater share of their income in state and local taxes than high-income families. Christine Ralston helped write the report for the I.F.P.
She says the bottom 60% of earners — people making $50,000 and less –pay more than 10% of their income in state and taxes. Ralston says the top 5% pay 7.6% or less, and the top 1% pay just over 6% of their income in taxes. The top income earners make over $320,000 a year.
Ralston says lower income families are especially hard hit by the state sales tax. "And it’s important to note that this tax which is one that takes more from those who have earned less has doubled in the last 25 years, actually 26 years, it’s nearly 7% today, up from 3% in 1982 and 4% in 1991," Ralston says. Ralston says contrary to popular belief, sales taxes hit harder on the low income than property taxes.
Ralston says for all but the very bottom and the very top of income earners, the property tax is the lowest percentage of taxes paid. Ralston says the Iowa Legislature should expand the Earned Income Tax Credit again to provide more relief for lower-income families.