Ten states — Washington, Florida, South Dakota, Illinois, Texas, Tennessee, Arizona, Pennsylvania,
Indiana, and Alabama— are particularly regressive. These “Terrible Ten” states ask their poorest residents
— those in the bottom 20 percent of the income scale — to pay up to six times as much of their income in
taxes as they ask the wealthy to pay. Middle-income families in these states pay up to three times as high a
share of their income as the wealthiest families

• Four of the ten states do not levy a personal income tax— Florida, South Dakota, Texas, and
Washington. An additional state, Tennessee, only applies its personal income tax to interest and dividend
income.
• Five states do levy personal income taxes, but have structured them in a way that makes them much less
progressive than in other states. Pennsylvania , Illinois and Indiana use a flat rate which taxes the income
of the wealthiest family at the same marginal rate as the poorest wage earner. Arizona and Alabama have
a graduated rate structure, however there is little difference between the bottom marginal rate and top
marginal rate

• The main finding of this report is that virtually every state’s tax system is fundamentally unfair, taking a
much greater share of income from middle- and low-income families than from wealthy families. The
absence of a graduated personal income tax and the over reliance on consumption taxes
exacerbate this problem in many states.