State Tax Policies Shift Burden from Income to Sales, Impacting Lower Earners
A recent analysis by the Institute on Taxation and Economic Policy reveals a significant shift in state tax policies since 1990, with a trend towards reducing income taxes for high earners and increasing sales and consumption taxes. This shift has resulted in a greater tax burden on everyday goods, affecting lower-income residents more heavily. The analysis highlights that while top income tax rates have generally decreased, sales taxes have become the largest source of state tax revenue. This change is partly attributed to anti-tax sentiments and economic shocks, such as the Great Recession, which led to a reduction in personal income taxes. States like North Carolina have used this opportunity to attract workers and businesses by lowering income taxes, a strategy that has been emulated by other states. However, this approach has led to budget shortfalls in some areas, as seen in Louisiana, where a previous tax cut was reversed due to insufficient income tax collections. 
