Here is the latest data for non-elderly taxpayers from the Institute on Taxation and Economic Policy for the District of Columbia, Maryland and Virginia. Tables use 2008 tax law which includes most recent changes, and the most recent income levels available from IRS (2006). The last row shows the effective tax rates for each income bracket since it includes the benefit derived from deducting the state income tax and property tax payments from the federal payment. Note that the top 1% in DC now pay a lower rate than in Maryland but slightly higher than Virginia. The last table shows the huge accumulation of taxable income (Adjusted Gross Income) in the top 1% of individuals compared to the bottom 50%. In DC the top 1% had in 2006 two times the taxable income of the bottom 50%. The taxable income of the top 1% was $5.3 billion in 2006, the taxable income of the top 5% was $8.8 billion. A modest increase of 3% in the DC income tax rate on the top 5% would generate $264 million in additional revenue, while the same income bracket would get back roughly a quarter in the federal deduction offset when they file their federal income tax return. The wealthy have been steadily moving into the District in the last decade, despite the lower tax rates of suburban Virginia and until this year Maryland. It is absurd to argue that wealthy DC residents will leave the District if they are required to pay slightly higher rates, given the advantages of living here, namely lower commuting costs and time, cultural opportunities etc. Who will buy their high-priced homes if they move? And if a small number do move, lets encourage the conversion of these large homes to apartments. Reducing the income gap and "misery index" in the District would benefit the wealthy as well as everyone else by reducing crime, stimulating consumer spending and reducing class/racial polarization. "The Bible commands that the law promote justice because human beings are not good enough to promote justice individually on their own," she said. "To assume that voluntary charity will raise enough revenues to meet this standard is to deny the sin of greed." Susan Pace Hamill, Professor, University of Alabama Law School. (NYT, December 25, 2007. See her books: "As Certain As Death, A Fifty-State Survey of State and Local Tax Laws" and "An Argument for Tax Reform Based on Judeo-Christian Ethics"
DC Tax Chart
Maryland Tax Chart
Virginia Tax Chart
Distribution of Federal AGI Within the States, 2006
Share of Total
In-State Federal AGI, 2006
Top 1% Bottom 50% Ratio
Wyoming 30.7% 11.6% 2.6
New York 28.7% 10.7% 2.7
Nevada 28.6% 13.2% 2.2
Connecticut 28.1% 10.6% 2.7
Florida 27.3% 11.7% 2.3
District of Columbia 25.5% 11.9% 2.1
California 23.1% 12.2% 1.9
Massachusetts 22.9% 12.0% 1.9
Texas 22.7% 12.1% 1.9
Illinois 21.4% 12.3% 1.7
United States 21.1% 12.7% 1.7
Arizona 20.5% 14.1% 1.5
Colorado 20.5% 13.2% 1.6
Oklahoma 20.4% 13.6% 1.5
New Jersey 19.9% 11.9% 1.7
Louisiana 19.5% 12.9% 1.5
Washington 19.1% 13.9% 1.4
Georgia 19.1% 12.8% 1.5
Idaho 19.0% 14.2% 1.3
Tennessee 19.0% 13.7% 1.4
South Dakota 18.9% 13.9% 1.4
Utah 18.6% 14.1% 1.3
New Hampshire 18.3% 13.5% 1.4
Alabama 18.2% 13.7% 1.3
Delaware 18.1% 14.0% 1.3
Pennsylvania 18.1% 13.1% 1.4
Maryland 18.1% 13.5% 1.3
Nebraska 17.7% 14.3% 1.2
Virginia 17.5% 13.3% 1.3
Minnesota 17.4% 13.7% 1.3
Kansas 17.2% 13.6% 1.3
Rhode Island 17.2% 13.6% 1.3
North Carolina 17.0% 14.0% 1.2
Missouri 16.9% 13.9% 1.2
Vermont 16.9% 13.8% 1.2
South Carolina 16.8% 14.1% 1.2
Wisconsin 16.5% 14.3% 1.2
Oregon 16.3% 14.2% 1.2
Montana 16.3% 13.6% 1.2
Hawaii 16.1% 14.7% 1.1
Mississippi 15.9% 14.7% 1.1
New Mexico 15.6% 13.8% 1.1
Ohio 15.5% 14.9% 1.0
Arkansas 15.4% 14.7% 1.0
Indiana 15.2% 14.2% 1.1
Kentucky 15.0% 14.5% 1.0
Michigan 15.0% 13.4% 1.1
North Dakota 14.9% 14.8% 1.0
Maine 14.9% 15.0% 1.0
Iowa 14.0% 15.5% 0.9
Alaska 14.0% 13.2% 1.1
West Virginia 12.1% 15.2% 0.8
Source: IRS Statistics of Income, 2006
For full report go to: http://www.ctj.org/itep/
* Personal Income Taxes: Latest IRS Data Reveal Fundamental Mismatches in the States 8/5/08
