ORLANDO, Fla. — Florida’s tax system was crowned the most “upside down” in the nation by researchers Tuesday as they released their latest study of each state’s tax code.
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The Who Pays? study, by the Institute on Taxation and Economic Policy, examined how fair each state’s taxes were, counting how much of a person’s income went toward paying taxes in each income bracket.
By not having an income tax, Florida’s tax system primarily relies on sales and property taxes to fund the government. That sets up what’s called a regressive tax system, where lower-income people pay more in taxes, as a percentage of their earnings, than wealthy people do.
Florida families in the bottom 20% income bracket, or families making less than $19,600 per year, spend 13.2% of their earnings paying taxes, the analysts found.
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The next income bracket, families earning between $19,600 and $35,700, spends 10.9% of their earnings in taxes.
The third income bracket – families making up to $61,500 – spends 9.5%, and the fourth – families making up to $118,300 – spends 8.4%.
According to the study, the wealthiest 1% of Florida families spend just 2.7% of their annual earnings paying taxes, or about five times less than the bottom earners, earning Florida the title of the most regressive state in the nation.
Florida's tax system is the most "upside down" in the nation, researchers say. Data shows low-income Floridians pay 5x more than their wealthy counterparts.
— Nick Papantonis WFTV (@NPapantonisWFTV) January 9, 2024
California, in comparison, is scorned as a high tax state but taxes residents evenly. https://t.co/rnt3WIVgMU pic.twitter.com/5UjIx8RdWb
“The Who Pays? report helps to reframe the narrative that Florida is a ‘low tax’ state,” Sadaf Knight, CEO of the Florida Policy Institute, said. “In fact, if you are from a family with very low income, Florida is a very ‘high tax’ state.”
States with tax codes the researchers considered fairer, or more weighted toward the wealthy, had income taxes that offset the burden sales taxes placed on working class families.
In Minnesota, which was rated the most progressive tax system in the US, the bottom earners spend 6.2% of their earnings on taxes. Middle class families spend 10%, and the wealthiest families spend 10.5%.
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California, typically scorned by Floridians, was also highly rated by the researchers. In that state, the lowest earners spent 11.7% of their income on income, sales, excise, and property taxes annually. Middle earners spent 10.4%, while the wealthiest spent 12%.
Knight said Florida’s system was a series of intentional choices made by politicians for the last century, starting with getting rid of the income tax in the 1920′s in the middle of a development craze that turned into a bust.
“Our Legislature should make every effort to address this and build more fairness into our tax code,” she said.
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Florida did get praise for recently exempting diapers and incontinence products from sales taxes, and Knight said a solution to the state’s problem did not have to mean implementing an income tax, which is widely viewed as a non-starter in Tallahassee.
“Our top priority… is pushing for a state level Earned Income Tax Credit, which we call a working Floridians tax rebate,” she said, adding a bill was introduced this session and the idea has received bipartisan support. “We estimate it would bring $513 per household to about 1.6 million households across Florida.”
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