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Today the Census Bureau released new data showing that in 17 states, the number of Americans living in poverty increased in 2011. Lawmakers and advocates interested in helping to lift families out of poverty can and should look to their states’ tax structures, which are often part of the problem but can also be part of the solution and play a role in helping to eliminate poverty.
When all the taxes imposed by state and local governments are taken into account, almost every state imposes a higher effective tax rate on low-income families than on upper- income taxpayers. A new Institute on Taxation and Economic Policy report, “State Tax Codes as Poverty Fighting Tools,” recommends four key anti-poverty tax policies: the Earned Income Tax Credit, property tax circuit breakers, targeted low-income tax credits, and child-related tax credits. The report identifies the states where each of these policies is in place, and finds that seven states (Alabama, Alaska, Florida, Mississippi, Nevada, Tennessee and Texas) don’t offer any of these four recommended anti-poverty tax policies.
The report also includes a survey of state-by-state anti-poverty tax policy decisions made this year and offers specific recommendations tailored to policymakers in each state as they work to combat poverty. Read ”State Tax Codes as Poverty Fighting Tools” here.