Personal Finance

California isn’t the worst place to be poor on Tax Day. It’s not the best, either. Here’s why

California Democrats are proposing some tax cuts on these items

California Democrats have several bills to ease the tax burden on the poor, as well as the struggling legal marijuana industry. The bills would cut the sales tax on legal marijuana, tampons and diapers, help renters.
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California Democrats have several bills to ease the tax burden on the poor, as well as the struggling legal marijuana industry. The bills would cut the sales tax on legal marijuana, tampons and diapers, help renters.

Complaining about taxes is a popular pastime in the Golden State, but a new survey finds that Californians don’t have it all that bad. Of course, they don’t have it all that good either.

Financial services website WalletHub conducted a survey of all 50 states, plus Washington, D.C., to determine which states were the best, and which were the worst, to be poor when Tax Day comes around.

To that end, WalletHub generated state-specific tax burden estimates for residents at three income levels: $25,000 a year, $50,000 a year, and $150,000 a year, using data from the Institute on Taxation and Economic Policy’s 2018 report.

California was middle-of-the-pack in all three categories. It ranked No. 24 for low- and medium-income earners and No. 34 for high-income earners.

Sales tax took up the highest percentage income for the poorest category. People making $25,000 a year paid approximately 6.4 percent of their income in sales tax.

Sales tax was also the single biggest category for middle-income-earners, though it took up just 4.7 percent of their annual earnings.

For the highest earners, income tax took out the single biggest chunk, at 3.6 percent of their annual earnings.

The poorest pay a proportionately greater amount of their income, 9.65 percent, than do the richest, at 9.1 percent.

California has a progressive income tax that charges higher rates for the wealthiest residents. People who make $1 million or more in a single year pay up to 13.3 percent of their earnings in state income tax.

A 2014 report from the Legislative Analyst’s Office found that the top 1 percent of California households pay almost 50 percent of state income tax.

According to the latest U.S. Census data, the median household income for California is $67,169.

So what’s the best state to be poor?

For tax purposes, it’s Delaware. Taxes take up just 5.24 percent of the earnings for someone making $25,000 a year. At nearly 14.6 percent, Washington state is the worst place to be poor come tax time.

Alaska took No. 1 for both middle- and high-income earners, in large part because there is no income tax in the state. On the opposite end of the spectrum, New York took No. 51 for both middle- and high-income categories.

The full report can be viewed here.

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Andrew Sheeler covers California’s unique political climate for McClatchy. He has covered crime and politics from Interior Alaska to North Dakota’s oil patch to the rugged coast of southern Oregon. He attended the University of Alaska Fairbanks.
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