Taxes constitute the primary revenue source for the U.S. government, with an average effective federal tax rate of 14.5% for Americans in 2022. High earners pay significantly more, while lower earners pay less than 4%. However, state and local tax policies vary dramatically, leading to unequal tax burdens for individuals within the same income brackets. This variation arises from the authority local governments have over tax rates, impacting funding for essential local services such as education and infrastructure. Analyzing tax data reveals significant disparities that contribute to financial inequities among citizens across different states.
Significant discrepancies exist in state and local tax policies across the U.S., meaning individuals within the same income bracket can face vastly different tax burdens based on their location.
In 2022, the federal tax rate for the highest earners reached 26.5%, while the bottom half of earners paid less than 4%, reflecting inequalities in the tax system.
State and local governments, despite the federal tax code's uniformity, exercise considerable power in determining tax rates, leading to unequal taxation experiences nationwide.
The funding of essential services and infrastructure at state and local levels hinges on tax revenue, highlighting the crucial role of local tax policies in overall financial impact.
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