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States Split on Taxing the Poor, Cont.

May 5, 2010 at 12:09 PM

To follow up on last week’s post on state taxes and the working poor (and TAPPED’s post on our recent report), these maps show the progress states have made over the past two decades in eliminating income taxes on working-poor families.

Between 1991 and 2009, the number of states that impose income taxes on two-parent families of four with poverty-level incomes shrank by nearly half, from 24 to 13.

States’ main tool to improve their tax treatment of low-income workers has been the earned income tax credit (EITC). Since 1991, the number of states with an EITC has jumped from six to 24 (including DC).

Unfortunately, EITCs and other low-income tax credits are now under the gun in several states. As my colleague Nick Johnson said recently, taxing working people into poverty — or deeper into poverty — is a terrible way to help balance your budget.

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