A new report by the Institute on Taxation and Economic Policy finds that Connecticut state and local taxes unfairly burden lower-income taxpayers, although somewhat less so than in 2007, before recent tax changes, including an increase in income taxes for wealthy residents and an earned income tax credit for low-income workers. Under current law, the poorest 20% of taxpayers pay 11% of their incomes in income, sales, property, and other Connecticut taxes, while the richest 1% pay just 5.5%. Our tax system is regressive, asking poorer people to chip in proportionately more and wealthier people to chip in proportionately less.
Despite this unfairness, our system has actually become less regressive over the past few years. In 2007, the poorest 20% of taxpayers paid 12% (vs. the current 11%) of their incomes in taxes, while the richest 1% paid 4.9% (vs. the current 5.5%). Much room for improvement remains, however, even to reach a point where individuals at different income levels pay the same proportion in taxes.