Most Americans agree that fair taxes are not regressive--that lower income taxpayers should not pay a higher percentage of their income in taxes than those with higher incomes. Oklahoma's tax system does not meet this simple fairness test for a number of reasons.

Low and moderate income Oklahomans pay more of their income in taxes. A 2007 study by the Institute on Taxation and Economic Policy shows that lower income Oklahomans pay a considerably higher percentage of their income in state and local taxes than higher income Oklahomans.



This graph shows the percentage of income paid in state and local taxes by each of  seven income groups. The regressivity of the system is obvious since the percentage paid in  taxes drops with each increase in income. Those who are in the lowest 20 percent of income earners--making $15,000 or less each year--pay 9.9 percent of their income in taxes. The percentage of income paid in taxes falls slightly for each income group above the middle. Those in the top 1 percent--making $412,000 or more each year--pay just 5.6 percent of their income in state and local taxes.

The graph shows that the income tax, as intended, is progressive, but not progressive enough to make up for the burden that sales and property taxes put on lower income taxpayers. Reforms in all three taxes, as discussed in the following sections, could make them fairer while maintaining existing revenue levels.

updated November 18, 2009

 Go to Characteristics of an Effective Tax System

• Progressive Features of the Tax System
• Regressive Features of the Tax System
• Making Taxes Fairer

‹‹ Go back to Expenditure Options to Close the Fiscal GapupGo on to Progressive Features of the Tax System ››