In America, the Federal Income tax is progressive and graduated, meaning that the more taxable income that you have in a given year, the higher the overall tax bracket that you will be subject to, so, for instance, if your filing category is single and you have $25,000 in taxable income, you would be liable for a 10% federal tax rate for the first $9,075 of your taxable income, with the balance of the $15,925 being taxed at a rate of 15%. If, on the other hand, your filing category is single, and you have $500,000 in taxable income, you will be subject to paying federal taxes for each graduated bracket percentage amount, at the rates of 10%, 15%, 25%, 28%, 33%, 35%, until you reach the threshold of $406,750 to which the income above that amount, which would be $93,250 would be taxed at 38%.
Seeing that the Federal income tax is both progressive and graduated, one would think that in the natural course of things that the State income tax for the State that you reside in, would, in fact, follow the same format, but it does not, in virtually every State of the union. First off, there are seven States that do not have any State income tax whatsoever. Out of the remaining forty-three States, there are pretty much only three States with truly meaningful progressive and graduated income tax rates, which are California, New Jersey, and Vermont. If you are single in California, and have taxable State income of $25,000, you would be subject to a 1% tax rate, graduating to 2% at $7,582 and maxing out at 4% for the balance of your income. If, you made $500,000 in taxable State income, you would eventually be paying State income taxes at the rate of 11.3%, without even hitting the top rates of 12.3% and 13.3%. This makes California the closest in structure to how your taxes are treated by the Federal government, meaning that California has the fairest progressive and graduated tax rates in the nation, in the sense that those that earn more, pay considerably more in their percentage rate for taxes.
However, in virtually every other State of the union, and taking $25,000 as the threshold example of income in comparison to income of $500,000 in nearly half of the States, you will be paying the exact same percentage as your tax rate. That is to say, for instance, if you live in Mississippi, the maximum State income tax rate is 5%, and that maximum is achieved for income at $10,000 and above. Yes, that is right, in Mississippi and some twenty-odd other states, individuals making $25,000 and above are taxed at the exact same percentage as somebody making twice or twenty times the amount of money that you are making. Also, with the exception of the three States previously mentioned, all the other States of this union, pretty much tax their constituents at essentially the same basic rate with very modest increases in percentage based on income, or in essence, a flat State income tax.
While most States do have on paper what would appear to be a progressive State income tax, in actuality, the threshold in most of these States to be subjected to the highest income tax rate in the State is held ridiculously low, and/or the percentage increase in graduated tax rates is as modest as simply going from perhaps 5% to 6%. This signifies that most States have little or no interest in taxing their residents at real progressive rates, which benefits the few at the expense of the many.