Study: AZ has one of the most unfair state, local tax systems

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By Catherine Holland By Catherine Holland

PHOENIX - It's another black eye for Arizona.

A national organization has ranked our state as having one of the most unfair local and state tax systems in the country.

"I think it's sh**," said Tracy Turner. "I really do."

The Phoenix man doesn't mince words when it comes to his thoughts on Arizona's state and local tax structure.

After all, he said he works hard for his $30,000 a year income.

"Why does this guy that's making a lot of money pay less in taxes, when I'm working my behind off," Turner wondered. "And I'm paying like a lot more, more than double what he's paying?"

The Institute on Taxation & Economic Policy released its Tax Inequality Index and, as Turner already pointed out, Arizona doesn't look good.

"Terrible 10," he said. "That sounds about right."

In fact, Arizona has cracked that list – ranking No. 8 in the nation when it comes to states with the most unfair state and local tax systems.

The bottom 20 percent income group pays 0.03 percent in personal state income tax.

The middle 20 percent pays 1.4 percent, while the top 1 percent pays a little more than 3 percent.

The ITEP said that's not the problem.

In fact, the organization gives Arizona kudos for its graduated personal income tax structure.

However, when you factor in sales, excise and property taxes, Arizona's poor and middle class take a hit.

The bottom 20 percent pays 12.5 percent of their income, the middle 20 percent pays 9.2 percent and the top 1 percent pays 4.6 percent.

"I understand that the guy that's making $1 million a year worked hard to get to that point," Turner said. "I understand that. But you're making a million a year. It should be equal to what I'm paying in taxes, at the very least."

The ITEP found many tax code features that are holding Arizona back.

For example, its report noted the state is too reliant on sales taxes and doesn't have a property tax credit for low-income taxpayers.

To read the entire ITEP report, click here.