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How Local Sales Taxes Target the Poor and Widen the Income Gap

A new report shows that low-income Americans are taxed at twice the rate as the richest one percent.
State sales tax on food and other necessities place a higher burden on poor families.
State sales tax on food and other necessities place a higher burden on poor families. AP images

In his State of the Union speech, President Obama will outline a plan to overhaul the federal tax code. His objective will be to reduce inequality in the tax structure, but even if these reforms are enacted, they might only help marginally, says Matthew Gardner, executive director of the Institute of Tax and Economic Policy. That's because they wouldn't address unfair tax systems at the state and local levels.

"At the state level, we're redistributing income away from poor people and giving it to rich people," says Gardner.