A new study released today by the Institute on Taxation and Economic Policy (ITEP) and New Jersey Policy Perspective (NJPP) finds that New Jersey’s middle class families pay more in taxes as a percent of their income compared to the state’s wealthiest residents.

The study, Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, evaluates all major state and local taxes, including personal and corporate income taxes, property taxes, sales and other excise taxes. Over the last year, New Jersey has made strides toward a more equitable tax code with the expansion of the Earned Income Tax Credit (EITC) and a new tax bracket for incomes over $5 million. However, the middle 20 percent of earners – families with incomes between $45,300 and $74,800 – still pay a higher share of their family income in taxes than the state’s top 1 percent, or families earning more than $897,300 per year.

“The wealthiest New Jerseyans have benefited most from our growing economy, yet they continue to pay a lower share of their income in taxes than middle class families,” said Sheila Reynertson, Senior Policy Analyst at NJPP. “The tax code remains unfair and starves New Jersey of the revenue necessary to adequately invest in its assets and programs that alleviate poverty. Governor Murphy’s first budget was a step in the right direction, but broader reforms must be pursued to tackle income inequality and ensure the state’s wealthiest residents are paying their fair share.”

Anti-tax advocates across the country and in New Jersey continue to push for tax policies that reduce tax rates for the wealthy and businesses. But there is a growing movement against this agenda as the public recognizes continual tax cuts for the wealthy and corporations mean less money to adequately fund our children’s education, our parks and public spaces, our infrastructure and other basic services.

As the Who Pays? study shows, broad-based graduated personal income taxes are the most equitable way to raise revenue. Given that middle-income people are paying more of their income in taxes than the richest New Jerseyans, lawmakers should carefully weigh the distribution of their taxes, as measured by Who Pays?, when considering changes to the tax code.

There’s also a more practical reason for New Jersey and all states to be concerned about regressive tax structures, according to ITEP. If the nation fails to address growing income inequality, states will have difficulty raising the revenue they need over time. The more income that goes to the wealthy (and the lower a state’s overall tax rate on the wealthy), the slower a state’s revenue grows over time.

“Rising income inequality is unconscionable, and it is certainly a problem that local, state and federal lawmakers should address,” said Meg Wiehe, deputy director of ITEP and an author of the study. “Regressive state tax systems didn’t cause the growing income divide, but they certainly exacerbate the problem. State lawmakers have control over how their tax systems are structured. They can and should enact more equitable tax policies that raise adequate revenue in a fair, sustainable way.”