Investing

The States With The Worst Income Inequality

10. Massachusetts
> Gini Coefficient: 0.468
> Median Income: $59,373 (8th Highest)
> Households Earning $200,000+: 6.56% (4th Highest)
> Population Living Below Poverty Line: 10.30% (7th Lowest)

Massachusetts has the fourth-greatest percentage of wealthy residents among all the states and the seventh-lowest percentage of people living below the poverty line.  However, according to The Massachusetts Budget and Policy Center, “incomes for the highest income families in Massachusetts have grown almost five times as fast as those for low-income families and nearly twice as fast as those for middle-income families,” over the past two decades.  According to the organization, the inequality gap has increased more during this time in Massachusetts than in 47 of the other states.

9. Illinois
> Gini Coefficient: 0.469
> Median Income: $52,870 (14th Highest)
> Households Earning $200,000+: 4.47% (10th Highest)
> Population Living Below Poverty Line: 13.30% (24th Lowest)

Illinois has a relatively large percentage of households earning $200,000 or more each year, 4.47% – the tenth greatest amount in the country.  The state has the 24th smallest percentage of residents living below the poverty line, in comparison, with 13.3%.  This may be due to the state’s policies which may be seen as giving preference to the wealthy. This year the state increased its flat income tax from 3% to 5%.  According to John Tillman, chief executive of the Illinois Policy Institute, quoted in the State-Journal Register, the tax increase is “especially going to hurt lower-income folks — those who are just starting out in careers or are struggling for whatever reason, who have incomes in the $20,000-$40,000 range.” Worst still, average personal income has decreased 3.2% for the bottom 60% of Illinois wage earners over the past 40 years, according to the Center for Tax and Budget Accountability.

8. Georgia
> Gini Coefficient: 0.469
> Median Income: $43,340 (10th Lowest)
> Households Earning $200,000+: 3.43% (19th Highest)
> Population Living Below Poverty Line: 16.50% (12th Highest)

According to the non-profit research organization Institute on Taxation and Economic Policy (ITEP), Georgia’s tax system is regressive.  This means that low-income families pay more of their income in state and local taxes than upper-income families do.  The poorest 20% of Georgians have 3.2% of statewide personal income before taxes, but their share of after-tax income is just 3.1%.  The best-off 1% of residents enjoys 16.7% of pretax Georgia income, and 17.2% of after-tax income.  More than 20% of Georgians are living below the poverty line.

7. Florida
> Gini Coefficient: 0.469
> Median Income: $45,631 (15th Lowest)
> Households Earning $200,000+: 3.08% (20th Highest)
> Population Living Below Poverty Line: 14.90% (18th Highest)

Although Florida has only the 18th-largest percentage of its population living in poverty in the country, that share is growing quickly.  From 2007 to 2009, the poverty rate increased from 12.1% to 14.9%, a growth of 550,000 people.  In comparison, the national rate increased from 12.5% to 14.3% over the same period.  Additionally, almost 1.2 million of the 2.7 million impoverished Florida residents live in “deep poverty,” defined by the US Census Bureau as households with incomes of  50% or less of the federal poverty level.  That amounts to $5,478 a year for an individual.  Recent tax breaks have been aimed at the wealthy, however. In 2007, both the state’s annual intangibles tax and the estate tax were eliminated.  “Florida is a low tax state, but not for those living in poverty,” reports the Institute on Taxation and Economic Policy.

6. Mississippi
> Gini Coefficient: 0.470
> Median Income: $35,078 (Lowest)
> Households Earning $200,000+: 1.54% (Lowest)
> Population Living Below Poverty Line: 21.90% (Highest)

Mississippi has the greatest percentage of poor people in the nation, 21.9%.  The state has the greatest percentage of households making below $30,000 a year, 42.53%, and the smallest percentage of households making $200,000 or more, 1.54%.  Suffice it to say, poverty is a major issue in Mississippi and it is getting worse.  From 2007 to 2009, the state’s poverty rate increased from 20.6% to 21.9%.