WITH THE PASSAGE of the Fair Share Amendment, or “millionaire’s tax,” Massachusetts is now the seventh most “progressive” state tax system in the country, according to a sweeping new report. 

The Washington, DC-based Institute on Taxation and Economic Policy’s seventh “Who Pays?” report supports several contentions that often come from vastly different sides of the Massachusetts political spectrum. Florida, with no state income tax, is very friendly to high-income filers, which could create incentives for high-income residents to leave the Bay State. But for residents in lower-income brackets, Massachusetts is a better option if they care about the share of their income that goes to pay taxes.

ITEP examined the tax systems in all 50 states plus the nation’s capital, finding that most states use “top-down” tax systems in which middle-and low-income families pay a higher share of their income in taxes than the wealthy.

 “When we look at how states are taxing the residents, it’s clear that they’re falling very far short of what most people consider to be a fair tax code,” said Carl Davis, ITEP’s research director, at a webinar discussing the new report. Fair could be defined in a few ways, he said, like a flat tax rate so everyone pays the same thing, or a progressive tax rate where the wealthy pay more. But most states don’t offer just one or the other, and the burden usually falls more heavily on middle- and low-income residents.

In 34 states, low-income families see a higher share of their income go to taxes than everyone else, the report found. Low-income households in six states plus DC pay lower proportions of their income to taxes than higher earners. Massachusetts sits just outside that most progressive bundle of states, having jumped 10 spots in ITEP’s progressive tax rankings over the last year almost entirely due to the passage of the millionaire’s tax. 

“More generally, from a national perspective, how is it that states are failing so miserably on this front?” Davis asked. “The core problem is not that complicated. The problem is that state and local governments are raising most of their tax revenue from regressive taxes on what people buy, or on their homes that they own or rent. And those expenses swallow up a larger share of income for low- and middle-income people.” 

The report comes at a tense moment in Massachusetts tax policy, with Gov. Maura Healey announcing budget cuts to help address a dramatically reduced tax revenue forecast this year. Fiscal conservatives say the high-income surcharge is an incentive for wealthy residents to leave the state. Healey and legislators tried to split the difference between progressive principles and interstate competitiveness in the billion-dollar tax cut package passed last year by including benefits for lower-income people alongside tax breaks that benefited some of the state’s wealthiest residents. 

Florida, an oft-touted alternative for those fleeing Massachusetts for a lower tax rate, is the nation’s most “regressive” tax system, according to ITEP. Low-income families in Florida pay almost five times as much of their income as the wealthy, with the lowest income bracket spending 13.2 percent of their income on taxes and the top 1 percent spending just 2.7 percent. 

In Massachusetts, in the lowest income bracket – families making less than $26,800 annually – pay 8.2 percent of their income in taxes, while the top 1 percent making over $1,000,600 pay 8.9 percent. Those making $26,800 to $103,500 pay between 9.2 and 9.6 percent of their income in taxes on average, with the state’s highest proportionate tax burden falling on those making $103,500 to $160,000 a year, who pay 10 percent of their income in taxes. The top 4 percent of earners, making $391,100 to $1,000,600 annually, pay the lowest percentage of their income in taxes – 7.9 percent.

Several items included in the recent tax package also bolstered families and low-income households, noted Phineas Baxandall, senior policy analyst and advocacy director at the Massachusetts Budget and Policy Center. 

“It’s something so contrary to what people repeat over and over again – for most people. Massachusetts is a low-tax state,” he said in the webinar. “Where you sit in the income stream, you pay a lower share of your income than most other states.” 

The middle 60 percent of tax filers in Massachusetts pay a lower share of their income than people in the middle 60 percent do in 32 other states, Baxandall said. Those in the bottom 40 percent of Massachusetts filers pay a lower share of their income than comparable filers in Florida, Texas, and 35 other states. 

State income tax rates are just one part of the puzzle of state, local, and federal tax code, said Doug Howgate, president of the Massachusetts Taxpayers Foundation.

“You want a tax code that’s fair, you want a tax code that efficiently raises revenue, and you want a tax code that doesn’t create some really negative behavioral incentives,” Howgate said. “Those are kind of the three big things, and one single tax regime doesn’t always do all of those things. So you’ve got to kind of mix and match.”

Isolating state income tax and focusing on the proportionate rather than the per capita metric can be useful for comparison, but federal taxes make up most taxes paid and tilt the system toward progressivity, Howgate said. “The reality is, [a state income tax system] is an adjunct to a highly progressive federal tax system that has much higher rates, especially on high income earners,” he said.

When asked about the state-federal balance, Davis said it is notable that people sense serious income tax inequities across the states.

“Out of all the public opinion polling that gets done on taxes, the most consistent, robust finding is that people strongly believe and understand that high income people and corporations are paying too little,” he said. “And I think state taxes are a contributing factor in that, because we see in a lot of states exceptionally low tax rates being charged to high income people… So I think there is absolutely history that the federal tax system is more progressive than state systems. I think the degree of progressivity there is somewhat questionable.”

Even the most progressive tax jurisdictions in the country don’t have what ITEP would characterize as a ”steeply progressive tax code,” but these systems look meaningfully different from the average state or from a state like Florida, ITEP webinar speakers said. 

Without the new high-income tax surcharge in Massachusetts, 17 states would have more equitable tax systems than the Bay State, the Massachusetts Budget and Policy Center noted in an analysis of ITEP’s report. The states that have more of a “right-side-up” tax system generally offer more generous refundable tax credits to low-income households, the center’s report noted.

Though the Commonwealth is not a truly progressive tax state, as some higher income ranges pay less proportionately than lower ones, the jump in the ITEP state-by-state rankings is encouraging, Baxandall said. “So it is just really gratifying to see the results of policy,” he said. “This is a policy choice, how regressive or progressive our taxes are. And we know there’s still work to do.”