State income tax rate high for those with moderate incomes

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Good morning,

Last week’s story on Delaware ranking in the top 10 in the percentage of millionaires drew a predictable response from State Rep. John Kowalko.

The Democrat from Newark has pushed for a higher income tax for those making more than $60,000 a year. Click here for a story on the recent bill.

According to Kowalko’s Facebook post, which shared a link to the Business Now story, the bill is going nowhere with fellow Democrat and House Speaker Pete Schwartzkopf keeping the bill off the floor.

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Getting far less attention over the years is the current income tax rate on residents with moderate incomes.

A quick look at neighboring states shows that Delaware has the highest rate for those making $60,000 or less. This includes high tax states, such as Massachusetts and New York. Deductions and local income taxes also affect rates.

By contrast, Delaware’s top income tax rate for those making $60,000 or less is 5.55 percent and 6.8 percent for those making more than $60,000. In the region, only Virginia appears to have a higher rate for those making less than $60,000

Granted, Delaware has low property taxes and no sale tax. But the state can ill afford to have income tax rates that are markedly higher than its neighbors.

In the meantime, chances for a tax break for those with lower incomes are nil, given the state’s reliance on the income tax and volatile or flat revenues on other areas.

Have a great day. The newsletter returns tomorrow. – Doug Rainey, Editor

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