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Posted: 04/14/12 10:48 AM ET  |  Updated: 04/14/12 10:53 AM ET

The 10 States Taxing The Poor Most: 24/7 Wall St.

24/7 Wall St.: In an effort to help families work their way out of poverty, most of the United States do not tax the incomes of working-poor families. A handful of states do, however. 24/7 Wall St. examined a new report from the Center on Budget and Policy Priorities to identify the states that tax the poor the most.

Read The States Taxing the Poor Most

The decision of these states to continue taxing the poor is notable because most states have stopped. Over the past two decades, there has been a widespread, bipartisan effort to roll back taxes on working-poor families. Today, only 15 states still tax families with incomes that are at, or below, the federal poverty line — currently $23,018.

However, the effort to reduce taxes on the poor has stalled, according to the CBPP. In 2011, no new states exempted working-poor families of four — the benchmark family unit used in the study — from income taxes. Worst still, in almost all 15 states, these taxes have increased.

The number of states that continue to tax poor, working families remains too high, Phil Oliff, policy analyst at the CBPP and coauthor of the report told 24/7 Wall St. “That makes it harder for those families to pay for basic necessities like food and clothing; it makes it more difficult for them to afford work related expenses like child care and transportation costs; and it’s bad for the state’s economy.”

While the average median income of the residents of these states varies, a number are particularly poor relative to the rest of the country. States such as West Virginia, Georgia and Alabama have among the highest poverty rates in the country. As a result, a larger percentage of these states’ populations are affected by taxes on poor families. According to Oliff, “States should be helping poor families to work their way into the middle class, not taxing them deeper into poverty.”

24/7 Wall St. identified 10 states that tax two-parent families of four living at the poverty line at the highest rate, based on CBPP’s report, “The Impact of State Income Taxes on Low-Income Families in 2011.” All of these states also tax families with incomes that place them below the poverty line. For each state, we also included the income level below the poverty line where families would not be taxed. In addition to this, we included the poverty rate and median household income for each state, based on data from the U.S. Census Bureau.

These 10 states tax the poor the most, according to 24/7 Wall St.:

10. West Virginia
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Income tax on working-poor: $151/yr.
Lowest taxable income: $22,400 (97 percent of poverty line)
Poverty rate: 17.6 percent (6th highest)
Median household income: $38,218 (2nd lowest)

West Virginia is among the country's poorest states. It has both the second-lowest median household income in the nation and the sixth-highest poverty rate. Despite this, the state's tax code does not help poor families. A family of four living at the poverty line must pay $151 in income tax. West Virginia also taxes families of four making 125 percent of the federal poverty line at least $730 per year -- among the largest amounts in the country.

Read more at 24/7 Wall St.
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Filed by Harry Bradford  |