The concept of a “public option” entered the American lexicon in 2009, during the congressional debate over what became the Affordable Care Act (ACA). It suggested what many considered a radical idea: that government itself would offer a health-care coverage plan, thereby forcing private insurance providers to compete with a lower-cost alternative. Progressive groups rallied behind the notion that a public option could bring much-needed choice into the health-care marketplace without the political challenges of adopting a single-payer system. But opponents still lambasted the entire ACA as a “government takeover” and regarded the “public option” in particular as the epitome of socialism. Although that measure failed, the fact that the public option concept spurred such political controversy itself is deeply paradoxical because, in fact, public funding of social provision, as well as government intervention to support the broader market economy, has a long history in the United States – one that is far more expansive and broadly used today than many Americans realize.

What federal tax structures giveth to low- and middle-income families, state and local tax structures taketh away. Chapter 5 tells the story of our unjust American tax system. While the overall federal tax structure is generally progressive, state and local tax systems are notably regressive. When analyzed as a whole, the combined tax system imposed on Americans today is mildly progressive. Chapter 5 describes the attributes of state and local tax systems focusing on structures that impose higher effective tax rates on low- and middle-income households. The chapter is divided into three sections discussing the major components of state and local taxation including property, sales and excise, and income taxation. Each section describes common attributes by focusing on specific state data and examples. States with particularly regressive features are highlighted as well as states with more progressive features. The chapter focuses on details of progressivity to provide not only a catalyst but also a template for positive change. The chapter concludes that state and local tax analysis must be part of any tax distribution analysis. Federal, state, and local tax policies and costs must be viewed together to understand that many poor families suffer a tax burden, but tax structures exist that governments can implement to mitigate and even alleviate this hardship.