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Altaf Rahamatulla on April 7, 2011 - 11:58am
Several elected officials across the states have approached budget shortfalls with extremely short-sighted and economically damaging proposals, including lavish tax breaks for corporations, slashing unemployment benefits, heinous cuts to programs that primarily benefit middle class and working families, eliminating earned income tax credit (EITC) programs, and privatizing services and institutions across the board, such as mental health services, prisons, and infrastructure. These types of policies will only serve to worsen fiscal pressures, exacerbate the economic pain of the middle class, increase inequality, and heighten the current regressivity of state tax structures, which, on average, place a heavier burden on low and middle-income earners than the rich. This is demonstrative of a disturbing and pervasive recent trend: tax breaks for the affluent and corporations, and austerity for the rest.
By peddling baseless and debunked right-wing rhetoric, these very same officials refuse to consider sensible, practical, and progressive alternatives to alleviating fiscal woes, despite overwhelming public support for such measures. In fact,in recent voter surveys, support for such policies rates extraordinarily high with respondents across the ideological spectrum. A recent poll conducted in New York state found that 71 percent of voters supported the extension of a "millionaire's tax" surcharge, including 54 percent of Republicans. In California, 78 percent of respondents agreed that a 1 percent increase in the income tax rate for individuals earning more than $500,000 was an appropriate step to take to address the deficit.
At the national level, a February 2011 Wall Street Journal/NBC poll found that 81 percent of respondents thought "placing a surtax on federal income taxes for people earning over one million dollars a year" was totally or mostly acceptable as a way to reduce the budget deficit. The same poll indicated that 68 percent supported "phasing out the Bush tax cuts for families earning $250,000 or more per year" in response to the samequestion.
Voters are recognizing the need for revenue to shore up state and local budgets at the ballot box as well. This past Tuesday, residents in St. Louis and Kansas City, Missouri, voted to retain a 1 percent earnings tax by an enormous margin. The revenue from the earnings tax represents one-third, or $140 million, of St. Loius’ budget, and two-fifths of Kansas City’s, or $200 million.
A number of state lawmakers have prioritized progressive tax and budget policy solutions as an essential piece of confronting shortfalls. In early January, Illinois enacted an increase in its personal and corporate income tax. This parallels a general trend of states increasing revenue during recent economic downturns, as over 30 states increased taxes in 2008 and 2009.
In Missouri, Rep. Jeanette Mott Oxford has introduced HB637 this session, an effort to modernize the state's tax structure by creating new top income tax rates and establishing a refundable tax credit for working families, and HB930, a bill that would eliminate the state income tax deduction for federal income taxes paid, a deduction which one expert noted "deprives the state of millions of dollars in needed funds and benefits almost exclusively the very wealthiest members of our communities, failing to promote tax fairness." Massachusetts Sen. Jamie Eldridge sponsored S19, a bill that would amend the state constitution to reform the state's current flax tax by increasing high-end income tax rates, which would generate millions in new revenue. Finally, other state lawmakers are looking to close corporate tax loopholes and end ineffective or costly subsidies.
During an economic downturn, progressive revenue generation is far preferable to deep cuts, as it allows states to provide funding for essential programs, pump money into the economy, and protect working families.As the Center on Budget and Policy Priorities has noted, "large and growing shares of the nation’s income and wealth are in the hands of a small number of taxpayers... While states can’t address growing inequality all on their own, a progressive income tax is part of the solution – not part of the problem."
Full Resources from this Article
Center on Budget and Policy Priorities – Don’t Blame State Budget Problems on Progressive Income Tax
This article is part of PSN's email newsletter, The Stateside Dispatch.
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