Make Tax Systems More Progressive

Oregon became the latest state to address the current fiscal crisis with progressive revenue increases.  This is part of a welcome trend that we highlighted back in April of states recognizing that budget cuts need to be balanced with wealthier state residents being asked to pay their fair share to address the effects of the economic downturn.

If most state legislatures are considering reasonable revenue increases this year, a few, like Missouri's House, have been captured by rightwing anti-tax fundamentalists.  One of the pet ideas of the far right in recent years has been eliminating the income tax for both individuals and corporations and replacing it with a sales tax applied to every transaction.  The rightwing call it the "fair tax" and the Missouri House became the first legislative chamber in the country to vote for a constitutional amendment, HJR 36, that would put the issue to voters in 2010.

After resisting the proposal for months, New York Governor Patterson has agreed with legislative leaders to raise income taxes on the wealthiest state residents in order to help close the state budget gap.  “It’s a profound breakthrough for tax fairness,” said Dan Cantor, executive director of the Working Families Party, an organization of New York individuals, labor unions and other groups that was a leader in the campaign to raise the tax rates.  The New York deal is part of a national movement of state leaders looking to raise new revenue from high-income residents to avoid budget cuts and fund needed investments for long-term economic recovery.

Addressing the recession affecting New Jersey, as well as many other states, New Jersey Governor Jon Corzine last week presented a plan for reviving the state economy.  Some of the proposals - such as speeding up work on infrastructure projects and putting $500 million of state pension money in community banks to spur lending to local businesses - are smart and desperately needed.

Too often, the impact that policies and measures have on low-income and marginalized communities is considered only as an after thought, if at all. Climate change policies are no exception.  

The budget news is grim in some states.  Twenty states face a combined budget shortfall of at least $35 billion for 2009, according to analysis by the Center on Budget Policy & Priorities (see CBPP graph below). Another 8 states will likely have budget problems next year or the year after.

In a dramatic sweep of 117 employers, a new New York State joint task force of state labor, tax and worker compensation agencies found that 2,078 employees had been illegally misclassified as independent contractors, with $19 million in wages not reported to the state.  An additional 646 workers were owed minimum wage and overtime pay totaling $3 million.

Because it lacks a state income tax, Washington State creates one of the highest tax burdens on poorer families, but some relief is being proposed, as the Washington State Budget & Policy Center outlines in this policy brief, in the form of a Working Families Credit which would give 350,000 Washington residents the equivalent of 10% of their federal Earned Income Tax Credit (EITC) refund.

It's now ten years since the 1996 welfare law promised to end "welfare as we know it." That goal may have been accomplished, but the results have been decidedly mixed, both for poor families and for state lawmakers coping with changing federal mandates.

The libertarian movement backed by a super-wealthy New York developer is proving why it hates the government so much: they appear constitutionally unable to follow the law. Howard Rich and his cronies have been behind efforts to clone Colorado's disastrous TABOR spending cap measure, various knock-off proposals based on Oregon's anti-land use planning law Measure 37, and various assaults on the judicial system.