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Make Tax Systems More Progressive

The usual objection to raising taxes on the wealthy or corporations is that such taxes undermine economic growth; yet there is remarkably little evidence to back up those claims. Studies instead have emphasized that neither business tax cuts nor estate tax cuts play any significant role in local economic growth. Instead, the sad truth is that almost every state tax system requires working families to pay a higher percentage of their income in taxes than their wealthier citizens. A report by the Center on Budget and Policy Priorities and EPI emphasizes that making state tax systems more progressive is also a way to mitigate the broader trend of growing before-tax economic inequality.

Core policies to achieve these goals include:

From the Dispatch

Tax Limitation Rules Costing States Big Bucks in Downgraded Bond Ratings

Aug 05, 2010

When state governments make it nearly impossible to raise taxes to pay their bills, their creditors apparently get very nervous and increase their costs to borrow money. Both Arizona and California have seen their bond ratings downgraded -- and their borrowing costs likely increasing -- with analysts citing both states' tax limitation rules that require a two-thirds vote of their legislatures to raise taxes as one reason.
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Debating Federalism: Conservative False History and Hypocrisy vs. Progressive Collaborative Federalism

Jun 15, 2010

The challenge for progressives from this “states rights” movement is not that any of these laws are likely to survive in court, but that conservatives too often get away with claiming to stand for constitutional values without significant challenge from progressives. The reality is that the right wing has no credibility in promoting their states’ rights arguments and should be challenged more directly. As this Dispatch will outline, their arguments fail on multiple grounds.

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Maine Voters Reject Tax Reform Initiative, but Approve Infrastructure Investment

Jun 10, 2010

This past Tuesday, Maine votersconsidered legislation which would have reformed the state's tax structure and bond measures that will bolster infrastructure investment.By a large margin, Mainers rejected a law passed last June, LD1495, to lower the top income tax rate from 8.5 percent to 6.5 percent for state residents earning less than $250,000 annually by broadening the sales tax to include different services and shifting tax burden to nonresidents by increasing the meals and lodging tax from 7 to 8.5 percent.
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State Revenue Increases Across the Nation Continue to Ease Pain of Downturn

May 24, 2010

As this Dispatch will detail, these votes mirror actions taking place in both conservative and progressive states and localities around the country. In 2009 and 2010, states have enacted a wide-ranging set of revenue increases to cope with cumulative 2010 and 2011 deficits of approximately $375 billion. Although revenue forecasts are improving, states are still reeling from historic declines in the past year.

What is remarkable is that the anti-tax movement has wracked up such regular failures in the crisis, as even many state leaders previously signing "no taxes" pledges have reneged on them. Instead, popular demand for new revenue to avert budget cuts has driven legislative movement on progressive tax and budget policy.

Adding to the general public support has been research consistently showing that progressive revenue increases during a downturn is a better alternative to cuts in order to promote growth and protect vulnerable populations suffering during the recession.

Finally, this Dispatch will outline some of the effective messaging and research to demonstrate to voters that progressive measures and tax increases are economically sound and go to the programs they want preserved -- the critical step in the success of revenue campaigns.

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