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States Using Common-Sense Tax Increases to Deal with Budget Deficits

States Using Common-Sense Tax Increases to Deal with Budget Deficits

Thursday, May 14, 2009

PERMALINK: http://www.progressivestates.org/node/23088


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Legislators working with Progressive States Network have created a sign on letter for state legislators across the country calling for real health care reform at the federal level, including support for choice of a public health insurance plan to ensure choice, access and affordability for consumers.

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Increasing-Democracy

By: NATHAN NEWMAN

States Using Common-Sense Tax Increases to Deal with Budget Deficits

As we detailed a few weeks ago, many states recognized this year that trying to solve budget crises with spending cuts would not only hurt many vulnerable state residents, but also would not be the most effective policy for economic recovery and long-term growth.

As sessions have moved forward, sixteen states have enacted tax increases and another seventeen states are considering revenue-raising options to close budget gaps, according to this analysis (and graph below) from the Center on Budget and Policy Priorities. 

New revenues enacted range from higher tax rates for high-income earners in New York and Hawaii, expansions of the sales tax in California, broadening the sales tax base and enacting corporate tax reforms in Wisconsin, and a array of new revenue sources in other states.

States have traditionally raised taxes in past recessions.  Yet, those states that did raise taxes suffered no drop in annual growth rates compared to states that depended on budget cuts alone during recessions. The reality is that long-term growth is dependent on making common-sense public investments, even and especially during economic downturns.  This is one reason that the states which collect the highest percentage of personal income in taxes actually sustain higher income growth.

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Increasing-Democracy

By: NATHAN Newman

Nutty, Dangerous "Fair Tax" Approved in Missouri House - Reports Highlight Likely Tax Increases for Working Families If Enacted

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.

What would be the result?  The wealthy and corporations would see a big tax cut and working families would start paying massively increased sales taxes, including on items like doctors visits and prescription drugs that have never been taxed in the past.  As this analysis by the Institute on Taxation and Economic Policy (ITEP) explains,

ITEP estimates that making HJR 36 a revenue-neutral tax change would require a new state and local average sales tax rate of 12.5 percent. This includes an increase in the basic sales tax rate of 3 percent to 9.9 percent...[T]hose with an average income of $37,000, would see an average tax hike of $2,036, the equivalent of 5.5 percent of their income...[T]he wealthiest 1 percent of Missourians, with an average income of over $1 million, would enjoy an average tax cut of $22,864 under HJR 36.

A separate report released by the Missouri Budget Project emphasizes the special harm the "fair tax" would inflict on Missourians living on fixed incomes, since it would apply sales taxes to basic services, including utilities, rent, medical care, food, prescription drugs, and child care -- most of which are things no other state makes subject to their sales tax.

So far, it seems unlikely that the Missouri Senate will join the Missouri House in sending JHR 36 to the ballot, in that case it's perhaps useful to catch the rightwing pushing their ideology in pure form.  As Rep. Roman LeBlanc (D-Kansas City) said in denouncing the bill, the "fair tax" was just part of the attack on the middle class: "And our Middle Class in this country has been under the greatest attack that we've ever seen in the history of our country."

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Increasing-Democracy

By: CHRISTIAN SMITH-SOCARIS

Georgia Becomes 2nd State to Require Proof of Citizenship to Vote

Following Arizona's lead, Georgia has passed a law requiring that all residents prove their citizenship before they can register to vote.  This is the most restrictive form of voter ID yet, and it is far more restrictive than the photo ID requirements that have been passed across the country.  It has been enacted even though there is no indication that non-citizen voting is a problem in the state; in fact, Georgia election officials are confident that the current photo ID requirement is strict enough to prevent any problems from arising.

Just how disenfranchising Georgia's new law will be is indicated by a national survey of voters conducted by the Brennan Center for Justice.  The survey found:

  • As many as 13 million people do not have documentary proof of citizenship.
  • The rate for people earning less than $25,000 is more than twice as likely to lack proof, than people earning more.
  • One third of women do not have documentary proof of citizenship with their current legal name.

Perhaps most troubling about this law is that it clearly constitutes a poll tax.  Unlike the Indiana photo ID law that was upheld by the Supreme Court, there is no provision for issuing free citizenship documents to poor voters in Georgia.  Any person wishing to register must supply proof of citizenship, even if they don't have enough money to obtain such proof.

Fortunately, the law will not go into effect until it has been reviewed by the US Dept of Justice.  While DOJ cleared the Arizona proof-of-citizenship law in the Voting Rights Act's pre-clearance process (VRA section 5), Arizona's proof-of-citizenship law was approved by the then-Bush Administration DOJ.  Observers expect the review to be far more probing this time given the new administration's stated commitment to voting rights.

Georgia's new law clearly illustrates the continuing need for Voting Rights Act pre-clearance, increasing the stakes in a coming Supreme Court decision on whether to strike down the pre-clearance provisions of the federal Voting Rights Act.  Should the court strike down section 5, Georgia voters' last hope for preventing this law from going into effect will be lost.  If that is the case, a legal challenge is likely.

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Research Roundup

Public opinion in support of progressive policies

  • The Political Ideology of the Millenial Generation - The future of progressive politics looks bright, given the deeply held progressive political beliefs held by young Americans, according to this study by the Center for American Progress.  Compared to older generations, the young millenial generation show greater support for gay marriage, a more tolerant attitude towards new immigrants, greater support for a stronger government to make the economy work, more support for universal health care, a greater desire for investments in new clean energy technologies, and believe we need a fairer trade approach to protect workers and consumers.
  • Key Religious Groups Want Government to Address Climate Change and Its Impact on World’s Poor - A national poll by Faith in Public Life finds broad support among religious groups, including Catholics and evangelicals for the idea that climate change is a threat to the world's poorest people and that government should be taking action to address the threat.

New reports on the role of higher education in promoting economic growth:

Health care coverage for children and need for health care costs transparency:

  • Coverage When It Counts- This Center for American Progress report highlights the failure of transparency of health care costs and recommends new standards for disclosure of likely out-of-pocket costs in a form to help consumers appreciate the kinds of medical events for which health insurance may be needed and relative levels of protection provided under different policies.
  • Covering More Children, Rewarding Success: State Performance Bonuses- This Families USA report discusses the new system of performance bonuses created by the new CHIP law to encourage states to exceed enrollment targets and improve retention of children in Medicaid and CHIP.

New resources on low-wage and immigrant worker rights from the National Employment Law Project

  • Unregulated Work - a presentation highlighting the systematic failure by government to deter a wide array of workplace violations and the need for greater action by policymakers.
  • Rights Begin at Home: Defending Domestic Workers' Rights - Handbooks for Illinois and California on the abuses to and methods to defend rights of domestic workers

Money in State Politics:

Green Jobs, Green Savings: Developing Maine's Economy by Securing Our Energy Future - This Opportunity Maine report identifies how energy costs stifle Maine's economy and the need for new standards for efficiency and renewable energy, workforce development to build green jobs, and new investments to build an economy based on those greener standards.


Resources

States Using Common-Sense Tax Increases to Deal with Budget Deficits

Center on Budget and Policy Priorities - Tax Measures Help Balance State Budgets: A Common and Reasonable Response to Shortfalls
Progressive States Network - Taxing High-Income Residents: Better than Budget Cuts, Better for Economic Growth
California Budget Project - Budget Cuts or Tax Increases: Which are Preferable During an Economic Downturn?
Institute on Taxation and Economic Policy - High Income Tax States Have Strong Economies

Nutty, Dangerous "Fair Tax" Approved in Missouri House - Reports Highlight Likely Tax Increases for Working Families If Enacted

Citizens for Tax Justice - Missouri House GOP Approves Massive Tax Increase on the Middle-Class, Tax Cuts for the Rich
Institute on Taxation and Economic Policy - Assessing the Impact of Missouri's "Fair Tax" Proposal: Middle Income Missourians Would Be the Hardest Hit by HJR 36
Missouri Budget Project - Consequences of HJR 36: Proposal to Dramatically Alter Missouri’s Tax Structure Would Burden Missouri Families and Economy

Georgia Becomes 2nd State to Require Proof of Citizenship to Vote

Brennan Center for Justice - Citizens Without Proof
Brennan Center for Justice - Survey of Georgia Election Officials
Senate Bill 86
AZCentral - Georgia Follows Arizona on Citizenship for Voters
Alliance for Justice - Supreme Court to Re-examine Voting Rights Act

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The Stateside Dispatch is written and edited by:

Nathan Newman, Interim Executive Director
Caroline Fan, Immigration and Workers' Rights Policy Specialist
Julie Schwartz, Broadband and Economic Development Policy Specialist
Christian Smith-Socaris, Election Reform Policy Specialist
Adam Thompson, Health Care Policy Specialist
Julie Bero, Executive Administrator and Outreach Associate
Austin Guest, Communications Specialist
Mike Maiorini, Online Technology Manager
Marisol Thomer, Outreach Coordinator

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