"The Institute on Taxation and Economic Policy (ITEP) has a proposal for Florida, Nevada, and five other states that do not impose an income tax: Swap a chunk of your sales tax for an income tax and Uncle Sam will foot much of the bill.
That’s the basic premise of Leaving Money on the Table, a joint effort of ITEP and United for a Fair Economy's Tax Fairness Organizing Collaborative, which argues for a "revenue neutral" shift from sales taxes to income taxes in seven states.
Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming rely on sales taxes to make up for their lack of a personal income tax, according to the report. By adopting a progressive graduated-rate income tax, of between 4.5 percent and 6.5 percent, and offsetting it with a reduction in the sales tax, those states could reduce their residents' federal income tax payments by as much as $5.5 billion. [...]"
Read the full blog by Dolores W. Gregory on BNATax.com
AP Photo via CBS News
In April, Arizona Governor Jan Brewer signed into law the anti-immigrant legislation, SB 1070. The law mandates state and local law enforcement to stop and check the immigration statuses of anyone they believe could be an undocumented immigrant. If a "suspect" can't prove legal status on the spot, he or she may be detained. And, built into the law is the right of legal Arizona residents to sue state officials or agencies that fail to or choose not to enforce SB 1070 (see
Sec. 2, Article 8G).
You might be wondering, How can they tell if someone is undocumented? Simply put, they eyeball it. If you're a individual with brown complexion, you're fair game. If your next thought is, Isn't that racial profiling?, you're right on track.
Despite Gov. Brewer's defense of the law and assurances that racial profiling will not be a practice in its enforcement, it's clear that it was happening even before the law was passed, as in this case of wrongful detainment. What's still very unclear is how racial profiling won't be a practice in its enforcement. That being the case, we can safely say that the law is immoral, unconstitutional in the U.S, and in violation of international human rights standards.
There is a growing movement of cities, coalitions, organizations, and individuals--some very high profile--who have furiously protested Arizona's action since the law passed in April, an indication of its gaining momentum. But, this is no light debate. President Obama has taken a very public stand against SB 1070. And, while he earlier pledged to pass immigration reform this year, he more recently worked a vague pushing of that deadline into a Cinco de Mayo address.
If this movement for humane immigration reform maintains its intensity, a historic immigrant rights victory just may be on the horizon.
The "Temporary" Bush Tax Cuts that Won't Go Away...
In 2001 and 2003, the Bush Administration pushed through legislation that cut personal income tax rates, cut tax rates on capital gains and dividends, and cut the federal estate tax on multi-millionaires. The reductions were phased in over several years, then set to revert in 2011 to their pre-Bush levels (a gimmick designed to mask the true cost of the cuts).
But instead of expiring in 2011 as planned, these cuts were extended for another two years as part of the tax deal struck between President Obama and GOP leaders. The Obama-GOP tax deal also included other measures, including weakening of the estate tax to its lowest rate since 1932 and a temporary two percent reduction of the Social Security tax rate. The income tax rates, capital gains and dividend rates, and estate tax are all set to revert to their pre-Bush levels at the end of 2012.
The Bush tax cuts were bad policy, and any extension of these tax breaks for millionaires and billionaires is bad for this country. Here's why:
1. At a time of mounting federal deficits, we cannot afford such lavish cuts.
Including interest, the Bush Tax Cuts cost us $2.5 trillion through 2010. The Obama-GOP tax deal, most of which consists of the extension of the Bush Tax Cuts, will cost $855 billion over the two-year extension period. $424 billion of that is in 2011 alone, nearly 40% of which will go to the top 5% of income earners.
2. The Bush tax cuts were rooted in the failed trickle down policies of the past.
Over half of all the Bush tax cuts went to the top 5% of households, while the bottom 60% of households shared less than 13% of the Bush tax cuts. Instead of the promised trickle-down, we got stagnant wages for middle class Americans while the wealthy became fabulously wealthy. We now have the greatest economic disparity in wealth since just before the Great Depression.
3. Public structures are the foundation upon which prosperity is built.
Many wealthy people understand that schools, courts, roads, bridges and transportation systems all play a role in their own financial success. Every successful businessperson in this country is building his or her prosperity on the foundation of public structures our tax dollars make possible. It’s only fair that they are asked to give back to support those structures.
4. Public spending, not tax cuts, is the most effective strategy for creating jobs.
With pressure to rein in deficits, Congress is increasingly forced to choose between spending cuts or tax increases. Powerful analysis from Moody’s have shown that public spending on schools, roads, buildings, public safety, and even unemployment benefits, provides more economic stimulus ($1.36 to $1.64 for each dollar spent), than making the Bush tax cuts permanent (29¢ to 37¢ for each dollar given up).
5. Taxes are not charity. They are part of our shared contract as citizens of this country.
Achieving big things requires us to pool resources through our tax system. Individual charitable giving cannot build a road or defend a nation. Even if hundreds of people gave their tax savings back to the US Treasury, it wouldn’t fundamentally change things. We are all citizens of the same nation and we need to share the responsibility of supporting it, especially high-wealth individuals who have been the largest recipients of the wasteful Bush tax cuts for the last 10 years.
With the majority of tax cut provisions expiring at the end of 2012, the question remains - what will federal tax law look like in the future?
The Economist is getting a lot right these days. After dropping some wisdom on celebrity columnist Dana Milbank and torture advocate Marc Thiessen (both of the Washington Post), they’re weighing in on inequality and social mobility in the U.S. They lay out some facts:
"Between 1947 and 1973, the typical American family’s income roughly doubled in real terms. Between 1973 and 2007, however, it grew by only 22%—and this thanks to the rise of two-worker households. In 2004 men in their 30s earned 12% less in real terms than their fathers did at a similar age, according to Pew’s Economic Mobility Project." [emphasis added]
And, “The richest 10% earned nearly half of all income, surpassing even their share in 1928, the year before the Great Crash.” (That’s British for the Great Depression.) They also mention that “parental income is a better predictor of a child’s future in America than in much of Europe,” something we shared with you several months back. And, they even go a step further, citing a study by the Economic Mobility Project, which finds that “those born to black middle-class families are much more likely than their white counterparts to fall in rank.”
Nicely done, but they still missed the mark on a few points. For instance, they write, “[T]he recession came at the end of a period marked by record levels of inequality.” Close, but the recession didn’t end growing inequality, it’s actually making it worse, a fact they point out later in the same article.
"The recession, meanwhile, may have exacerbated trends in inequality. The capital markets, points out Timothy Smeeding of the University of Wisconsin, have recovered more quickly than the housing or labour markets. This is troubling for the poor and the middle class, since homes represent a greater share of their wealth. Unemployment has been concentrated in America’s lower ranks. As the rich recover, poor and middle-class people may lag behind. Young workers may fare badly, too. Those who graduate in recessions have lower incomes in the long term, according to Lisa Kahn of Yale University." [emphasis added]
While it’s good that they corrected themselves, it’s odd that they needed to. As with their premature declaration of the end of a period of record inequality, they also jumped the gun on the end of the Bush tax cuts for the wealthy. We’re still working on that. For the record, President Obama has proposed ending the Bush tax cuts on top incomes while extending them for everybody else, but Congress has not yet taken up his budget proposal. When they do, even Obama’s modest tax proposals will be under withering attacks from America’s angry, but misguided anti-tax movement. That’s why we need as many voices as we can get calling for fairer economic policies.
The Economist has long been the world’s leading journal of laissez-faire economics. So, we weren’t shocked to see a call for “reducing entitlements” in their conclusion. It’s disappointing and wrong, but it’s still refreshing to see them addressing inequality at all.
TFOC on the Radio
The following radio news stories about a recent TFOC report, entitled Solutions that Work for Main Street: Progressive Guidelines for Closing Recessionary State Budget Gaps, explain that budget cuts are not the only answer to widespread state budget deficits.
These stories, originally aired in Virginia, Tennessee, Florida, and New York, were syndicated for broadcast on radio stations across the country, reaching well over 4 million listeners! See below for transcript exerpts and click through to listen to the stories on Public News Service.
April 1, 2010
"Ron Deutsch, executive director of New Yorkers for Fiscal Fairness, points out that Wall Street is one sector of New York's economy that has bounced back from the recession and into record profits. To head off painful state budget cuts, which also will send a negative ripple effect through the state's economy, he urges decisionmakers to consider taxing Wall Street's bonuses and excess profits, instead.
'We've spent trillions to shore up the financial sector, and Main Street basically bailed out Wall Street. So, what we're saying is there are a number of different ways Wall Street could help contribute to helping solve our state's budget gap right now.
The report, issued by the United for a Fair Economy Tax Fairness Organizing Collaborative, also suggests tapping into rainy day funds, scrutinizing existing tax breaks and encouraging more federal revenue sharing.
[...] Karen Kraut, director of the Tax Fairness Organizing Collaborative, says [...] "We're also looking at things like closing corporate loopholes and ending tax breaks for businesses that don't produce the jobs that they say they're going to produce."
Listen to our 4/1/10 New York radio story on Public News Service.
April 1, 2010
"Daniella Levine, president and CEO of the Human Services Coalition, Miami, says legislators need to put politics aside because cutting state spending hurts economic recovery. Instead, she suggests they focus on fine-tuning the tax code so it reflects a progressive structure - meaning those who make the least pay the smallest share and those who make the most pay a larger share to fund critical services.
"We are looking at cutting some of the most basic services - health care and education and senior programs - and what is so worrisome is we are still continuing to reduce taxes for those who are able to pay."
Listen to our 4/1/10 Florida radio story on Public News Service.
March 31, 2010
"While many would argue against raising taxes in tough economic times, Elizabeth Wright, executive director of Tennesseans for Fair Taxation, says the discussion is more complex and needs to focus on getting rid of unsound and unfair taxes.
"Our state economy is based far too heavily on the sales tax. Most states have a more even balance: a sales tax, a property tax and a tax on personal income."
Listen to our 3/31/10 Tennessee radio story on Public News Service.
March 31, 2010
"David Shreve, report co-author and an economist with the Virginia Organizing Project, says legislators need to put politics aside, because cutting state spending hurts the economy. Instead, he suggests states focus on fine-tuning their tax code so it reflects a progressive structure -- meaning those who make the least pay the smallest share and those who make the most pay a larger share.
"This is not only much, much easier to do than anyone would imagine, it's very economically sound to approach it this way. If you're looking for the optimum way to move Virginia more quickly out of the recession, this is it."
Listen to our 3/31/10 Virginia radio story on Public News Service.
"Imagine this: your state has the option of reducing its residents’ combined federal tax bills by hundreds of millions of dollars a year and, at the same time, substantially reducing state taxes for almost 80 percent of its residents ... but then chooses not to do so.
Remarkably, that’s exactly what Wyoming and six other states are doing. Wyoming, Florida, Nevada, South Dakota, Tennessee, Texas, and Washington are opting out of a state tax reform that would make those significant benefits to taxpayers possible.
Like the other six states, Wyoming raises revenue by relying heavily on sales taxes instead of levying a personal state income tax. Those two revenue approaches combined create a lose-lose situation for most Wyomingites.
Low- and middle-income residents lose because they end up paying significantly more of their income in total state taxes than do high-income taxpayers. And residents who itemize their federal tax returns lose the "bang for the buck" on the deduction for state tax payments (the "federal offset"), thereby missing an opportunity to export a more substantial part of their state tax load to the federal government. [...]"
Read the full column by Karen Kraut in the Casper Star-Tribune
Listen to Bill Creighton on The Rick Smith Show.
Highlights from the interview:
Creighton: "We're the folks that the Bush Tax Cuts were designed to help...my tax burden has progressively gone down, since, well actually, since Reagan."
Smith: "So let's say we jump back up to just the Reagan tax cut, which was the top marginal rate at about 50%, would your lifestyle completely change, or would you not even notice it?
Creighton: "It wouldn't affect me a bit. If I were paying what I should have been paying, I would still have enough.
What's ludicrous is that I can go out and swing a sledge hammer and pay 33, 34, 35% for swinging a sledge hammer, or I can sit on my duff and watch my [invested] money grow and pay what actually works out to less than 15%. It's crazy... [Our country] rewards sitting back and doing nothing if you have enough...We penalize work by comparison for what we do for not working.
A bunch of us have signed a pledge which says that we are giving back the tax cuts we've received from Bush. There is a tax calculator on ResponsibleWealth.org where individuals can go...and the calculator will show you what your Bush 'tax gift' was...we have pledged to give that money back to fix this tax code."
This is sad. Despite everything, it’s still hard to believe that anyone would oppose a tax cut on basic food items because for fear that it will lead to "increasing taxes on some taxpayers making more than $200,000 a year."
Back in April, the Alabama House of Representatives voted not to debate House Bill 1, a bill that would have repealed the 4% sales tax on groceries and saved residents upwards of $300 million per year. Why? Because some didn't like that it made up for that revenue with modest tax increases on those making more than $200,000 per year.
Our Alabama TFOC partner waged a noble campaign. There will be victories to come, but, for now, this stings.
"[...] Cambridge was a popular target of Tea Party warm-up acts (the Boston Globe was too, with one speaker bellowing you’ll only read the real scoop “in the Herald.”)
But some from Cambridge didn’t take the liberal ribbing sitting down.
'We share some of the anger,' said Steve Schnapp, 64, of Cambridge. Schnapp works for United for a Fair Economy, a nonpartisan group. 'We feel the target of (the Tea Party) anger is misdirected. The problem isn’t big government, it is the fact that wealthy individuals and institutions have too much power.”
Read the full article from the Boston Herald
Visit UFE's Flickr page for more photos from this event
SORRY! Fox News' embeddable link wasn't so embeddable. Click here or on the image below to watch the video on FoxBusiness.com.