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Oregon voted to increase taxes on corporations and the wealthy to help fund programs that assist low and middle-income families.
The debate around the issue was extremely contentious, but advocates effectively articulated the necessary message: increasing income tax rates at the top only affects a small number of state residents, and is economically sound, politically feasible, and popular with the public. This is especially true when compared to the alternative: massive cuts in education, infrastructure, and health care that endanger a state's economic and social vitality.
As 48 states confront shortfalls this year, budget will be the predominant focus for lawmakers across the country. In fact, the Center on Budget and Policy Priorities estimates $350 billion in cumulative state deficits for 2010 and 2011. The downturn has also taken an enormous toll on tax revenue. Mark Zandi, chief economist at Moody's Economy.com, reports that state and local tax revenues dropped nine percent in 2009, “the largest decline on record going back to just after World War II.”
The Oregon vote points to progressive tax, budget, and economic policies as the most appropriate measures to deal with deficits this year.
Despite virulent Right wing rhetoric to the contrary, there is actually substantial public support for progressive revenue generation as a means to make critical investments and foster economic growth. The Center for American Progress conducted polling and found that 79 percent of the public believes, “[g]overnment investments in education, infrastructure, and science are necessary to ensure America’s long-term economic growth.” Accordingly, in a time of economic hardship, when so many working families are struggling, voters are likely to support policies to raise revenue, strengthen public programs, and provide safeguards to those who have been affected by the recession.
In 2009 alone, California, Connecticut, Colorado, Delaware, Hawaii, New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont, and Wisconsin instituted either a permanent or temporary reform of personal income taxes. Another 11 states considered or enacted business tax increases to help deal with budget deficits.
These trends provide insights on the failure of anti-tax campaigns in recent years as well. As the Ballot Initiative Strategy Center explains, "[t]he Grover Norquist, Club for Growth, Glenn Beck, Tea Party crowd tried to use the bleak budget picture as an opportunity to ratchet down even harder as states look to find the revenue necessary to protect priorities, create jobs, and get their economies going—but voters rejected that failed approach." For instance, of the Right wing’s 28 attempts to introduce the so-called “Taxpayer Bill of Rights” (TABOR), an effort to impose a rigid straitjacket on state revenue options, only Colorado has adopted this disastrous policy. The state has since experienced an increase in the number of adults and children without health insurance and a severe decline in education funding as a result of the misguided initiative.
This indicates an inherent acknowledgment that progressive tax policies do not undermine economic growth, lead to out-of-state migration of wealthy residents, or cause unemployment.
Furthermore, a common misconception about taxes is the idea that the wealthy have incredibly high tax burdens. The reality is the richest taxpayers have not been contributing their fair share for years. The Institute for Taxation and Economic Policy discovered that when you factor in sales, excise, property, and income taxes, states place a much heavier tax burden on working families as compared to the wealthy.
During an economic downturn, progressive revenue generation is preferable to deep cuts, as it allows states to provide funding for essential programs, pump money into the economy, make critical investments, and protect working families in this time of hardship.
A budget that relies too heavily on cuts will hurt the private sector and the economy as a whole by reducing consumer spending and increasing unemployment. According to the Economic Policy Institute, one dollar in cuts translates to $1.41 lost in economic activity and 41 cents less spending in the private sector. At the same time, families will have to deal with the reality of budget reductions: reduced health care services, less access to affordable housing, underfunded educational systems with larger class sizes, fewer police officers protecting communities, and generally diminished quality of vital programs.
Peter Orszag, Director of the Office of Management and Budget, and Nobel Prize winning economist, Joseph Stiglitz confirm: “[T]ax increases on higher-income families are the least damaging mechanism for closing state fiscal deficits in the short run. Reductions in government spending on goods and services, or reductions in transfer payments to lower-income families, are likely to be more damaging to the economy in the short run than tax increases focused on higher-income families.”
Spending on programs that assist low and middle-income families is smart economic policy. Working families will more readily spend their funds on basic necessities, thus boosting short-run demand and fostering market activity. For instance, economic research indicates that one dollar spent on increasing food stamps creates $1.73 in market demand.
States are exploring several other progressive policies to deal with deficits. These include eliminating wasteful subsidies and ineffective tax credits, closing corporate tax loopholes, enacting combined reporting, expanding the sales tax base to include certain services, and collecting sales tax on Internet purchases. State lawmakers are also advancing transparency legislation to foster more comprehensive reporting of subsidies, contracts, and corporate tax breaks.
Given the fiscal and economic crisis, public investments in jobs and services for those in need are critical. Progressive revenue and budget approaches are not only economically effective, but also popular with the public—for good reason.
Altaf Rahamatulla wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Altaf is the Tax and Budget Policy Specialist at the Progressive States Network, an organization that works to initiate progressive change at the state level through strategic advocacy and policy efforts. He can be reached at arahamatulla[AT]progressivestates.org.
Interested?
Time to Tax Financial Speculation For
those of us who want the financial industry to serve people and the
planet rather than dominate them, this is the most exciting reform
under serious consideration on the world stage.
Taxing Wealth for the Common Good Why some high-income Americans are asking to pay more taxes.
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27 Comments so far
Show AllThe top 2.5% are the ones who have the fewest obstacles to leaving the state, and they will. These types of social engineering schemes don't work for long.
There are so many non-sequiturs in this article I don't know where I would begin.
Very silly comment.
Social engineering is exactly what has been happening in this country since the Reagan mudslide began in 1981. The rich have engineered our political system to shift more and more of the nation's wealth to their grubby little hands. We now have a greed-based economy which best serves those to whom there is never enough and who already have more than they could ever possibly use.
Wouldn't you rather live in a country that worked like adults (think Scandinavia) to continually improve the lot of all? Remember...freedom from hunger, freedom from want is the best true measure of freedom.
>>>generalcommentator wrote: Remember...freedom from hunger, freedom from want is the best true measure of freedom.
And also the measure of a decent, civilized society.
"The top 2.5% are the ones who have the fewest obstacles to leaving the state, and they will."
Good. Let them leave. Rich people are a blight on every community that they infest. They work tirelessly to undermine zoning laws, wreck the local tax base and build big ugly gated communities full of over-sized McMansions.
In 1970 corporations paid 29% of US income taxes, today they pay 6% and within a decade they will pay none. Many states and local governments have drastically cut property taxes for corporations.
Every dollar that corporations are not paying in taxes is another dollar the government must tax you and I.
States and the Federal Gov. have a long way to go to restore corporate taxation to the level it was when the systematic destruction of the US middle class began 30 years ago.
Unfortunately, there is a generation of voters that have been groomed to accept the tax structure that we have now as normal. These are also the fools that believe that one day, if they work hard enough, they themselves will be one of the *rich*. These are the teabagger types and tend to view themselves as conservatives. Of course...you know that. Unfortunately, they don't.
Maybe they'll move to Europe or Canada. You know, places where taxes are lower...
I hear taxes are low in Mexico. This is important, cuz they'll need security against all those ignorant poor people who nevertheless know how to aim a gun.
Let 'em go and good riddance. Your comment betrays an utter lack of faith in human ingenuity and industriousness. In fact you seem to believe that capitalists need to be coddled in order to be productive, i.e., you appear to have no faith whatsoever in the "free market".
Horse flop!!
If the weaker competitors leave the kitchen because they can't take the heat, stronger competitors will enter the market and succeed by filling those empty market niches. Well, isn't that what is supposed to happen in a "free market". And if it doesn't, does it mean that the "wizards of finance" and the "captains of industry" actually prefer a big government handout and thus a rigged game and thus not a real "free market" at all?
Perhaps you prefer the "social engineering" of burst credit bubble followed by $1.5 trillion in bailouts, tax easements and loan guarantees at our expense to the geniuses who burst the bubble. Because private banks and insurance companies did it and we paid for it, it's all OK, is that it? But if the voters "engineer" some relief from crumbling services and infrastructure it's "utopian, socialism, confiscatory, blah, blah, blah..."
Why do you defend them? You're the rube. You're the mark and this is the grift. Would you defend a mugger?
The positive relationship between higher taxes and increased standards of living has been well established both in the US and in Europe.
In the US, however, the corporate media has promulgated Friedmanesque fanatasies ever since the Reagan administration.
q
I heard a Republican Congressman play that tired theme yesterday. When asked why he doesn't approve of the current version of Obamacare, in which the Feds act to control insurance company actions, he said he preferred 'the free market' of competition. Point to a system that costs twice what the rest of the world pays yet kills 40,000 Americans every year, and all these clowns think they need to say is 'free market' and all these glaring realities go away.
"Last month, Oregonians overwhelmingly approved ballot initiatives to increase taxes on high-end personal and corporate income."
It's what voter initiatives and referendums can do when they, unlike California's, are fair, with no super-majority requirements and/or unlimited ads from the rich. Why should this most democratic solution be limited to states and not used in Federal government to resolve such things as corporate war-profiteering, Big Insurance health-care, education and student loans, campaign finance reform, constitutional amendments to corporate person-hood, ending the WOD, and so on?
Here is an idea, instead of;
"increasing income tax rates at the top ... alternative: massive cuts in education, infrastructure, and health care ... "
Why not Cut the MILITARY INDUSTRIAL COMPLEX fund. Entirely maybe.
END ALL The WARS.
Bring Home EVERY United States Military Person that is stationed in the 700 bases in over 140 countries around the world.
Do NOT Upgrade the nuclear warheads.
And STOP employing murdering mercenaries, like Xe (Blackwater) that get paid doctor equivalent wages.
and Stop sending money to Israel, not a wooden nickel any more for Israel.
We would not have to spend one single red cent on another Military Weapon in this nation for a few hundred years I am sure and still out Military the entire world over.
Besides, we should NOT even have a standing Army in this country.
If we allowed our citizens to be armed and ready for NATIONAL DEFENSE (like in Switzerland) We would have NO NEED for the Military Industrial Complex, hence NO occupations around the world.
We would easily save what A Trillion or 2 Trillion dollars a year - that money could be used to A. NOT RAise taxes for ANYONE.
B. go into the infrastructure, some sort of (not forced down our throat by the threat of fines) healthcare system that makes it easy for anyone who WANTS it to get it.
And the list goes on.
I always hear people complaining about the rich or whoever. But no one ever talks about cutting the Military Industrial Complex out of the picture.
Well, I can't say no one in Politics, because Ron Paul does.
Anyway, END the FED (thats another Big problem with the economy in this country - since our tax money is used to pay of the interest incurred on the debt created by the fed) that money is NOT spent on social programs like so falsely believed. So, END The FED.
END The WARS and the Occupations and the Military Industrial Complex, and you will see a great amount of money that can be used for all the entitlement programs and social programs and whatever else everybody seems to want.
peace. love. anarchy
Everyone with brains knows that this is the solution. However, the MIC has manufacturing (jobs) in every state, thus controlling congress, and that is how they play the game.
All the money saved could go into government-funded infrastructure jobs, jobs building trains by re-tooled automakers (with the loans for re-tooling paid back to the taxpayers), tax incentives for manufacturing and buying alt.energy systems. There is a lot that could be done that would be so good for this country, and for that reason, will not be done.
F*** the Empire!
Agreed. And now we discover the true meaning of the 2nd amendment. Also,heavy taxes should be levied against the super rich because massive acumulations of wealth in private hands is a threat to our democracy, a threat to our constitution, acrimw against humanity,and a sin before God. For thatveeason alone thevrich ahould be taxed, even if we do nothing more with the money than hurl it into the ocean as the filthy lucre that it is. For this reason alone it would be wise policy.
We might do well to take a hint from Erich Fromm, who drew a distinction between 'freedom from' and 'freedom to.' That might clarify the discussion a bit.
joshuafalchion
As an Oregonian, no one was more surprised at the passage of the measure; in this Libertarian-heavy state, tax increases are almost impossible to pass. What a great day for Oregon! Now if only the rest of the country could pull its collective head from its collective ass and do the same thing.
Freedom means nothing if the only definition of freedom is the ability to be wealthier than everyone else.
Perhaps the state-by-state approach is the only way to make any progress on so many of these issues. This method would force lobbyists to spread out their efforts in 50 different cities across the country.
As long as we have a concentration of obstructionists in D.C., the only message most citizens will ever hear is, "Requiring everyone to contribute their fair share to the common good is nothing more than punishing success."
Who are the people who have the power to create money?
Money is Source Value. This value is within us.
A world is coming into being in which all will have this power, by agreeing that they will "earn" money in time instead of by labor.
All are priceless unto the least and beginning there.
The rich and powerful? Now, that's another story.
http://eieio.2020oregon.net/
Oregonians For Rich-Tweaking Taxes is a parody of the leash-led coalition of wealthy Oregonians concerned about profit growth and the economic health of their corporate bottom lines...
-EIO
This is what exasperates me with right wingers. They just do not understand that we have options. Not 'one size fits all' for every year or decade or era. Raising taxes is not, as insisted by the right, an absolute sin.
Rightwing mythology insists its what comes after that matters. Today you're raising taxes, tomorrow you're declaring war against private ownership and killing millions who protest. Against such a hell on earth only the Tea Partiers stand. Such a heavy responsibility for a group of people that dearly need to get a life.
Eat the rich.
(They taste like rattlesnake!)
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But rattlesnake tastes like chicken... Oh, right.
Gary
“Your tax dollars are being used to pay for grade school classes that teach our children that cannibalism, wife-swapping and the murder of infants and the elderly are acceptable behavior”
-- Senator Jesse Helms
Progressive taxes need to be restored in this country. There is no doubt about that. That said, with significant chunks of our tax dollars used to slaughter women and children in far-flung regions of the world, supporting any tax increase is questionable. Give them more money when they can figure out how to use it responsibly. Until then, teabaggers will continue to win hearts and minds because the average American doesn't really see much of his or her tax dollar.
Occam's razor: the simplest solution is best.
EVERYBODY pays 10% on their gross ( including those non-breathing, bloodless corporate droid persons)
If a country, state, city had to cut every program 10% , wouldn't that be more fair than cherry picking?
Nobody can write off losses. You win, you lose, that's life.
No mortgage tax credit, no children tax credit. You can't afford, you don't have!
Wouldn't a Spartan life style for all be better than living with those " 30 tyrants? "
All knowing tax and budget people, could this work?
Regressive tax schemes such as the one you outlined are those most favored by right wing Randian trash. What do our taxes pay for? Protection. What does a person living in a ghetto hovel have worth protecting? Educated society. What poor person hires educated people. Roads and airports. What poor person drives or flies in a jet? The people who benefit most should pay the most.
Some Randian guy once proposed to me a transaction tax. I don't think he thought it through carefully. 1 penny on every dollar spent split between buyer and seller. This would include any and all transactions. No corporate loopholes, everyone pays, everything is taxed. This would include raw materials, intermediate goods, final goods, services, wages, anything. If you think about this tax, it is tremendously progressive. Furthermore, it is truly fair. Those who buy and sell the most, pay the most. I don't know how much money cycles in the economy in any given year but I suspect our coffers would be bulging. It will never come to pass because our corporate fascist taskmasters would never pay anything above 0%.
Lefty---
I may be randy but I'm not a Randian.
The author proposes a financial transactions tax that would apply to all Wall Street type transactions but would have the effect of slowing down speculative transactions such as credit default swaps. The figure most used is 0.25%. Another good proposal would be to closely regulate short selling.
I just heard that Goldman Sachs is creating an instrument that enables it to bet against the Greek economy! Think about it. One corporation can "short sell" entire countries.
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