Left In Lowell

Let’s Have A New Ballot Question On Taxes - Progressive Style

by Lynne at 12:14 pm.

In an article addressing the shrinking revenues and the tough time facing the new session of the state legislature, Matt Murphy (my fave local journalist by the way) tells us that government officials, while cutting as much as they can, may be looking at revenue streams such as an increase in the gas or sales tax, or casinos (ug, more on that later).

I have a fix! It will solve all our problems, and be a much fairer tax system than increasing the sales tax (which hits the lower and middle classes disproportionately harder). You can even call it a tax cut for middle income and lower income families. We need a progressive income tax.

More than half the states in the Union have progressive income tax. A progressive income tax is based on the ability to pay. Families struggling to buy food to feed their families are hit harder by a flat income tax than a family making $500,000 a year - a larger percent of the former family’s income is dedicated to essentials such as shelter (mortgage or rent), food, commuting, basic clothing. Therefore, a 5.3% tax rate for them takes up money they need, whereas 5.3% of $500,000 takes money off the top - that richer family can forgo a few nonessentials in order to pay it.

So, why not give a nice, bound-to-be-popular income tax cut…to anyone making less than, say, $100,000? Give them a reduced rate of 4%, maybe even 3.5%. People making $100K-$200K could get taxed at 5.5%. Then people making more than $200,000 get taxed at, say, 7%. New Jersey’s top tax rate on incomes over $500,000 is 9%, and no, there was no “rich flight” out of that state.

It’s proven to all but some stubborn trickle-downers and libertarians that prosperity still flourishes when top tax rates are much higher than they are now. Some of our best years as a nation were under much higher top tax rates. When you put the tax burden proportionately on people who can least afford it, upward mobility suffers, and so do revenues that can accomplish the level playing field (like quality education and affordable higher ed). You just don’t have enough money to do that job when you’re squeezing blood from a stone.

At some point, yes, some ridiculously high taxes even on rich people does probably slow down growth and reinvestment. But it is completely evident to anyone with half a brain cell that we are no where near that point in our current taxing regime. The so-called Laffer curve (the basis for that disproven trickle-down economic theory) never bothers to tell you where we are sitting on that curve. Well, we’re at pretty historic lows for the different tax brackets, particularly the top brackets. I don’t think anyone can really claim that less is more at these tax levels, nor at levels significantly higher than where we are now.

But if we did this right, we’d be giving a tax cut to those who really need it (like Obama is proposing on the national level) and still could come out ahead on revenues, so we can fix our ailing infrastructure, invest in higher ed, keep our universal health care (with fixes of course), stop the bleeding in our public schools, and have great program to combat hunger and poverty.

If my husband and I were making so much money that I stopped worrying where my next mortgage payment was going to come from, I’d gladly pay a higher tax. Call it giving back to a system which would have given me a lot of breaks I wouldn’t have otherwise had (like affordable higher education).

Now, I know the legislature is a bunch of cowards on tax issues. Sorry, but they are. They would never in a million years take up a bill (or, if I recall, a necessary Constitutional Convention) that would do this. So, I propose that we get aggressive in fighting the anti-taxers in our midst who keep putting initiatives that would destroy the revenues for the state like this last round. I say we put a progressive tax on the ballot. Tell voters that if they make less than that upper end of the lowest tax bracket, they will get a lovely tax cut. There are more of us middle class folks than there is rich people. I think it would pass, especially given that it is obvious from the margin of defeat on Question 1 that people understand that we cannot expect a level playing field and services for ourselves and our families, if we do not share in the burden of paying for it.

[Filed under MA politics, Budget] [link]

18 Responses to “Let’s Have A New Ballot Question On Taxes - Progressive Style”

Tim Little Says:
November 6th, 2008 at 3:56 pm
Yes, the persistence of the flat tax has always stuck out like a sore thumb when it comes to the Bay State’s progressive “creds”.

We know the power of the grass-/netroots, Lynne; time to get the ball rolling!
kpem Says:
November 6th, 2008 at 4:19 pm
Lynne,
I am sure you will not agree, but believe it or not $100,000 does not make many of us wealthy or even give us the pleasure of not worrying about our mortgage. I would be all for paying higher tax rates if I was not already being penalized on things like medical bills and daycare. My child was born with a condition that can run as much as $1000 per month in expenses. Blue cross, Tufts, Cigna etc. all refuse coverage even though the doctors say the treatment is required. (A doctor saying it is required does not make it covered so we learned) The only health insurance that covers her condition is Mass Health, which we do not qualify. This gets me irate that only people that have the state to advocate for them get “better” insurance. Parents that make $100,000 also have to work alot and pay alot in daycare to make that. ($17,000 and we get to write off $3000?) Give us Universal Health insurance, a full day care write off, full medical deductions, and higher child credits, and I would say tax away I have the money. Do not get me wrong I am not complaining. I am lucky we can pay what we are being billed, but please do not push us as the picture of wealth. Lets allow for legitimate expenses before we make the blanket statement of “hey you can afford it”
waittilnextyr Says:
November 6th, 2008 at 4:57 pm
Graduated tax gets an OK in Mass.
Article from: The Boston Globe Article date: November 17, 1992 Author: Don Aucoin, Globe Staff More results for: proposal for graduated income tax in massachusetts | Copyright informationCopyright 1992 The Boston Globe.

Setting the stage for a fierce debate over tax policy, the state Legislature gave overwhelming support yesterday to a constitutional amendment to establish a graduated income tax.

The 132-39 vote at a joint session of the Senate and House, which took place without a murmur of debate, is a major first step toward putting the contentious issue on the ballot in two years.

“We just cast a vote on the single most important issue in state government,” said an exultant state Rep. James Marzilli (D-Arlington), who supports a graduated income tax. “This is a great victory.”
fishydude Says:
November 6th, 2008 at 9:06 pm
Once again A liberal “progressive” calls for a truly regressive tax. taxing productivity creates disincentive to be creative. It does punish success.
Flat taxes treat all income equally. The regressive federal tax results in me writing an addition check for at least $2000 every year even though I only get to take home a little over half my salary each pay day. And I don’t make $200,000 a year either.
Communism does not work. And when the number of people taking money from their neighbors exceeds the number paying, there will be nothing to stop the complete legalized theft of other people’s property.
Liberal judges have already declared it legal for the government to steal private property from one person and give it to another private party for private gain when the new party promises to pay more taxes. (KELO)
Liberals will never accept that most of the “poor” are thus by their own decisions. Those who did have done well do nit do so at the expense of someone else, unless one is a thief.
That I earn substantially more than a cashier at Wal-Mart is deemed “unfair” by liberals. That I do more for charity that the sum total of a Wal-Mart cashier doesn’t matter. That I went to college, earned a degree, don’t waste money on alcohol drugs and cigarettes and now reap the rewards of these decisions means I must be forced pay more to help those who made bad decision avoid the consequences of their bad decisions. Here is a news flash for your. History proves over and over that when bad decisions are subsidized, the number of people making bad decisions increase.
Lynne Says:
November 7th, 2008 at 7:25 am
kpem: didn’t say 100K makes you rich. I said lower taxes for people under that, keep them around the same for people at 100K-200K, and make them higher for people with more than that.

Surely we can all agree, if you are making 200K, you aren’t worrying about whether or not you can feed your family quality food? And if people buy million-dollar homes and leverage themselves too high when making 200K, that’s their own fault.

FYI, for all moderators, for comments on the other thread, this fishydude is hereby banned going forward. I don’t put up with hate speech.
Kim Says:
November 7th, 2008 at 7:50 am
I do think the real issue is what defines wealthy. Hopefully when we hit 200k we can start my husbands business. I would not vote for this with the amounts that you proposed because I think it hurts small business.
Lynne Says:
November 7th, 2008 at 9:01 am
I completely disagree. If I was making 200K in my small business (and that would be net profit, not gross, after you deduct business expenses by the way) I’d be perfectly in the position to pay a couple more percentage points in tax rate.

But, hey, make the ceiling 250K. Whatever. I was throwing out numbers off the top of my head. They weren’t set in stone. I particularly really want to concentrate on the 500K+ incomes…New Jersey has a 9% rate for them, and we can all agree, if you are making half a million a year, you are not middle class any more, right?
Lynne Says:
November 7th, 2008 at 9:03 am
By the way, this income tax increase theoretically should NOT prevent people from expanding their businesses. Remember, the income tax hits after expenses, therefore adding employees, as an expense, deducts from your taxable profit or income. So this bull about “small businesses of 250K or more won’t expand if they are taxed at higher rates” crap is exactly that - total crap.

In fact, I would think it might even encourage people to hire more and expand rather than pay the higher rate at 250K or 500K+. At least, it would me.
mike01824 Says:
November 7th, 2008 at 9:12 am
Medical bills have the potential to bankrupt families at almost any income level. I think getting them under control is a separate topic.

People who earn more are getting greater benefit from the public infrastructure that we’ve all paid for. It’s fair to ask them to contribute more to the same system that helped them succeed.

It might help to look at the federal tax brackets. Could we agree that the middle class fits under the 25% tax bracket? $78,850 single, $131,400 married filing jointly. I would lower tax rates for incomes below those thresholds.

http://www.moneychimp.com/features/tax_brackets.htm
joe from Lowell Says:
November 7th, 2008 at 9:31 am
fishydude,

You don’t know what the word “regressive” means.
waittilnextyr Says:
November 7th, 2008 at 12:16 pm
“taxing productivity creates disincentive to be creative.”

And what is productivity, is it someone finding a better way to make a product, or discovering a better product to do a job? Or is it the CEO of a multi-national corporation exploiting underpaid workers in another country to do the work for cents on the dollar?

I’d vote for a tax credit for true productivity improvement, and tax penalties for those who merely exploit the workers.
Kim Says:
November 7th, 2008 at 3:12 pm
“If I was making 200K in my small business”

I meant if individuals making 200K are taxed higher it may slow them down from opening a small business. We would like to ever get to a point where we make enough money to save some, invest some, and maybe buy some equipment to start a business.
Lynne Says:
November 7th, 2008 at 4:18 pm
First, Kim, keep in mind that taxes are incremental - let’s say you go up a tax bracket, 1% every 100K.

The first 100K you make, no matter your sum total, is 1%. The income from 101K-200K is taxed at 2%. Income between 201K-300K is at 3%.

You are not taxed for 300K at 3%, but 1/3 of it at 1%, 1/3 at 2%, 1/3 at 3%. Is that clearer?

So if you juuuust reach into the “upper” tax bracket, you are actually having very little of your income taxed at the higher rate.
Kim Says:
November 7th, 2008 at 11:08 pm
Yep I understand that. Maybe we just disagree on the amount of monery or maybe you were just throwing numbers out there. You have however used the $100,000 number in the past as a basis for tax increases. You do not see it as any kind of success penalty? People that make more money are already contibuting more in taxes just from their spending. Why not impose a higher sales tax so that people that make more, and would like to save, invest, and start a business are not burdened with higher taxes.
Lynne Says:
November 8th, 2008 at 9:04 am
Success penalty? No. How about paying your fair share after taking your fair share? People who make money are using government services too, and many of them moreso. Take a look at local development and how much money comes from the state budget. Now, I’m not against incentivizing businesses to do what we need them to do but it costs money. If people who are making money hand over fist don’t think they benefit from a strong central government leveling the playing field they are delusional.

For instance, roads and bridges - without these, commerce as wealthy companies know it would cease to exist.

Sales taxes are fairly regressive, ie they hit people with less ability to pay harder than people with plenty of ability to pay. We have long had a progressive income tax structure federally and so have most states. The debate on that fairness has been over with for some time in most industrialized nations, and most of this country as well, except for a few conservative trickle-downers. It’s a fact that the middle class, and the lower class, AND the wealthy class in the long run, do better when we have a progressive tax structure which takes into account ability to pay. The times when we’ve had the longest prosperity coincide with sane progressive tax policies. The times which end in the most pain and suffering are the ones with the least rules and the least progressive tax structures (the 20s, the 80s, 2001-2008). I don’t know about you, but I’d rather have a stable economy that works for everyone rather than a stagnant one that works for only the upper class.

Wages were basically stagnant these last 8 years for everyone but the CEOs who are getting bailed out as we speak. No thanks to more of the same.
Kim Says:
November 8th, 2008 at 11:50 pm
Lynne,
Do not get me wrong I am all for paying my fair share. My issue is that with an unfair tax system that limits medical expenses to an unreasonable percentage (which would hit someone with a lower income even harder) and an unreasonable day care allowance (my provider has to declare it all as income) it leaves me to think that the income level needs to be set quite a bit higher for a progressive tax ($500,000) I also would like to choose where my “extra” money goes and not be mandated. I choose eye research, breast cancer funding, and autism research as they are near and dear. If more money is taken from my income then I have to make some choices that should be mine to make. Maybe we should concentrate on bringing people up instead of bringing money down.
mike01824 Says:
November 9th, 2008 at 9:47 am
Bringing people up requires investing in public infrastructure. Schools, airports, roads, public health, courts, medical research. Once people have been brought up, it’s fair to ask them to contribute to the same system that enabled their success.

A progressive tax system is the only one that makes sense. Higher taxes on people with lower incomes won’t fund the infrastructure we all rely on to become successful.
Kim Says:
November 9th, 2008 at 10:47 pm
My point was, and is, that it is getting hard for people that make good money and think that they spend within reason to get by right now. The tax system is not fair to people with high daycare and medical expenes.

November 6, 2008

Let’s Have A New Ballot Question On Taxes - Progressive Style

18 Responses to “Let’s Have A New Ballot Question On Taxes - Progressive Style”

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