To fix state budgets, tax the rich!
July 14, 2017 12:41 PM CDT BY ART PERLO
Editor’s note: The author wrote this article about the current state budget crisis in Connecticut. It is a timely telling, however, of the story happening in states all across the country and it shows clearly that taxing the rich is the feasible and sensible solution to what is a national problem.
Summer jobs for teenagers have been canceled, state college and university charges keep rising, and every area of public life is affected by the state’s budget crisis — all in the second wealthiest state in the country, with the second highest level of inequality.
Connecticut’s budget shortfall is projected at about $2 billion per year. Yet, the wealthiest residents face a lower effective tax rate than the rest of us, and hundreds of millions are lost every year through corporate loopholes, special exemptions, legal tax avoidance, and outright tax evasion. If the wealthiest households paid at the same rate as the rest of us, more than $2 billion per year would be raised, erasing the deficit!
Despite this, we are told that asking big corporations, millionaires and billionaires to pay their share is off the table. That leaves only one alternative: cut, cut, cut.
What should we cut? Programs for children with disabilities? Kick kids off HUSKY health care? No summer jobs for teens (already happening)? Close state parks and beaches? Raise tuition for higher ed (even more)? Cut Care4Kids so moms lose their jobs when they can’t afford child care? Cut support for cities and towns? End the already-reduced property tax credit?
Individuals and advocates for all of those affected have given eloquent testimony that their programs should not be cut. And they are all right! After years of austerity and crisis, programs have been cut to the bone and there is a huge backlog of unmet needs.
But if taxing the rich is off the table, everyone else is left to fight over the crumbs. This pits towns against cities, workers against retirees, and kids’ education against housing.
Particularly damaging is the blatant attack on public workers, led by Republicans and following the Koch brothers’ playbook. Over several decades, the failure of big corporations and wealthy individuals to pay their share has contributed to severely underfunded pension and health funds, and high levels of debt. Instead of asking state workers to cut back the retirement and health benefits they were promised, why not ask the banks and other bondholders to give up some of the payments they were promised? Why are promises to Wall Street considered sacred, while promises to workers are only good until the next budget shortfall?
Mark Pazniokas, writing in the CT Mirror, gave the “responsible” answer, saying that lawmakers must “focus on reassuring Wall Street credit-rating agencies, corporate C-suites and taxpayers they are capable of balancing the budget.”
I disagree! Connecticut’s lawmakers should focus on meeting the needs of Connecticut’s residents!
There is enough wealth in this state to maintain and even expand the work being done, while keeping promises made to state workers and filling vacancies to allow them to perform their jobs. There have been a number of useful proposals to accomplish this. These include:
- Increasing the income tax rate on the portion of incomes over $250,000 per year.
- Closing the “carried interest” loophole.
- Extending the sales tax to yacht storage, legal fees, and other services mainly used by the wealthy and big business.
- Reviewing and ending outdated corporate subsidies and tax exemptions
- Enacting a low-wage employers fee, so that big companies like Walmart that pay less than $15/hr would reimburse the state for the cost of providing services to their workers.
- Hiring more state Department of Revenue Services (DRS) auditors to cut down on cheating by businesses and high-income households.
Finally, the Trump administration and Republican Congress are preparing to slash… Read more here.