Sunday, March 1, 2009

Making Our Tax System Progressive Again

Taxes have quite a history in the United States. At its start, the federal government was supported by taxes on whiskey, carriages, sugar, tobacco and snuff.

In 1817, Congress moved to have the government rely instead on tariffs on imported goods.

Then, in 1862, to pay to fight the Civil War, the nation’s first income tax law was passed. It was made the mainstay of our tax system in 1916 with the idea that it would be what’s called progressive. The more people make, the more they pay.

That worked fine until Ronald Reagan and what was called the Reagan Revolution, a revolution but one involving the richest in the U.S. Their tax rate was halved. More recently, there were more huge tax breaks given to the rich under the tenure of George W. Bush.

So increasingly, those in the middle and lower classes ended up carrying a greater and greater proportional tax load.

On a state level, this has what’s been happening, too.

In the last three decades, New York State, where I live, has also cut its tax rate for the richest by 50 percent—so now someone making $4 million a year pays the same as someone earning $40,000 a year in New York.

Over in Connecticut, the income tax situation is also disproportionally tougher on working families.

On this side of the Long Island Sound, folks have joined together to challenge the unfair tax structure—pressing their case recently in a special lobby day in Albany.

Of great concern, New York State seeking to deal with an anticipated $15 billion deficit by placing even more of a burden on working people.

And not just working people. In an especially nasty would-be rip-off, Governor David Paterson’s proposed state budget would have 90% of the money raised by a tuition hike imposed on State University students go to the state’s general fund instead of SUNY.

Paying the deficit off the backs of students. Disproportioinally taxing the middle and lower classes. This is not progressive.

Meanwhile, in Washington, President Obama is preparing a new federal budget—which includes ending the enormous tax breaks the rich have received. As he said in his speech to the nation last week, people earning less than $250,000 would see a tax break, those above an increase. The Obama administration would try to make our tax system progressive again.

It’s about time.

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