R i g h t a r d i a: WIN: Flip the tax structure to wipe out deficits

Monday, July 4, 2011

WIN: Flip the tax structure to wipe out deficits

7/4/2011

Karen Kraut

Flip it to fix it. A United For A Fair Economy study shows that states could wipe out budget deficits and pay for public services in the future by just flipping the regressive tax structures to progressive ones. United For A Fair Economy’s Karen Kraut. Kraut stated:

It doesn’t have to be this way. States could really produce a large mount of revenue. They could have an economically sustainable tax system if they flipped their structures - asking that the wealthiest families pay as a share of their income what the lowest income families are currently paying as a share of their income in state and local taxes – and vice-versa.

If state tax systems were inverted like this Kraut says 60 percent of state income taxpayers would pay the same or less state income taxes while preserving public education and other services. Kraut added:

Everyone in the lowest income quintile and the second quintile would see a reduction in the amount of their income that they’re paying in state and local taxes. On the flip side the wealthiest families who are currently not carrying their weight in terms of the share of income they’re paying in state and local taxes, they would be asked to pay proportionately more. The idea of constantly giving wealthy people and corporations tax breaks is gonna lift all boats has never proven to be true.

The full report on flipping state tax structures to wipe out deficits is at fair economy.org.

The problem is that state and municipal taxes are completely flat and regressive. This means the affluent get a great deal on sales tax and real estate tax. When your hear Republicans talking about flat taxes and fair taxes, this is what Americans already have at the state and municipal level.

The GOP has flattened federal Income tax which is progressive, but the GOP still whines about income tax which really needs to be reformed progressively to pay the deficit down. "Reforms" to the Estate Tax exempted the families of 50,000 millionaires from this tax.

If we had a progressive tax structure in the US, it would result in a vibrant middle class like we had after World War 2. Americans have been victimized by supply side economics.