Don Wycliff's Tribune column today brings out the income gap that Alan Greenspan testified about this summer. As the gap grows between the wealthy and the poor, and higher education gets more expensive, it is becoming more difficult for the children of the poor to move up into a higher economic class. This is a bad development for the U.S., as one of our greatest attributes has been our lack of strong class system where the working class and the upper class stayed separate over generations.
The main difference between Bush and Kerry on this topic is whether to tax the wealthiest Americans (earning more than $250,000 annually) at 39.6% or at 35%. And also whether to tax America's wealthiest heirs with an estate tax.
Bush doesn't want to, with the consequence of a greater income gap and a stronger class system. Kerry wants to, with the consequence of a smaller income gap and a weaker class system. Not by much, but a little.
(That ought to be our main message to any undecided or "Gee, I like Bush and Kerry seems like such a boring snob" voter -- if you make less than $250K, then a vote for Bush means a poorer four more years for you personally.)
I also think that we Illinoisians (Illini?) should recognize our role in creating an income gap with our state tax. Our 3% income tax is low, and what's worse, we start taxing people at $2,000 of income. That means the minimum wage workers without benefits who can't afford college are paying income tax, which keeps people poorer.
The General Assembly should pass HB 7294, which would raise the income tax rate to 4% but more importantly, raise the standard exemption from $2,000 to $12,000 (no more taxing poverty wages!).
The wealthiest Illinoisians would pay an additional 1% of their income, while most Illinoisians would pay less in the state income tax. It's about a $2.4 billion shift in taxes, which would go a long way towards manufacturing a middle class in our state.
And the kicker: we'd get more money back from the federal government (about an additional $800 million every year), since state income tax paid by higher-income people is deductible off their federal returns, meaning the feds subsidize those state taxes paid. Wealthy people pay about a third of their income in federal taxes, so about a third of the $2.4 billion would be 'picked up' by the federal government, which is the equivalent of an $800 million project in Illinois. Every year.
Let's hope we can convince more representatives than Will Davis and Willie Delgado to co-sponsor the bill. And thanks to those two legislators!