Saturday, March 31, 2007
Gross Receipts Taxes:
A Counterproductive Approach to Addressing Tax Regressivity
Illinois' Tax System: Truly "One of the Most Regressive"
Gross Receipts Taxes: Disadvantages Generally Outweigh Advantages
More Productive Approaches to Achieving Tax Fairness Are Available
The brief argues that dropping the corporate income tax, as Governor Blagojevich proposes, is a horrible idea, since it is the most progressive aspect of our tax system. It's the only tax that has the highest income earners paying more. Our sales and excise taxes hammer low-income people, which perpetuates poverty. In fact, here's how state and local taxes add up currently for taxpayers, based on their income.
13% of income paid by poorest 20%
11% of income paid by second 20%
10% of income paid by middle 20%
9% of income paid by 60-80% of income
6% of income paid by richest 1% income earners
See the graph on the policy brief. It's sobering.
We perpetuate poverty by taxing low income people far more than high income people -- as a percentage of income.
That's got to change.
Thank goodness Governor Blagojevich has made tax fairness the center of the debate. If we just used an actual flat tax, as Dick Armey and Phil Gramm and Steve Forbes and all the other Wall Street Journal Republicans have been pushing for, so that at the end of the year, everyone paid the same flat percentage of their income in state and local taxes, we'd have to dramatically cut taxes on lower-income people (income less than $45,000) and triple the state income tax to 9% or so on incomes above $100,000 or so. That would probably get us to the place where everyone pays about 10% of their income for state and local government.
Finally, the policy brief argues that we need to strengthen the corporate income tax by "repealing failed incentives like single-sales factor apportionment or by limiting overly generous net operating loss carry-forwards or carry-backs." And to lessen the burden on low- and moderate-income taxpayers, the brief suggests "instituting a graduated income tax structure or exempting groceries from the sales tax."
Friday, March 30, 2007
Mr. Kane's point in his recent post is that "a business-friendly climate" does not mean "corporations don't pay taxes" which many business groups often use as synonyms.
If corporations pay taxes and get benefits from it -- like, not having to pay for health insurance for their workers because taxes cover that, or a transportation network that allows them to get workers to show up and sell their products to a broad market, or workers who are educated enough to add value to the company -- then that's better than not paying taxes at all and then not getting any of those benefits.
It's just a pragmatic calculation about which deal is better -- buy good things with taxes, or live without those good things and not pay taxes. In a lot of the big policy debates (health care, education, transportation), we're generally not investing enough with taxpayer-financed initiatives to come up with the optimal arrangement. Each proposal, like Illinois Covered, or Transportation for Illinois Coalition's Keep Illinois Moving Forward package, needs its own cost-benefit assessment, but it makes zero sense to say that raising taxes is automatically bad, regardless of what we might buy with the tax money.
That's like saying buying a house is bad because it costs hundreds of thousands of dollars -- and that money will have to be paid for somehow! If the benefits outweigh the costs for most people, it's worth doing. If not, it's not.
Thursday, March 29, 2007
In committee last month, Republican and Democratic members both expressed support for making Illinois voters relevant to presidential elections and unhappiness with a meaningless election in Illinois where the winner of the race was selected by voters in other states.
On the very same day the House moved the Illinois primary election, the Maryland Senate voted to join with other states and elect the president by a national popular vote in November. Legislators expressed support for making Maryland voters relevant in presidential elections and unhappiness with a meaningless election in Maryland where the winner of the race was selected by voters in other states.
There are two presidential elections: the February primary and the November general election. Illinois voters -- and in fact, all American voters -- should be central to both of them. We Illinois voters have been irrelevant to both the February primary and the November general election for quite some time. Yesterday brought a significant legislative step to end our irrelevancy for both elections.
There is identical legislation in Illinois to join with other states to create a national popular vote. The bills are HB 858 (sponsored by Robert Molaro with 46 total co-sponsors) and SB 78 (sponsored by Jacqueline Collins with 14 total co-sponsors).
Here is a Washington Post article on the Maryland legislation. Here is the website of National Popular Vote, the organization promoting the campaign (I lobby for them).
Tuesday, March 27, 2007
Come to the Illinois College Democrats annual convention this weekend. For information, see the link below:
(From their page):
7pm- Early Registration
10pm- Social Event
s Life 100
11-11:45- Welcome from IFCD and CDA-Campus Life 100
12-1pm- Speaker-IL State Senator Don Harmon-Altgeld Auditorium
2pm- Workshops- Fundraising-HSC 306, Running for Congress-HSC 406
3pm-The State of the “Union”-HSC 306, Campaign Training-HSC 406
4:15pm-Candidate Forum Altgeld
5pm-Keynote Speaker- Alexi Giannoulias (tentative)- Altgeld Auditorium
6pm-Caucus Meetings-HSC 306, 406, 506
7pm-Executive Forum/IFCD Candidate speeches-Campus Life 100
10-12am- Brunch/IFCD Executive Elections-Holmes Student Center Skyroom
12:30-1pm- Honorary Awards Ceremony (Alpha Phi Alpha and NAACP)-Skyroom
1pm- Keynote Speaker- Linda Chapa LaVia- Altgeld Auditorium-Skyroom
Our annual convention will take place at Northern Illinois University from Friday March 30th to Sunday April 1st. We are still planning the convention's programming, but look forward to exciting speakers and workshops, as well as our executive board elections. Registration is $15. Rooms for are available for $60 a night in the Holmes Student Center. You may register for the convention by going to the CDA website and donating $15 to CDA. Please type in Illinois Federation of College Democrats in the space designated for occupation. This way CDA will know that those funds are for us. The money raised will be used to pay for the cost of rooms and the meals that will be provided. The $15 does not include the hotel cost. You may click on the links below to do so. You may should use the second link to send the registration fee.
Sunday, March 25, 2007
Prairie State Blue is the new name of what used to be SoapBlox Chicago. It's the biggest group progressive blog in the state.
There Is A Way is by Springfield environmentalist Will Reynolds (glad to see more bloggers using their names).
Illinois Reason is a new one with some fancy web tools.
Wonkish kicks it off with my favorite wonky topic of the month: GRT v. 750.
Improving Amtrak Incrementally is a blog I mostly write for the Midwest High Speed Rail Association, but we're looking for more posters.
Illinois Issues has a great blog that I can't believe I've neglected to add to the blog roll.
Saturday, March 24, 2007
Progressives tend to spend most of our time on the spending side defining what we want to buy -- doctors, teachers and bus drivers with operating dollars and hospitals, schools and buses with capital dollars.
Right-wingers tend to spend most of their time on the taxing side defining that they don't want their sponsors (high income people or corporations) to be taxed at all.
So, right-wingers tend to get their way. Government taxes on wealth and high incomes continue to fall. (Taxes on work and low-incomes, unfortunately, aren't attacked by right-wingers, so they tend to rise). And we progressives often don't get to buy the things that would be good for the nation because....there isn't any money.
The best group in the country working on arming progressives with analysis to advocate for taxes on high incomes is the Center for Tax Justice. They helped start a blog called Talking Taxes here and their website is here. If you're not a member, join up.
Anyway, in Illinois, we're lucky. We're in the midst of a glorious debate over tax fairness and Governor Blagojevich deserves a ton of credit for launching it. He's got a bold proposal to fund health insurance and education boosts through a gross receipts tax and a business payroll tax. The rhetorical center of his campaign is that business isn't paying enough. And they're almost certainly not -- especially the biggest ones with the most money. We have the lowest state income tax in the nation (3% for individuals, 4.8% for corporations), and people or companies with high profits or income can figure out how to shelter a lot of their income so they don't pay even that small levy. The rest of us, meanwhile, pony up with very high sales taxes and relatively high property taxes. That means taxes our regressive -- we hit low and moderate income hard and go light on high incomes. Not smart, especially since our middle class is getting flattened by other government policies: corporate trade agreements that export jobs, anti-union labor laws, tolerance of millions of undocumented workers without an amnesty and underinvestment in education so that education gets both more expensive and of lower quality.
So the great progressive debate happening this month is, in shorthand, 750 versus GRT. HB 750, championed by Senator James Meeks and cooked up primarily by the Center for Tax and Budget Accountability, is a straight-forward progressive reform that taxes high incomes more and low incomes less. (By the way, props go out to blogging Representative John Fritchey for representing a higher-income district but publicly recognizing that it's good for the entire state to get away from our poverty-perpetuating regressive tax system and championing HB 750. 750 got out of a Senate committee last year (after adding in some higher education money), and got a House committee hearing last week.
The Gross Receipts Tax is part of the Governor's submitted budget and has raised the ire of just about every business group in the state. (Opposition from the business community often, but not always, signals that the bill is good for most people of the state). However, most legislators aren't biting. As one legislator told me this week: "they're pushing the Kool-Aid hard. But I'm not sipping." The GRT is essentially a sales tax, and that hits lower incomes harder than higher incomes. That's regressive.
The Governor would like to buy some progressive things with the money -- just-about universal health insurance. That's good. But is that enough for Democrats to overcome the regressive aspects of the GRT? Based on the reaction so far, it doesn't look like it.
But again, the Governor has moved the debate in a great direction launching a campaign for tax fairness and an agressive call for change against the champions of the status quo. That alone earns him credit in my book. Now the General Assembly might find a better way of matching his soaring rhetoric.
Saturday, March 17, 2007
His latest move to find a way to keep the 1970s-era presidential public funding law relevant is instructive. Most big time presidential campaigns have the ability to raise far more private money than the amount of public funding available to campaigns in both the primary and general elections. More resources means a more powerful campaign, so there isn't much incentive to forgo raising the private dollars (and accept the obligations, however tenuous or implicit inherent in those donations) to embrace the relative political freedom of public funds.
Instead of merely noting the sad demise of public funding, Senator Obama came up with a novel work-around to his desire to remain competitive with his rivals in the primary campaign: he asked the Federal Election Commission if he could raise private funds for the general election campaign now (as all of the big time campaigns are doing), with the condition that, if he does win the nomination he can still decide to take public funding and can send the money back to the donors.
Very clever! And even though a few fussy D.C. reform organizations submitted comments opposing Senator Obama's move, the Federal Elections Commission granted Senator Obama's request on March 1st. Almost immediately, Senator McCain's campaign applauded Senator Obama and promised to match Senator Obama in foregoing public private funds for the general election if McCain wins the Republican nomination.
No other campaign has expressed any sentiment in joining Senators Obama and McCain in the general election.
Although the Sun-Times described his personal investment policy as a "stumble" in 60 point font on the front page, I found it an innovative (if unsuccessful) attempt to address the ethical concerns of leveraging his public position for private gain while retaining the ability to steer his private investments away from corporation engaging in unethical activities in pursuit of the bottom line. In other words, he recognized that it's not enough for public officials to let someone else make all their investment decisions -- they also need to be responsible for using the power of private capital to influence corporate activities. Thus, he created a quasi-blind trust. While the effort did not pan out as hoped, his attempt to find a better structure for private investments by public officials deserves applause, not knee-jerk denunciations.
One of my lines during Senator Obama's primary election is that he would join Senators McCain and Feingold as the leading reformers in the nation, working to reduce the persistent clout of corporations and wealthy people who skew our public policies towards enriching the rich and impoverishing the rest of us. His innovative and intelligent move to update presidential public funding to stay relevant with modern conditions is bolstering his reputation as one of the republic's leading reformers.
Saturday, March 10, 2007
It very well may be that their greatest accomplishment was a 2005 law that extends daylight savings time an additional seven weeks, starting tomorrow.
It's smart to adjust our work day to when the sun is actually shining, and I'm glad the Republican Congress got this done, but it is sad that it's hard to think of a different bill passed in the last two years that outshines the pragmatic impact of extending daylight.