More than half the states in the Union have progressive income tax. A progressive income tax is based on the ability to pay. Families struggling to buy food to feed their families are hit harder by a flat income tax than a family making $500,000 a year – a larger percent of the former family’s income is dedicated to essentials such as shelter (mortgage or rent), food, commuting, basic clothing. Therefore, a 5.3% tax rate for them takes up money they need, whereas 5.3% of $500,000 takes money off the top – that richer family can forgo a few nonessentials in order to pay it.
So, why not give a nice, bound-to-be-popular income tax cut…to anyone making less than, say, $100,000? Give them a reduced rate of 4%, maybe even 3.5%. People making $100K-$200K could get taxed at 5.5%. Then people making more than $200,000 get taxed at, say, 7%. New Jersey’s top tax rate on incomes over $500,000 is 9%, and no, there was no “rich flight” out of that state.
It’s proven to all but some stubborn trickle-downers and libertarians that prosperity still flourishes when top tax rates are much higher than they are now. Some of our best years as a nation were under much higher top tax rates. When you put the tax burden proportionately on people who can least afford it, upward mobility suffers, and so do revenues that can accomplish the level playing field (like quality education and affordable higher ed). You just don’t have enough money to do that job when you’re squeezing blood from a stone.
At some point, yes, some ridiculously high taxes even on rich people does probably slow down growth and reinvestment. But it is completely evident to anyone with half a brain cell that we are no where near that point in our current taxing regime. The so-called Laffer curve (the basis for that disproven trickle-down economic theory) never bothers to tell you where we are sitting on that curve. Well, we’re at pretty historic lows for the different tax brackets, particularly the top brackets. I don’t think anyone can really claim that less is more at these tax levels, nor at levels significantly higher than where we are now.
But if we did this right, we’d be giving a tax cut to those who really need it (like Obama is proposing on the national level) and still could come out ahead on revenues, so we can fix our ailing infrastructure, invest in higher ed, keep our universal health care (with fixes of course), stop the bleeding in our public schools, and have great program to combat hunger and poverty.
If my husband and I were making so much money that I stopped worrying where my next mortgage payment was going to come from, I’d gladly pay a higher tax. Call it giving back to a system which would have given me a lot of breaks I wouldn’t have otherwise had (like affordable higher education).
Now, I know the legislature is a bunch of cowards on tax issues. Sorry, but they are. They would never in a million years take up a bill (or, if I recall, a necessary Constitutional Convention) that would do this. So, I propose that we get aggressive in fighting the anti-taxers in our midst who keep putting initiatives that would destroy the revenues for the state like this last round. I say we put a progressive tax on the ballot. Tell voters that if they make less than that upper end of the lowest tax bracket, they will get a lovely tax cut. There are more of us middle class folks than there is rich people. I think it would pass, especially given that it is obvious from the margin of defeat on Question 1 that people understand that we cannot expect a level playing field and services for ourselves and our families, if we do not share in the burden of paying for it.