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Tuesday, April 5, 2011

Class War and Fair Taxes

Blame Ronald Reagan. The Gipper popularized the idea that all taxes are evil and sold us “Supply-Side Economics,” the idea that the more we slash taxes for the rich, the better off we’ll all be. Trickle-Down Economics, called voodoo economics by George Bush I, became political gospel. At the state level too, the watchword for any politician who wanted to stay in office was CUT.

After a 30-year tax cutting orgy, taxes in general – especially for the top brackets – are at record lows. Yet, while trickle-down worked great for the rich, it didn’t work very well for anyone else. It didn't pump up the economy but did bankrupt government at every level, leaving us naked and vulnerable when the economy turned bad.

As economist Robert Reich recently put it, we must tax the rich – NOW. Reich notes the rich pay less taxes now than they have in generations. In the 1950s, the top bracket was 91%, but now the top rate has been reduced to 35%. Estate and capital gains taxes have been cut to near insignificance. .

Instead of redressing this error, Congress is fighting over how many more billions to cut from essential domestic programs. We may see the government actually shut down because the new cuts don’t meet the Tea Party target of over $60 billion (as opposed to the $30 billion “compromise” offered by the Democrats).

And the Republicans’ new long-range budget plan would effectively end Medicare by giving the elderly worthless vouchers for private insurance – all to save the rich from being taxed as they should be. In addition to repealing health care reform, the Republicans want to cut over one trillion dollars from federal health care programs

Despite what Dan Yorke and the ProJo say, Rhode Island also chopped taxes for the rich (the “flat tax,” the new brackets adopted last year, capital gains tax cuts, etc.). RI politicians were afraid the rich would leave, thanks to fake data from the RI Statewide Coalition and OSPRI, RISC’s unthink tank, unless we gave them lavish gifts to stay.

When cutting taxes for the rich didn’t work, we were told by talk radio, RISC, the ProJo etc. we needed to take it out on our real enemies - public employees. Blame school teachers, cops and firefighters for not giving up enough of their wages and benefits to finance tax cuts for the rich. Don Carcieri pushed thousands of state workers to retire or leave. Now we don’t have enough people, or money, to do all the things we take for granted and expect the state to do – like deal with our car licenses, inspect bakeries and restaurants, fix the roads, etc.

Governor Chafee eked out his victory over his tax-cut promising opponents Republican John Robitaille and pseudo-Dem Frank Caprio even though he actually promised to raise taxes to start to address our out-of-whack economy. Craven politicians and pundits are standing in line to denounce Chafee’s plan as anti-business – and that the answer is a combination of more cuts to the state workforce and more tax deals for the rich. Like that’s worked so well so far!

Tom Sgouros, one of the state’s few economic authorities who hasn’t been bought off, stepped up to challenge all those who criticize Chafee’s tax ideas to bring their own specific proposals forward – not just tired rhetoric about curbing unnecessary expenses and ferreting out waste, fraud and abuse.

The fight over taxes is right here in Charlestown too, as we absorb the effects of our recent reassessment. As it stands right now, Charlestown’s middle-class families will face a very big increase in their taxes, while wealthier households, including many of our millionaire non-residents, will either see their property tax bills drop or face little or no increase. And read the smug anonymous justifications for that in the CCA’s e-mailings (if you can get on their list). And see how the new tax rate will affect you by using the unique Progressive Charlestown magic Tax Calculator.

We are long overdue for a truly Fair Tax policy. We must stop feeling guilty about asking people to pick up the tab for vital government services. If we want roads and bridges that won’t kill us, public health and safety, parks, recreation and libraries, schools, health care, a clean environment, a driver’s license without a five-hour wait – that takes money and people. We also must stop feeling guilty about asking the rich to begin to once again pay their fair share.

If we adopted a truly Fair Tax policy in Rhode Island, no doubt some wealthy will leave rather than pay their fair share. Bye, bye. Others will stay. And still others yet might try to have it both ways and buy themselves a condo in Martin County, Florida.

Author: Will Collette