Focus | The tax burden on the … who, again?
Story by Chris Graham
With AFP Audio
If you believe the partisan rhetoric, it’s the wealthy who bear the tax burden, and who are deserving of tax breaks to get the economy moving.
A new report by the Institute on Taxation and Economic Policy and the Virginia Organizing Project puts the rhetoric in a new light.
Low- and middle-income Virginians put out significantly more of their income in local and state taxes than the average Virginia millionaire, according to the report, which was released today.
Millionaires pay out 6.3 percent of their income in local and state taxes, according to the report, while low- and middle-income Virginians pay 8.9 percent and 8.8 percent of their income in local and state taxes, respectively.
The reason for the disparity isn’t hard to figure out.
“Put simply, Virginia and other state governments get the lion’s share of their revenues from three types of taxes – income, sales and property. And only one of them, income tax, can really be designed in a way that is fair. The other two, especially sales taxes, but also to a lesser extent property taxes, are inherently regressive, by which I mean they inherently fall most heavily on low-income families,” said Matthew Gardner, the executive director of the Institute on Taxation and Economic Policy and the lead author of the study.
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Denise Smith of the Virginia Organizing Project on tax fairness (4:59)
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Low- and middle-income families tend to spend most or all of their income getting by week to week, and thus are hit hardest by what are flat sales taxes that are the same for everybody no matter income levels. Property taxes are also a bigger issue for low- and middle-income families because, as Gardner explains, “Your home is often the biggest and only real asset you’ve got. And as your income goes up, of course the value of your home keeps going up, but it doesn’t keep pace with the growth in your income.”
“The personal income tax can be adjusted to be precisely as fair as you want it to be. By changing the rates, by changing the tax credits you allow. It’s a much more manipulable tax, from a tax-fairness perspective,” Gardner said.
This flies in the face of the contention of some conservatives to advocate for a flat income tax as being ultimately fair by setting a single tax rate across the income spectrum. Going that route, this report suggests, would make the tax system that much more regressive, and also hamstring local and state governments in their efforts to maintain a basic level of service in the core service areas.
“What we overlook in this when we talk about fairness first is that when you have an upside-down system as we have in Virginia, you don’t get a kind of a revenue system that can keep up with the needs of a modern state for public investment, in public education, transportation, health care, public safety, to name just the major categories. Also we neglect to construct a tax system that can help to generate rather than stifle economic activity. In my mind, those two things go along with fairness, or if you have no fairness in an upside-down system, your system always fails to do those two things,” said David Shreve, an economist and a member of the Virginia Organizing Project’s Tax Reform Committee.
The Project recommends reforming Virginia’s tax system to better serve Virginia’s families as well as the state budget.
“Virginia’s tax structure has not changed since 1926. Our regressive tax system is hitting working families hard. We cannot keep going like this. We all keep waiting for the wealth to trickle down, and it’s not happening. Where is it?” said Denise Smith, also a member of the Virginia Organizing Project Tax Reform Committee.
“Meanwhile low- and middle-income people are struggling to get by in this economy while paying a higher percentage of overall taxes than the wealthiest people in the state. Tax percentages should be determined by ability to pay.”
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As a reporter you need to give an unbiased report. I assume that you did report exactly what I The Institute on Taxation and Economic Policy and the Virginia Organizing Project put out. However, you failed to mention who these organizations are and what political position they take. How do I know if they are biased? Without this info the reader can put no objective value on their information. This report is an example of biased reporting by “selective reporting” – publish only part of the story to mislead. This propaganda. Shame on you.
Incidentally I paid, in ’08, 28.4% of my income in federal, state and local taxes. If I include and estimate of the sales tax the percentage comes to ~29.7. I assume that I am “rich” by the standard set by the Institute.
The two organizations in question are nonpartisan. “How do I know if they are biased?” is the question above. And then the assumption is made that they are.
Shame on the person making the assumption for calling this “selective reporting” and “propaganda.” I can understand that some might not like the analysis, but that doesn’t make it selective or biased.
If you want to debate the contentions raised in the report, do so. Don’t attack the messenger.
Guess you still don’t understand. You did not provide the info on the organizations in the article and clearly, based on my personal first hand info they don’t know what they are talking about. A short statement about them being “nonpartisan” in the original piece would have been in order. Since their info is contrary to my personal experience, I still believe it is “propaganda” and reflects your personal view of their “facts”.
But a short statement on them being nonpartisan would not have cleared up the issue for you, John, because as you admit, you still believe their information is “propaganda.”
It’s fine that you have an issue with the data and their conclusions. That doesn’t make it “propaganda.”
The wealthiest 1% of Americans own about 40% of this country’s wealth. It’s been going up since the mid 80′s with the roll-back of the Capital gains tax. The last time the ultra-wealthy owned this much was in 1929; the same year as the Great Depression. Coincidence…your call? Don’t get income mixed up with wealth. They are not the same thing. If you are calculating how much ‘income’ tax you pay, you’re not one of the richest 1%. They don’t think in terms of ‘income’ tax. You probably don’t even know anyone that is in the richest 1%.