|Protesters attend a tax demonstration in Texas. Credit: today.mccombs.utexas.edu.|
By Maria Svart
The spring issue of Democratic Left arrives before Tax Day, April 15. As socialists, we know how important a fair and progressive tax system is to a fair and progressive society. It’s important, then, that we understand how, for more than 30 years, the right wing has worked to lower taxes for the rich and use the reduced income as an excuse to starve government programs that benefit all of us.
We know that candidates for office consider it political suicide to talk about raising taxes, even on the rich, but it is a complete myth that U.S. income taxes are too high. The truth is that the United States is both the lowest and most regressively taxed nation in the developed world. We spend less of our collective income on public provision than any other advanced democracy. On the other hand, we do excel in spending in two areas that violently destroy rather than enhance human life: the military and mass incarceration.
As the articles in this issue attest, when politicians from both major parties cut funding for public programs such as education, housing, child care, jobs, infrastructure, and transportation and at the same time cut taxes for the wealthy and corporations, many people are harmed in palpable ways. This has real consequences. For example, violence against women cannot be reversed without increased social and protective services for women and children and publicly funded childcare and parental leave. All these measures would enhance the independence of women and increase their security. Nor can our society end the school-to-prison pipeline that plagues poor black, brown, and de-industrialized white communities without massive public investment in job training and putting people to work rebuilding our tattered infrastructure.
Contrary to capitalist claims, with the notable exceptions of prisons and the military, the United States is the land of small, not big government, in comparison to even the most conservative western industrialized countries and to our own country in the past. Fifty years ago, we spent more of our gross domestic product on public provision than we do now and had higher tax rates on the wealthy. (For more detailed figures, see the websites of the Center for Budget and Policy Priorities cbpp.org and Citizens for Tax Justice ctj.org.)
How did this happen? As Janet Spitz shows in her article (to be posted soon – ed.), the corporate-funded mass media tell us that taxes are too high and that they sap “entrepreneurial” energy. This is not just an ideology that enhances the wealth and power of the 1%, it’s a bald-faced lie, reinforced by the training our business elites receive.
Although a majority of people in the United States favor expanded government spending to fund basic human needs and to end poverty, most also believe they are heavily taxed. This is not a completely false belief, as the reality is that families and individuals in the bottom 80% of the income distribution bear the biggest tax burden. In the United States today, the average tax rate on the richest 10% of families is 23%. Although the bottom 20% of U.S. families pay little in income tax, they pay a comparatively high 18% or more of their incomes in regressive sales and property taxes and also often in flat-rate, non-refundable local and/or state income or wage taxes. And at the federal level they pay a regressive flat-rate payroll tax for Social Security and Medicare. That tax is capped at $135,000 in income. Elsewhere in the industrialized western world, the top 10% pay more than 30% in taxes and the bottom fifth pay under 12%. No wonder many people of the 99% feel overtaxed.
The United States had figures closer to those of other industrialized western democracies in the 1960s, but ever since the mid-1970s there has been a massive lobbying effort by the “wealth protection” industry of lobbyists who have worked overtime to remove whatever progressivity existed in the U.S. tax system. In 2012, the industry spent over $9 billion on such lobbying, with 80% of those funds coming from industry, trade, and professional associations. All these groups work to cut their effective tax rates. And this investment pays off. In 1971, corporate tax revenue constituted over 25% of the federal budget. Today, it brings in only 10% of government revenue.
This reshifting of the tax burden and defunding of government started under Ronald Reagan and continued through the Clinton and Bush years, so it’s no wonder that generations have grown up never knowing that government can and should play a positive role in promoting a just and fair society.
As the articles in the spring issue of Democratic Left show, these policies have had a real and terrifying impact on all our lives, but particularly on the lives of women and people of color. All parents, but especially women, have to work a double shift of paid work and then unpaid childcare, and would benefit from decently funded education and childcare policies. Millions of un- and underemployed people would benefit from living wages and job programs that translate into economic security. The North American Free Trade Agreement and the war on drugs, along with rising inequality and joblessness, have forced people to migrate north and filled our prisons here at home.
We can call these assaults economic violence. It is real and it is starving our national soul. If we are to overturn regressive and upwardly redistributive tax and trade polices, our movements must gain more political traction. Only then will our political elites fear a mobilized electorate more than rich lobbyists and campaign donors. The left and labor have to engage in much more creative popular education and street protest to show how the defunding of public programs such as K-12 and public higher education renders our society more inegalitarian than ever. Reversing the Reagan and Bush tax cuts for just the most affluent 2% would add $140 billion a year to our four trillion dollar federal budget. If we abolished federal tax expenditures on corporations (for example, the oil depletion allowance and the corporate exemption from paying taxes on foreign earnings), we could fund another $120 billion dollars in human needs. A wee bit of a Robin Hood Tax—a modest financial transactions tax of 0.25% on all stock, bond, and derivatives trading—could bring in another $200 billion plus and could be the beginning of a real challenge to the power of finance capital.
And, finally, at the state level, if we taxed the top 20% of income earners at the same average rate that we tax the bottom fifth (or quintile), state tax revenue would increase by 10%. Tax and spending policy is a form of class warfare. We, the people, have to take back the income and wealth that we create from those who have long used state power to garner their unjust share.
|Maria Svart is the national director of the Democratic Socialists of America.|
Individually signed posts do not necessarily reflect the views of DSA as an organization or its leadership. Democratic Left blog post submission guidelines can be found here.