Reply #47: Vermont [View All]

[Nicholas_J]

Before Howard Dean...

As the ITEP article indicated, when consumptions taxes are a larger portion of a states revenues than any income tax, then the tax system is REGRESSIVE. Dean introduced and fought to pur through Snellings plan to take the three tiered system in whiich the federal offsets actually crested a system in which ALL groups paid the SAME percentage even AFTER the federal offsets.


The issue again, is NOT that most states have progressive tax systems, but that Dean worked for regression in the system that existed.

Idaho, with more millionaires than any other state, though it has a LOW tax burden, has one of the MOST progressive systems in the nation.

Oregon is another state with a progresive tax system:


this is what makes a states taxation REGRESSIVE:


What Makes a State’s Tax System Regressive?

The study highlights the common features of states with particularly regressive tax systems. In the ten
most regressive tax states, several items particularly stand out:

# Six of the ten states lack a broad-based personal
income tax.

# The other four states levy broad-based income
taxes, but have structured the tax in a way that
makes it much less progressive than in other
states. Three of them have flat-rate income taxes,
and one allows a deduction for federal income
taxes paid.

AS a matter of fact, Vermont was considered to be one of the most progresive states tax-wise. Still is moderately fair, as the article states. But the concern is the direction Dean decided to take Vermont. Which has follwed the national trends towards regression, even since the Reagan Administration. It is the policy of the DLC to try to reverse this trend, working towards PROGRESSIVE, fair taxes.

The DLC wants to creste a progressive system, and COMPLETELY eliminate tariffs at th fderal level, which would cut the cost of things like clothing, shoes, furtniture, and other cheap items made overseas that add more than 45 cents to every dollar of every item, like a pair of sneakers, made in China. The items that are those that can be afforded by the average middle class or poor person are heavily hit by this taxation

The Hyde Park Declaration, whci his the platform statement of Centrist DLC members, making progressive taxxation the goal of the Democratic Party, was not signed onto by Howard Dean, nor has he given any idea as to his support of the platform or not.

That is essentially what the article was about. Chiding Vermont for losing its edge as a progresive tax state. ANd this was from a bunch of economists andaccountants, hardly the most radical people in the world when it comes to taxation.

It is the assertion of CONSERVATIVES, that progressive systems PUNISH the sucessful and hard working.

Yet the vitality of Canada, and The European Economic comunity is s stark reminder that tax regression has nothing to do with prosperity, and everything to do with the widening gap between rich and poor.

How Much is Too Much?

It is taken for granted in much of the public debate over taxes that our taxes are "too high." But "too high" is a relative term. Too high compared to what?

The usual answer is that we pay too much compared to Americans. On a collective basis we certainly pay more than Americans (although the average-income Canadian pays less income and payroll taxes, than the average-income American; see Table 2). But we also have medi-care, public universities, more generous public pensions, and a range of other things that most Canadians have indicated they are quite willing to pay for. And largely thanks to higher taxes and more generous public programs, Canadian society is still far more equal and inclusive, despite recent cutbacks. Try as they might, Canada's business leaders have not yet succeeded in convincing us of the strange propo-sition that the United States of America is the prototype against which all social and economic variables must be measured.

Do we pay "too much" compared to a broader sample of other countries? Not especially. Taxes and other revenues collected by all levels of government in Canada are just below the average level for all industrialized countries: 41.8 percent of GDP this year, compared to 42 percent for the OECD, according to the OECD's own data (see Table 2).

Table 2
Are Canadians Overtaxed?


Source: OECD Economic Outlook, OECD Tax/Benefit Position of Employees. Averages are unweighted. Average worker tax is net income tax, social security, and transfers as share of wage income, for a married average production worker with two children.

Do we pay "too much" compared to how much we used to pay? Even here the evidence does not justify the unprecedented air time that has been captured by the tax rage campaigners. The tax revolt worked up a real head of steam through the latter 1990s. But ironically, that was the same decade in which total taxes did not increase at all-for the first time in the entire postwar era.

Longer-run trends in taxes and program spending by all levels of government in Canada are illustrated in Figure 2. Taxes increased signifi-cantly relative to GDP in every decade of the postwar era, until the 1990s. Since 1990, total taxes collected at all levels have remained stable at about 43 percent of GDP, and they are now falling.

http://www.caw.ca/whatwedo/research/taxcuts.asp

But think about this...when you add up all of the taxes, income, sales, excise, and on an on, the average member of the middle class pays about 39 percent of his earnings in taxation of some kind. And gets jack for it, compared to Canadians, who pay a bare 3 percent more.

But the differnce is, that in Canada, and Europe, the rich pay a a much larger percent of their taxes in income taxes to offset the lesser amont that they pay in other taxes. They may buy more expensive clithing, but if one person makes a thousand times more money than another, he just is not going to spend a thousand times more in pants or shoes or on eating out, or on gasoline or cigarette taxes.

Dean reversed the trend in which in Vermont, the rich paid more. Or at least a fairer share, if not more. Brought in even more taxation based on consumption, rather than ability to pay.

Dean did it, and set it going in that direction, in which Vermont Conservatives wish to take it further.

That is the goal of REPUBLICANS at the federal level. And since it was Deans philosophy at the state level, there is NO evidence that he will do any different at the federal level. Bush's tax cuts for the nation favor the rich. Deans tax cuts in the state of Vermont favored the rich. They both did the same things. Vermonts small budgets and relatively large surpluses allowed Dean to continually balance the budgets with the assistance of raiding the loacked box surplus. Like movint money from savings to checking to pay the rent when you are out of work.

But Deans income tax cuts resulted in the crisis that Vermont faced in 2002 leaving Vermont with as large deficits as there were when Dean took office. If he had not cut income taxes, the need to slash the budget would have not occurred.