Thursday, October 13, 2011

Why Tax the Rich When You Can Tax the Poor?

As reported in USA Today, states across the country are increasing existing tolls on roads/bridges/
tunnels as well as charging tolls for the first time on roads that have always been free.  A toll is a tax and one that falls disproportionately on the middle class and poor.   It is a very regressive tax.

I understand that states and localities are strapped for money and that they need to raise revenues somehow in order not to have even deeper cuts in services.  But to raise revenues in a very regressive manner … hitting lower income people harder than upper income … is socially unfair and contrary to progressive principles.

This is especially egregious when the tax is on something that is a necessity for many.  For people commuting for work within large metropolitan areas, public transportation is not generally a very realistic alternative.  It either just doesn’t exist, or it doesn’t take you where you need to go. 

For many people in the lower-middle income categories, a raise in tolls could mean that commuting to work is no longer financially reasonable.  If they have to quit their jobs that means higher unemployment with greater strain on local government services.  Regardless how you look at it, it’s bad government policy.  Other examples of bad taxes to raise would be sales taxes and gasoline taxes, both of which are regressive and impact the ability to acquire necessities.

And there are alternatives that are not regressive.  The one is obviously to raise income taxes on the wealthy.   It’s anathema to the Republicans, but it’s the right thing to do.  The tax rate for the richest Americans is lower than it has been since before the Depression.  Another option would be to place or raise a sales tax surcharge on luxury items.

Then there are alternatives that, while regressive, do not impact necessities … although granted that’s all in the eye of the beholder.  I’m referring to sin taxes … taxes on alcohol and cigarettes. While these definitely hit lower income people disproportionately, cigarettes and alcohol are not necessities and in quantity are actually bad for people. So if a state has a clear social policy of discouraging the use of cigarettes and alcohol, I could support such a tax increase.  But only then,

We live in a culture where the rich and big business have access to the people who hold the levers of power in government.  The middle class and poor have no such access.  As a result, the rich and big business are catered to; the rest are mostly given lip service.  It is unjust.  It is against the American social contract.  It is un-American.