Some Governors want to Cut Taxes for the Rich and Increase Taxes for the Poor
Call it the reverse Robin Hood tax strategy: Republican governors in several states want to rob from the poor through higher taxes and give to the rich by cutting their taxes.
GOP Governors Paul LePage of Maine, John Kasich of Ohio, Nikki Haley of South Carolina and several others are considering raising so-called consumption taxes, such as those imposed on sales of cigarettes, gasoline, even haircuts and movie tickets, to generate more revenue for their state budgets.
At the same time, they want to slash income taxes, which would benefit wealthy taxpayers the most.
This strategy would, they argue, stimulate business creation and job growth.
But increasing sales taxes usually hurts lower income earners more than the wealthy because the former has to spend more of their earnings on food and necessities.
The report cites two national studies to support its claim. One is from the Economic
Policy Institute, which revealed that “one percent of people at the top now claim at least one sixth of all personal income in 38 states, while incomes for the middle class have remained flat,” according to the Keystone report. The second study cited is from The Institute on Taxation and Economic Policy, which found that “in 20 states, the top one percent pay less than half the tax rate of the middle class,” noted Keystone. “On average across the 50 states, the top one percent pay only 60 percent as much in taxes as the middle fifth.”
The report’s warnings may have come too late for several states that have already put the controversial tax juggle into practice.
“The strategy of shifting from income taxes to consumption taxes has caused huge budget shortfalls in Kansas and, more recently, North Carolina, which announced a budget shortfall of nearly half a billion dollars,” Shaila Dewan wrote at The New York Times.
-Noel Brinkerhoff, Danny Biederman
To Learn More:
States Consider Increasing Taxes for the Poor and Cutting Them for the Affluent (by Shaila Dewan, New York Times)
Tax Fairness: An Answer to State Budget Problems (Keystone Research Center and Good Jobs First) (pdf)
Under the Radar, Payroll Tax Increase Hits the Working Poor (by Noel Brinkerhoff, AllGov)
Louisiana Gov. Jindal Proposes Raising Taxes for 80% of State’s Citizens(by Matt Bewig, AllGov)
Kansas Tax Committee Approves Bill to Raise Taxes for Poor and Lower Taxes for Rich (by Matt Bewig, AllGov)
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