These days, if you say anything that can be interpreted as increasing taxes on anybody, the tax sloganeers--who spend their time making the world safe for tax cuts for millionaires--will be on top of it in a minute, claiming that the sky will fall down. Why will the sky fall? Because without tax cuts, there won't be any economic growth to lift all boats.....
Well, what they say is usually--"tax increases! Yikes! That means entrepreneurers will have to pay more" . (And, of course, they also seem to think all wealthy people are entreprenuers and the vast majority of us are just worker drones, so remember to translate that word "entrepreneur" as "wealthy people" in the case of these tax rip-off sloganeers.) And then they add "that means no economic growth, which will hurt all you little guys too" (as though they cared.....).
But the facts over time have been quite different. The US has actually done quite well in terms of better standards of living for everyone in times of high marginal tax rates. Look at the three post-war decades before Reagan. Then look at the following three decades that we might call the Reagan era--when the "greed is good", "starve the (government) beast" and "tax cuts for the wealthy" mentality took over. The elite have enjoyed the tax cuts and the vast majority (David Cay Johnston's term for 90% of American taxpayers) haven't done so well.
So it is encouraging to see that some states are beginning to realize that they need to have enough resources to meet the real needs of their people, and they can actually acquire those resources by progressive tax policies rather than blunt instruments like sales taxes or services taxes that often are regressive in nature. Maryland's governor Martin O'Malley signed SB 48 on April 8. That law repeals a 6% sales tax on computer services that was slated to take effect July 1. It replaces it with a three-year income tax surcharge on high income taxpayers. Those with income ABOVE $1 MILLION will pay 6.25% instead of 5.5%. The state expects to raise about $110 million annually.
My home state of Michigan should think about changing its rules and doing something similar. A progressive income tax, with high rates at the top for those earning $500,000 and especially for those earning a million or more, makes sense.
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