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Monday, Dec. 30, 2013

Scott Walker's Scariest Tax Plan Yet

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If you thought Republican Gov. Scott Walker’s destruction of bargaining rights for public employees was politically and economically devastating for Wisconsin, you ain’t seen nothing yet.

Walker is openly suggesting another destructive upheaval of state government that could make the divisive neutering of public employee unions look like a day at the beach.

This time the ultimate goal is the holy grail of all those right-wing millionaires and billionaires everywhere who see Walker as a mild-mannered public face for their fondest, greediest dreams.

They’re dreaming of the elimination of the progressive income tax.

Walker says he intends to take bold action on taxes in Wisconsin and that the discussion should definitely include the glorious possibility of eliminating state income taxes completely.

To which, the overwhelming majority of all taxpayers in this state, Republican and Democrat alike—everyone who’s not a complete sap—should rise up and respond in unison: “Glorious for whom?”

Some important facts have gotten lost in recent years as Republicans and even many Democrats have been driven by tax-cut politics.

One is that taxes, though unpopular, are necessary for government to deliver needed services to all of us. The other is that not all taxes are created equal.

The wealthy have spent a lot of money and bought a lot of politicians to convince people that the absolutely worst possible tax on the face of the earth is the progressive income tax.

Why, the more money they make, the more money the government takes. How can anybody in America ever get ahead?

Well, we all know they’ve figured out how to do it in spades. The income gap between those at the top and all the rest of us is at historic levels.

Most of us are just fly specks on the rearview mirrors of the limousines carrying the richest 1% farther and farther away from us faster than ever before.

All anyone in America who’s not a millionaire or billionaire really needs to know is that the progressive income tax is the fairest, most equitable form of taxation ever invented.

That’s because it’s based upon ability to pay. People at the bottom barely scraping by should pay less than Scrooge McDuck, Donald’s filthy-rich uncle, who just shovels a few buckets of cash out of his swimming pool to pay his tax bill.

Working-class families, struggling to stay out of poverty and acquire a few material benefits, can pay more than the very poorest, but they shouldn’t pay CEO rates.

Those at the top can pay more and they should. Their country and their communities have been very, very good to them.

 

Income Tax Scheme Would Help the 1%

That fair, graduated system of taxation would be wiped out if Walker succeeded in eliminating the state income tax or, an alternative he’s suggested, cuts top rates so everyone, regardless of income, pays the same rate.

The income tax is Wisconsin’s biggest source of government funding, raising about half the money the state spends. The other primary sources are corporate taxes, which Walker also wants to eliminate, and the state’s 5% sales tax.

So if Walker eliminated both corporate taxes and the income tax, he’d have to load all state revenue on to the sales tax. It would require a sales tax rate of at least 14.4%, about twice California’s 7.5% sales tax, now the highest in the nation.

Walker might shave a few points off that whopping percentage by expanding the sales tax to items now exempted because they’re necessary for life, including food and health care.

As absurd as such an excessive sales tax seems, it’s even worse than you think. That’s because, despite what some believe, sales taxes aren’t easier to pay just because you don’t fill out complicated tax forms and you pay them a few pennies or dollars at a time.

Some people even foolishly believe sales taxes are fair because, you know, rich people buy a lot more stuff than poor people so they pay more, don’t they?

Actually, just the opposite is true. People with lower incomes spend almost everything from paycheck to paycheck, paying taxes on all of it, while the super-wealthy just keep stacking their money into bigger and bigger piles. They can’t possibly spend it all.

An independent study by the Wisconsin Budget Project found that moving all state income tax revenue onto the sales tax would mean the bottom four-fifths of Wisconsin taxpayers would pay hundreds of dollars more in taxes every year while the top 1% would save an average of $44,000 a year.

If Walker were looking out for the overwhelming majority of people instead of the richest one-fifth, he wouldn’t propose replacing the fairest possible system of taxation with one that requires those who have less to pay hundreds of dollars more in taxes so the wealthiest could pay tens of thousands of dollars less.