Income Tax Debate

Income Tax

Federal income tax is an issue that has been debated since it was enacted into law on February 3, 1913. The GOP is well-known for its opposition to taxes but recently some republican states have been lobbying to raise taxes on the poor while cutting taxes on the rich. This trend of taxing the little guy is not new and has been met with disastrous results in states such as Arizona.

About 10 of the Republican Senators that have proposed these taxes have done so by placing their focus on consumption taxes. Consumption taxes burden the poor because they are a flat tax and cost the same for everyone. However, lower wage earners have less to spend on items like e-cigarettes, gas, and others products and services in general. In states like Maine, South Carolina, and Ohio low-income households may soon be getting doubly taxed if their income tax are raised as well.

Income Tax

In this debate Republicans argue that by lowering income tax on the wealthy and businesses it will provide stimulus for them to create jobs for the poor. According to the Economic Policy and the House Fiscal Agency states like Michigan, that rank 29th among the 50 in personal tax equality and 49th in what percentage of the state’s tax revenue it receives from businesses, are a prime example of the lower class paying more than it should.

In the city of Flint a family that makes $10,000 per year and a family in Howell making $50,000 per year both pay a standard 9.2 percent of their income in taxes. What might appear strange is that billionaire Manuel Moroun from the same state pays less than five percent in income taxes. Since Michigan enacted this tax scheme in 2012 retirees and middle-class families have witnessed their taxes increase by $4 billion. Essentially, in this state hard-working families pay a substantial 64 percent of the state’s local tax revenue while businesses pay only 36 percent of this amount.

The state that has earned the title as having the worst regressive tax scheme is Washington State according to the Institute on Taxation and Economic Policy (ITEP). Washington scored an ITEP of -12.6 percent. This is the spread in percent income contribution between the bottom 20 percent of taxpayers and the top one percent. The lowest earners pay 16.8 percent of their income while the highest pay 2.4 percent of theirs.

There are some other factors to take into consideration though. While Washington received the lowest ITEP score it did relatively well on other aspects of its economy. The average household income in 2013 was $58,405 a high average income compared to most other states. Also, the national poverty level held at 15.8 percent in 2013 while Washington’s was at 14.1 percent. This provides mixed feedback but does not deter attention from the notably low ITEP score.

Income tax is one of the government’s top sources for revenue that pays for infrastructure and schools and will continue to be debated as Republicans continue to push for higher taxes on the poor. Businesses and low-income families alike need to support their communities and should both contribute a bearable amount.

By Joel Wickwire

Sources:
Detroit Free Press
MSNBC
USA Today
Photo by Jason Dirks – License
Photo by Chris Potter – License

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