10 Updates

Push For Progressive Income Taxes Picks Up In The Blue States

Apr 29 2014, 1:51pm CDT | by

As opposed to Capitol Hill, where there is gridlock amid a divided federal government, most states around the country are under unified political control, with Republicans running the governor’s...

Filed under: news

 
 
 

13 weeks ago

Push For Progressive Income Taxes Picks Up In The Blue States

Apr 29 2014, 1:51pm CDT | by

As opposed to Capitol Hill, where there is gridlock amid a divided federal government, most states around the country are under unified political control, with Republicans running the governor’s mansion and both chambers of the legislature in 24 states, while the Democrats do likewise in 13 states. As the halfway point of 2014 approaches, the two parties continue to take the states where they have unified partisan control in diametrically opposite directions from a policy standpoint.

In Democrat-run Illinois, whose state legislature is the place where President Obama learned the political ropes, liberal fiscal policy and its effects are on full display. Gov. Pat Quinn (D) signed into law massive “temporary” tax increases – a 66 percent individual income tax hike and 23 percent hike in the corporate rate – upon taking office in 2011. Gov. Quinn is now determined to prevent those tax increases from expiring later this year. However, in just the last few months, there have been a procession of additional tax increases proposed in the Land of Lincoln.

First there was the “millionaire’s tax” proposed by Speaker Mike Madigan (D-Chicago), the most powerful guy in Springfield, which would have actually increased taxes on the majority of small business profits in the state. Speaker Madigan recently withdrew the bill due to insufficient support from his own party.

Then there was the bill to impose a statewide soda tax , which would just punish lower and middle income households (the blue collar family on Chicago’s South Side is going to feel the pinch from an extra levy on a bottle of Coca-Cola a whole lot more than will the corporate lawyer in Winnetka), while doing nothing to improve health.

Now progressive activists, Democrat legislators, and the government employee unions who fund them both have their sights set on a graduated income tax, that way they can divide taxpayers into groups and mug them one at a time. Constitutional amendments that would move the Illinois income tax from a flat five percent to a progressive structure have been introduced by Rep. Naomi Jakobsson (D-Champaign) and Senator Don Harmon (D-Oak Park). Rep. Jakobsson’s proposal would result in seven income tax brackets, with the top rate nearly doubled to nine percent.

The Center for Budget and Policy Priorities (CBPP), a liberal think tank, is a vocal proponent of the Illinois progressive income tax proposals. CBPP claims a graduated income tax will reduce income inequality. However, in a report issued this week, the non-partisan Tax Foundation points out how CBPP’s claim in completely false. As the Tax Foundation rebuttal of CBPP notes, while there is little variability in income inequality between progressive and flat tax states, income inequality is actually greater on average in states with a progressive income tax.

In fact, Illinois’ tax competitiveness would take a major hit if it were to adopt a progressive income tax. The Tax Foundation’s State Business Tax Climate measures and ranks the business tax climates of all 50 states in terms of economic competitiveness. The think tank has determined that should Rep. Jakobsson’s progressive income tax bill be approved, Illinois would drop from having the 32 nd to 44 th worst state business tax climate in the nation .

Of the 41 states with an income tax, eight of them have a flat tax. North Carolina was the most recent to join the flat tax state ranks with the passage of its historic tax reform bill in 2013, which reduced and flattened the state’s income tax, taking the top rate from 7.75 percent (previously the highest in the Southeast), to a flat 5.8 percent. With the bottom rate previously at six percent, all North Carolina taxpayers saw a rate reduction this year.

Flat Income Tax States

Colorado 4.63%
Illinois 5.0%
Indiana 3.4%
Massachusetts 5.25%
Michigan 4.33%
North Carolina 5.8%
Pennsylvania 3.07%
Utah 5.0%

Illinois lawmakers aren’t the only ones considering making their state revenues more volatile by instituting a progressive income tax. 2014 has seen renewed interest in a graduated income tax in Massachusetts, where Senate Majority Leader Stanley Rosenburg (D-Amherst) and others have introduced a constitutional amendment that would give the state legislature the authority to impose a tiered income tax.

Though lawmakers on Beacon Hill covet a progressive income tax, even the residents of deep blue Massachusetts, a state that went for Obama 61-38 percent in the 2012 presidential election, recognize the benefits that come with a flat tax, such as equal treatment from the tax man and greater budget stability. Since 1962, Bay State voters have rejected progressive income tax proposals at the ballot on five separate occasions, most recently in 1994.

Democratic state lawmakers, liberal advocacy groups, and other supporters of progressive income taxes claim that those who have higher incomes should pay more in taxes. Well, that is precisely what happens under a flat tax. Under a 5.25% flat tax like the one in Massachusetts, an individual with taxable income of $40,000 a year would owe the state $2,100, whereas someone with taxable income of $100,000 in a year would pay $5,250 in state income tax.

Tax Foundation economist Scott Drenkard made a strong case for moving to a flat state income tax in testimony before the North Carolina Senate Finance Committee last year, noting that “economic literature on progressive income taxes is especially unkind.” Drenkard pointed to an OECD study that found reductions in the top marginal income tax rate are beneficial to long term growth, as well as host of academic studies finding higher marginal tax rates reduce economic growth.

Lawmakers in Illinois, Massachusetts, and elsewhere would be wise to reject progressive income tax proposals. Fortunately, many states – such as Arizona, Louisiana, Nebraska, Wisconsin, Missouri, Georgia, and others – are considering proposals to move in the opposite direction, toward lower, flatter, more equitable and competitive state tax codes.

As has been mentioned in this space before, there is a great public policy experiment taking place in the U.S., and it is happening in state capitals across the country. States continue to move in different directions on fiscal policy and will, in time, demonstrate which approach works best.

 />/>

Patrick Gleason is Director of State Affairs at Americans for Tax Reform. Follow him on Twitter @PatrickMGleason  

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was bro ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rakya ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hishammuddin ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selata ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 m ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Must ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM20 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 2 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kidex) t ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Drinking water shortage to hit world by 2040
London, July 30 (IANS) If we continue doing what we are doing today to meet our energy demands, there will not be enough water in the world to quench the thirst of the world population by 2040, says a study.
 
 
Kerry visit a start, Modi visit to US pivotal (Comment: Special to IANS)
John Kerry visits India Wednesday as a raft of crises consume American diplomacy. By contrast, US-India relations are at a moment of opportunity, but the US Secretary of State faces challenges in New Delhi that are significant in their own way.
 
 
Our Milky Way much smaller than previously thought
London, July 30 (IANS) The Milky Way, the galaxy that contains our solar system, is way smaller than astronomers previously thought, says a study.
 
 
Be aware of calories from soft drinks during meals
London, July 30 (IANS) Did you ever count calories from the soft drink you usually order along with the dinner? Now is the time to factor those in.
 
 
 

Latest from the Network

James Garner died of heart attack
Los Angeles, July 30 (IANS) Legendary Hollywood actor James Garner, who died earlier this month, passed away following a heart attack, his death certificate has revealed. Known for his roles in movies like "The...
Read more on Celebrity Balla
 
Australia issues arrest warrant against two terrorists
Sydney, July 30 (IANS) Arrest warrants were issued Wednesday against two alleged terrorists in Australia who boasted of beheading "infidels" in Iraq and posted gruesome images of severed heads on Twitter. The...
Read more on Politics Balla
 
Katy Perry parties with new beau in Las Vegas
Los Angeles, July 30 (IANS) Singer Katy Perry was spotted having a gala time with her rumoured new boyfriend and disc jockey Diplo in Las Vegas after the duo rekindled their romance last month. The "Dark Horse"...
Read more on Celebrity Balla
 
Drinking water shortage to hit world by 2040
London, July 30 (IANS) If we continue doing what we are doing today to meet our energy demands, there will not be enough water in the world to quench the thirst of the world population by 2040, says a study. The study...
Read more on Apple Balla
 
Kerry visit a start, Modi visit to US pivotal (Comment: Special to IANS)
John Kerry visits India Wednesday as a raft of crises consume American diplomacy. By contrast, US-India relations are at a moment of opportunity, but the US Secretary of State faces challenges in New Delhi that are...
Read more on Politics Balla
 
Rita Ora kept forgetting Fifty Shades of Grey lines
Rita Ora kept forgetting her lines whilst filming her scenes in 'Fifty Shades of Grey.' The 23-year-old singer - who landed the role of Mia Grey in the erotic drama - had someone feeding her script to her through an...
Read more on Movie Balla
 
Our Milky Way much smaller than previously thought
London, July 30 (IANS) The Milky Way, the galaxy that contains our solar system, is way smaller than astronomers previously thought, says a study. It is approximately half the weight of a neighbouring galaxy - known...
Read more on Apple Balla
 
Be aware of calories from soft drinks during meals
London, July 30 (IANS) Did you ever count calories from the soft drink you usually order along with the dinner? Now is the time to factor those in. New research indicates that meals that include a calorific drink are...
Read more on Business Balla
 
Apple Drops Their Appeal of Samsung Verdict
After the ruling in Apple’s favor by a jury in the patent infringement case with Samsung, the company was seeking a permanent injunction on a number of Samsung’s devices. The goal was to ban sale of Samsung products...
Read more on Apple Balla