To preserve entitlements, don’t cut taxes for middle class

first_imgThe political logic is not hard to understand.The middle class continues to struggle, and, with midterm elections just around the corner, both parties need the support of middle-class voters.But missing from the tax debate is an appreciation that lawmakers have already crafted a tax-friendly regime for middle-income taxpayers.The result is a more progressive tax system that raises less revenue.Unless Congress is willing to dramatically cut major entitlement programs and eschew new social programs to address poverty and declining economic mobility, we need more tax revenue from the middle class, not less.Middle-class tax burdens are at historic lows. The Congressional Budget Office reported in 2016 that the average federal income tax rate for the middle class — here meaning the middle 60 percent of the income distribution — declined from 7.8 percent in 1979 to 3.4 percent in 2013.Focusing on all federal taxes (not just income taxes), the average tax rate dropped from 19.2 to 13.8 percent over the same period. This approach appeals to both parties, since Republicans favor small government while Democrats favor tax progressivity. But it also undercuts the government’s ability to pay for its core responsibilities.The middle class faces significant economic challenges and increased vulnerability, such as income stagnation, declining wealth and decreased job security.It is also grappling with dramatic increases in housing costs, medical care and education.The Big Six tax-reform framework responds to these challenges by reducing the already low federal tax burden on the middle class even further.The nonpartisan Tax Policy Center estimates that the framework would result in an average tax cut of $660 per household for members of the middle 20 percent (as well as an $8,500 cut for households in the top 20 percent and $130,000 cut for the top 1 percent).While this modest increase in middle-class disposable income might be helpful, it would do little to fund government programs that alleviate economic insecurity.What the middle class needs is not meager tax cuts but a muscular commitment to robust public institutions designed to benefit middle-income individuals. With these lower tax rates, the share of taxes paid by the middle class has also declined.The middle class paid 35 percent of income taxes in 1979 but only 16 percent in 2013, while its share of all federal taxes fell from 43 to 30 percent.Tax burdens on the American middle class are low not only by historical standards, but also in comparison with other developed countries.Data from the Organization for Economic Cooperation and Development reveal that American families with children face substantially lower average income-tax rates (in some cases, less than half) than similar families in other developed countries.And this is before factoring in consumption taxes, which represent a large share of middle-class tax burdens in most countries, but not in the United States.How did we get here?To be sure, some of the decline in middle-class tax burdens results from itsdeclining fortunes. Categories: Editorial, OpinionAmid the partisan rancor surrounding the framework for tax reform developed by GOP congressional leaders, there is one area of remarkable consensus: lower taxes for the middle class.center_img The middle 60 percent of households accounted for 49 percent of all pre-tax income in 1979 but only 43.4 percent in 2013. Meanwhile, the share of pre-tax income going to the top 1 percent increased from 8.9 to 15 percent.Even without changes in the tax code, such skewed income growth would have reduced the middle-class share of taxes paid.But the current tax structure is also the product of a host of pro-middle-class policies.This is not a well-thought-out, comprehensive strategy, but rather a series of uncoordinated changes in our tax laws.Some of the changes, such as expansions in the earned-income tax credit, were designed to help poor families but also benefitted many middle-class households.Others, such as the child tax credit, were expressly crafted to benefit the middle class.Still other cuts, such as the 2001 rate reductions, provided political grease for the “tax cuts for everyone” strategy that dominates U.S. politics. The higher taxes could come from our current income tax (from tax increases on the middle class and the wealthy) or a broad-based consumption tax (such as a VAT or carbon tax).How a country raises revenue strongly influences how the money is spent.Countries with more comprehensive social programs impose higher taxes on the middle class. Paradoxically, then, we may need less progressive taxes to fund more progressive spending programs.So enough of the middle-class tax cuts.It is time for a new fiscal strategy.Kirk J. Stark is the Barrall Family Professor of Tax Law and Policy at the University of California at Los Angeles School of Law. Eric M. Zolt, the Michael H. Schill Distinguished Professor of Law at UCLA, served in the Office of Tax Policy at the Treasury Department from 1989 to 1992.More from The Daily Gazette:Foss: Should main downtown branch of the Schenectady County Public Library reopen?EDITORIAL: Find a way to get family members into nursing homesEDITORIAL: Thruway tax unfair to working motoristsEDITORIAL: Beware of voter intimidationEDITORIAL: Urgent: Today is the last day to complete the censuslast_img read more

Park will benefit future generations

first_imgCategories: Letters to the Editor, Opinion We urge people living in the district to vote yes on Dec. 5 at Gowana Middle School on the proposal to sell land to the town of Clifton Park for $1.1 million to preserve 34 acres of land for a central park.This centrally located park will be available to all residents of southern Saratoga County and future generations to enjoy.Voting yes on this proposal will secure this land as green space, promote the building of community and move plans forward to develop a central park.Deborah LakritzLeland LakritzClifton ParkMore from The Daily Gazette:EDITORIAL: Beware of voter intimidationEDITORIAL: Find a way to get family members into nursing homesFoss: Should main downtown branch of the Schenectady County Public Library reopen?High-risk COVID exposure reported in Clifton ParkControversial solar project goes before Clifton Park Planning Board We have been residents of Clifton Park for 44 years and are the parents of two girls who attended and graduated from Shenendehowa.We have seven grandchildren, six currently attending various Shenendehowa schools.last_img read more

Put Liberty statue in its rightful place

first_imgCategories: Letters to the Editor, Opinion I totally agree with Jessie Malecki’s March 14 letter to the editor regarding the proposed relocation of the Statue of Liberty, which has been in the old/new Liberty Park on lower State Street in Schenectady since 1950.I personally have missed it being there during the renovation of the park as I cross the Western Gateway Bridge from the west daily and looked forward to seeing it “greet” me at the entrance to the city.To even consider not replacing this statue in the newly renovated park seems ludicrous to me. Please, Mr. Mayor, get it back where it belongs.RICHARD DICRISTOFARORotterdam JunctionMore from The Daily Gazette:EDITORIAL: Beware of voter intimidationEDITORIAL: Thruway tax unfair to working motoristsEDITORIAL: Urgent: Today is the last day to complete the censusLocal movie theater operators react to green lightFoss: Should main downtown branch of the Schenectady County Public Library reopen?last_img read more

Bidders line up for 200 acre Herts rail freight scheme

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Q&A

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Exposed: the secrets of millions of lease contracts

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Virtual future

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It’s a Menai adventure

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Jiwasraya’s losses from investing in questionable stocks estimated to reach Rp 13t

first_imgState-owned insurer PT Asuransi Jiwasraya has claimed that the losses it suffered from investing in several questionable stocks exceed those of social insurer Asuransi Sosial Angkatan Bersenjata Republik Indonesia (Asabri).Jiwasraya president director Hexana Tri Sasongko estimated on Wednesday that the insurer suffered a loss of Rp 13 trillion (US$ 949.65 million) from its investments in stocks of companies affiliated with businessmen Heru Hidayat and Benny Tjokrosaputro.Both businessmen have been named suspects and detained by the Attorney General’s Office (AGO) in the Jiwasraya corruption case. “The majority of our investment in stocks and equity mutual funds has been impaired and decreased our investment value,” he told the press after a hearing with House of Representatives’ Commission VI overseeing state-owned companies and trade, in Jakarta.He added that the total losses the company suffered from investing in the two businessmen’s companies’ stocks were still being audited by the Supreme Audit Agency (BPK).The alleged investment mismanagement in Jiwasraya has been investigated for corruption after the insurer failed to pay out more than Rp 16 trillion in matured insurance policies as of January to its customers. The AGO has named five suspects, including two of Jiwasraya’s former executives, in the case.In the meantime, Asabri claimed that its losses from investing in similar stocks could reach Rp 11.4 trillion, higher than its previous claim of Rp 10.9 trillion last month.President director Sonny Widjaja said the insurer, which handles the social insurance and pension funds for the National Police, the Indonesian Military and employees of the Defense Ministry, had secured a commitment from both businessmen to compensate for the losses.“We will utilize the police force to collect the money [from Heru and Benny] because we don’t have the authority to take away their assets,” he said during the hearing. Topics :last_img read more

Pope in dramatic visit to empty Rome to pray for end of virus

first_imgA Vatican picture showed the pope and a small security detail walking on an empty Via del Corso, which is usually packed with shoppers and people taking strolls on Sunday.The Vatican said earlier that his Holy Weeks and Easter services next month will be held without public participation, a step believed to be unprecedented in modern times.It was not clear how the massive events will be scaled down but sources said officials were studying ways to hold them in indoor locations, including St. Peter’s Basilica and the Sistine Chapel, with small representative groups attending.The Holy Week services, which begin on Palm Sunday, leading up to Easter, the most important day of the Roman Catholic liturgical calendar for the world’s 1.3 billion members. Palm Sunday, which commemorates Jesus’ entry to Jerusalem, usually takes place in St. Peter’s Square, which traditionally is decorated with olive trees while those in the crowd hold up palm branches.Another Holy Week event, the Way of the Cross procession on Good Friday, takes place around Rome’s ancient Colosseum.Pope Francis prays at the Santa Maria Maggiore basilica for the end of the coronavirus pandemic, in Rome, Italy March 15, 2020. (REUTERS/Handout/Vatican Media)NO FLOWERS THIS YEARThe main event is the Easter Sunday Mass and the pope’s twice-yearly “Urbi et Orbi” blessing and message from the central balcony of St. Peter’s Square.The Netherlands usually fly in tens of thousands of flowers to decorate the papal altar and the entire square, but the Dutch ambassador to the Vatican, Caroline Weijers, said last week that there would be no flowers this year.Italy has been hit harder than any other European nation. The country’s death toll rose to 1,809 on Sunday and the total number of cases rose to 24,747.The pope, the Vatican – a tiny city-state surrounded by Rome – and the church in predominantly Catholic Italy have all been forced to modify centuries of tradition because of the outbreak.Pope Francis sends a virtual hug after delivering his weekly Angelus prayer via video at the Vatican, March 15, 2020. (REUTERS/Handout/Vatican Media)In Italy, as elsewhere, Masses have been canceled to avoid people gathering. Bishops have urged the faithful to participate via television and the internet.In staunchly Catholic Poland, which has reported just over a 100 coronavirus cases and three deaths, church authorities recommended the faithful watch mass on TV or online after the government banned public gatherings larger than 50 people.Many priests preached to nearly empty pews on Sunday.”It is such a depressing feeling for a priest,” said Wieslaw Niemyjski, who conducts services in a cathedral in Drohiczyn, a town of roughly 2,000 people in eastern Poland.The noon children’s Mass usually attracts about 200 people, he said. “Today there were maybe 17 people, plus five acolytes, three priests. I’ve never seen anything like this before.”Topics : Pope Francis ventured into a deserted Rome on Sunday to pray at two shrines for the end of the coronavirus pandemic, as the Vatican said his Easter services will be held without the public for the first time.Francis left the Vatican unannounced to pray at the Basilica of Santa Maria Maggiore and then walked along one of Rome’s main streets to visit St. Marcello church to pray before a crucifix that was used in a procession when the plague hit Rome in 1522.A Vatican statement said he prayed for an end to the pandemic and also for the sick, their families and health providers and workers keeping pharmacies and food stories open amid a national lockdown.last_img read more