Of course the answer is clear: we have them because the 1% wants us to have them. By guile, propaganda, and sometimes thinly disguised bribery, the 1% have crafted an overall tax system in this country that overwhelmingly favors the rich. This is borne out by Joan McCarter's recent diary: http://www.dailykos.com/... which I heartily recommend.
Why have we allowed this to happen? How can we reverse it? I have no answers; all I can do is to give my opinion as to what the problem is.
I think we can agree on the definition: A regressive tax is one that falls upon the lower income taxpayer more heavily than than on the higher income taxpayer as a percentage of income. We can define progressive taxes as just the reverse. For all practical purposes, there are no neutral taxes, although the Medicare tax comes very close. (It is slightly regressive because dividends and capital gains are not subject to it.)
What progressive taxes do we have in this country? We have the individual income tax, the estate tax together with the gift tax (basically siamese twins), and a few progressive state income taxes. There are a few "luxury taxes" that might be progressive, but they are inconsequential window dressing.
What regressive taxes do we have? All the rest of them, and there are hundreds. The principle culprits are, in no particular order, Social Security taxes, sales taxes, excise taxes, corporate income taxes (a debatable issue), road and bridge tolls, and property taxes. (Did I miss one? It's hard to keep track.)
The poll suggests ways to make Social Security taxes less regressive, and the results should be interesting. In a previous diary where mentioned the "third rail", I ran into a buzz saw; the comments seemed to favor the present regressive structure. Let's see what a poll reveals, but first, please consider my argument for a progressive Social Security tax structure.
I argue that our present economic environment is, to a very great extent, due to the people presently retired, and soon to retire. They built the roads, bridges, buildings, power grids, and the internet. Without their labor, we would today use slide rules for calculating, roads that might support 45 MPH traffic on a good day, and fans to keep us cool in summer. Automobiles would go perhaps 5000 miles between trips to the repair shop. TV's, when they were working, would receive 3 or 4 channels, but only if your roof antenna pointed in the right direction. Microwave ovens? What are they? Computers? Just a distant dream. Software? Does that mean velvet pillows?
Those who are now retired invented, developed, and built the technological marvel that enables us to produce so much more today than was possible back in their time. Even those who merely pushed a broom supported the technological and infrastructure development with their taxes and their purchases. And now the 1% wants to use all these marvelous tools without even a token acknowledgement of where these marvels came from. Their message: Let the poorest of the poor support the workers who are now retired. Let the entry level worker who makes a minimum wage be the mainstay of their income. We rich folks did it all for ourselves, by being born into a generation that was so industrious and so inventive, and we don't owe them a bloody thing.
I put this argument to Peter Ferrara (If you are unfamiliar with this scum, Google is your friend.) by email quite a few years ago. His response? Basically, he said that the rich don't owe them a thing. Their labor was bought and paid for; end of story. If they starve, it's their own fault. I was aghast at his attitude. How could anybody be so ... so inhuman? So unfeeling? So immersed in the pursuit of greater and greater wealth that they blithely throw anybody under the bus for a buck?
My position on this is that we should do what is best for society. It is mathematically obvious that the well-being of the 99% should supercede the well-being of the 1%. If some abstract notion of "fairness", such as the idea of a flat tax, results in greater misery for the 99%, then there is something wrong with that notion. (There I go again, preaching to the choir.)
Sorry for the rant; you've seen it dozens of times before. But, dammit, something has to be done before they lay claim to the very last dollar.
To get back to the topic of regressive taxes, let's consider federal excise taxes. Many of them have the purpose of building a trust fund to compensate victims of a particular evil, black lung disease, for example. If the mine owner is long since dead, and his company is defunct, there is still a fund to compensate victims. These excise taxes are obviously a good thing. But I am annoyed at the "sin" taxes, because they are regressive. As a former smoker, I am sympathetic to the aim of discouraging smoking, but I think that taxing the poor is not the right way to go about it. But let's face it, sin taxes are small potatoes in the grand scheme of things.
I criticized the corporate income tax in my last diary. But as a result of several of the comments, I am no longer entirely convinced such a tax is regressive. If we taxed dividends and capital gains as ordinary income, it might even be a positive tax. This is an issue on which I am suspending judgement, at least for the moment.
The federal tax structure, with all its flaws, is a model of fairness compared to state an local taxes. Each and every one of the 50 states has a decidedly regressive tax system. This is baffling, because Americans all understand that a regressive tax is unfair. So how can it be that all 50 states have selected a regressive--and sometimes cruelly regressive--tax system? Take a few minutes to check it out, if you have not already done so. It is nothing less than a national disgrace. On a population-weighted basis, all 50 states tax the lowest income quintile at roughly twice the rate of the top 1%--10.8% Vs 5.3%.
Now, my question is this: In view of the fact that the various states have a clear model for a progressive tax system, namely the individual income tax, why have all 50 states opted for a system that is clearly and blatantly regressive? I have my own theory why this is so, but rather than give my own opinion, I'd like to solicit yours.