Roughly a third to a half of our total tax load goes to state and local taxing authorities. It is well documented that state and local taxes are regressive--sometimes cruelly so. (If you have not yet done so, I strongly urge you to spend a half hour or so surfing this site.) The reason for this is a puzzle to me. If we acknowledge that taxing the poor preferentially is a bad thing, why do all 50 states do this?
Maybe the real reason that state and local taxes are regressive comes down to the fact that the wealthy have a much greater voice in government than the poor. One would think that a sense of noblesse oblige would counteract this, but that doesn't seem to be the case. Most of the rich seem to be content--even eager--to extend their wealth at the expense of the poor.
As I've said before, there are rich people who are exceptions, but they are a minority. Most of the 1% seem to be infected with the meme to increase their wealth by any means possible. They believe that the system gives them that right--even that obligation. Capitalism wouldn't work properly unless they pursued wealth ruthlessly.
When we agree that wealth should be pursued ruthlessly, we deny that human well-being should play a part in our management of tax policy. If the principle virtue of capitalism must be subverted to a policy that mandates a net decrease in human well-being, then capitalism must be wrong.
I don't believe that capitalism is wrong, but I do believe that it must be restrained from its excesses. It must be regulated; the wealthy ought not to be allowed to have it their own way just because they are wealthy. Roughly half our population (the half that votes Republican) has been convinced that tax policies that favor the 1% are a good idea. They are wrong, and we need to find ways to convince them otherwise.
So what does this have to do with state and local taxes? The unvarnished truth is that state and local authorities routinely tax their poorest citizens at a higher rate than they tax their richest citizens. This is true in all 50 states; it is nothing less than a national disgrace. We are not talking about chump change--trillions in state and local taxes are at issue here.
So what can we do about this national disgrace? It really is quite simple in principle, though difficult in practice. We should tax citizens according to their means. At every level, from federal to village, we should have a tax that imposes a progressive income tax.
Sales taxes are horridly regressive; therefore we should eliminate them. Property taxes also turn out to be regressive (but not as badly as sales taxes), so they should also be eliminated. Excise taxes are just targeted sales taxes, and should be eliminated. Just in case you haven't noticed (LOL), I am a firm opponent of regressive taxes. Maybe you think that a particular regressive tax serves a purpose. Cigarette taxes come to mind, for example. It seems that we ought to discourage smoking, and I certainly agree with that aim. But to penalize the poor who happen to be afflicted with that addiction does not serve the needs of society. (Full disclosure: I am a reformed smoker.)
A progressive income tax would lift some of the burden from the poor and increase it on the rich, and our national disgrace could be wiped out. I would like to go so far as to mandate a particular progressive structure for all states. For example, require that every state tax its lowest quintile of income at half the rate for the highest quintile, with regular stepwise marginal rates for the middle quintiles. This would not be terribly progressive, but at least the slope of the line would be positive. This would also serve an important function for voters, who could compare the tax rates and level of services of their state to those of similar states.
There are two tiny problems with this approach. First, the rich could be expected to put up formidable resistance to the idea. Second, we would need a constitutional amendment to make the idea legal. So as far as practicability goes, the idea gets a zero rating; what ought we to do?
The first thing we should do is to make this our number one campaign issue in state / local politics. Democrats in states whose tax structure is regressive (There are 50!) ought to make this a make or break issue when it comes to state legislature and gubernatorial elections.
In my state, Indiana, I have never seen a single line in any candidate's position that points out that we tax our bottom quintile at twice the rate of our top quintile. I have never seen an Op-Ed that calls attention to this inequity. I have never heard any candidate promise to introduce legislation to correct this obvious evil. I have never seen a yard sign that even hints at tax fairness as a campaign issue, much less a billboard or a direct mail campaign. It seems as if nobody gives a shit that the poor are getting reamed at the state and local level.
Daily Kos seems primarily interested in the national political scene, and that's as it should be. The most important issues are fought at the national level, and I'm not trying to detract from that or divert attention from it. But when we occasionally pay attention to the state and local scene, I think we should be adamant that the current tax structure has to be changed. In all 50 states, one at a time, we should make a progressive income tax the main source of revenue.