{"id":9063,"date":"2019-04-24T00:54:24","date_gmt":"2019-04-24T04:54:24","guid":{"rendered":"http:\/\/marcstier.com\/blog2\/?p=9063"},"modified":"2024-01-06T20:02:33","modified_gmt":"2024-01-07T01:02:33","slug":"how-the-fair-share-tax-will-restore-fairness-to-our-tax-system-2","status":"publish","type":"post","link":"https:\/\/marcstier.com\/blog2\/?p=9063","title":{"rendered":"How the \u2018Fair Share Tax\u2019 will restore fairness to our tax system"},"content":{"rendered":"<p><a href=\"https:\/\/www.penncapital-star.com\/commentary\/how-the-fair-share-tax-will-restore-fairness-to-our-tax-system-opinion\/\">Originally published by the PA Capital-Star on April 24, 2019<\/a><\/p>\n<p>Pennsylvania politics remains divided. One side, composed of mostly conservatives, believes that the key to prosperity is to cut taxes for the rich, cut spending for everyone else and\u2014although they don\u2019t say it too loudly\u2014keep wages low.<\/p>\n<p>The other side, composed of mostly liberals, believe that a prosperous Pennsylvania needs to close our public investment deficit. They point out that state spending as a share of gross state product has fallen by 12 percent compared to the years 1997-2011. That has left us with:<\/p>\n<ul>\n<li>K-12 schools\u00a0that\u00a0remain among the most unequal in the country,\u00a0leaving too many of our children\u00a0to receive\u00a0an inadequate education;<\/li>\n<li>state spending on higher education that is half of what it was in 1983-84, leaving us fourth from the bottom among all states in per capita spending and 40th\u00a0of 50 states in the percentage of adults with more than a high school education;<\/li>\n<li>roads and bridges that are in a state of disrepair and inadequate public transit systems that may lose their state subsidy in the next year or two;<\/li>\n<li>a continued decline in spending on\u00a0environmental\u00a0protection despite the\u00a0threat of fracking; and<\/li>\n<li>thousands of\u00a0Pennsylvanians who need child care, intellectual disability, and mental health (including opioid abuse treatment),\u00a0yet\u00a0face long waiting lists.<\/li>\n<\/ul>\n<p>With a Democratic governor and a Republican-controlled General Assembly, neither side is getting what they want this year. And thanks to robust revenues, the\u00a0governor\u2019s\u00a0austere\u00a0budget\u2014but not as austere as Republicans want\u2014may be settled\u00a0without too much stress.<\/p>\n<p>But that\u00a0means that partisan gridlock is making it impossible for our government to make a real choice between the two visions of\u00a0Pennsylvania\u2019s future. And for those of us who take the second view, it means we\u00a0will still\u00a0have\u00a0a\u00a0serious\u00a0public investment deficit\u00a0that undermines our long-term prosperity.<\/p>\n<p>At some point we may have to make a choice, but we will\u00a0no doubt\u00a0do so under difficult conditions. Revenues won\u2019t continue\u00a0at high levels\u00a0indefinitely.<\/p>\n<p>After years of\u00a0a\u00a0budget\u00a0that relies\u00a0on one-time revenues and borrowing from the future, a modest recession could put the annual budget back in the red.\u00a0And then we will have to choose between\u00a0spending\u00a0and\u00a0raising\u00a0taxes.<\/p>\n<p>What will we do then?<\/p>\n<p>The answer is to fix our upside-down\u00a0tax system.<\/p>\n<p>A fair tax system asks\u00a0those with higher incomes to pay a higher percentage of their income in taxes. But the\u00a0uniformity clause of our\u00a0state\u00a0constitution\u00a0prohibits\u00a0graduated tax rates\u00a0and turns our tax system upside-down.<\/p>\n<p>The 20 percent of Pennsylvania families with the lowest incomes (making less than $20,000\/year) pay 13.8 percent of their income in state and local taxes, while those in the top 1 percent (making on average $1.7 million\/year) only pay 6.0% of their income on state and local taxes. The bottom 60 percent of income earners, on average, pay at nearly double the tax rate of what the richest Pennsylvanians pay on average.<\/p>\n<p>Our upside-down tax system is not only horribly unfair, it makes it impossible to raise\u00a0sufficient\u00a0revenues\u00a0to close our public investment deficit now. And it will make it impossible to close a budget deficit when we have a recession.<\/p>\n<p>Income for the top 1 percent of households in the state has been skyrocketing but has remained stagnant for everyone else. If we won\u2019t tax the richest Pennsylvanians, we will never have the funds we need.<\/p>\n<p>The long-term solution is to repeal our uniformity clause, which will take time.\u00a0But\u00a0there is a\u00a0near-term\u00a0solution, which we call the Fair Share Tax.<\/p>\n<p>Central to this plan is dividing the personal income tax (PIT) into two new taxes. The first would tax wages and interest at 2.8 percent, which is a decrease from the current PIT of 3.07 percent. The second would tax what we call income from wealth\u2014dividends, capital gains, business profits, royalties, and estates\u2014at 6.5 percent.<\/p>\n<p>The Fair Share Tax would bring in $2.2 billion in new revenue. About 50% of the new revenue would come from the top 1 percent, 80 percent would come from the richest fifth, and 16% would come from out-of-state taxpayers. This means that only a tiny 4 percent of the additional revenue would come from the bottom four-fifths of Pennsylvania taxpayers.<\/p>\n<p>Under the plan, 47 percent of taxpayers would see their taxes go down, 35 percent will see no change in their taxes, and only 18 percent will see their taxes go up. And the effective tax rate on the top 1 percent of taxpayers\u2014the combined rate they pay on all of their income\u2014would be only 3.9 percent, far less than that of New York and New Jersey and below all of our neighboring states except Ohio.<\/p>\n<p>The Fair Share Tax is fair to\u00a0small\u00a0businesses and seniors as well.\u00a0Family-owned businesses can\u00a0choose to\u00a0receive compensation\u00a0as\u00a0profits or wages.<\/p>\n<p>By taking wages instead of profits, they can lower their taxes under the Fair Share plan. And as is the case today, most of seniors\u2019 retirement income\u2014Social Security, pensions, and 401k plans\u2014will remain untaxed. Three-quarters of seniors will see a tax cut or no change in their taxes. The top 20 percent of seniors, who have an average income of $246,100, will pay 92 percent of the increase in taxes among seniors.<\/p>\n<p>The Fair Share Tax\u00a0would\u00a0turn\u00a0our tax system right-side-up\u00a0while\u00a0generating\u00a0the revenues we need\u00a0to\u00a0protect the state budget during an economic downturn\u00a0and meet our public investment crisis.\u00a0It\u2019s the solution to the long-term problems that our legislators are ignoring this year.<\/p>\n<p>It would give us the\u00a0means\u00a0to create individual opportunity and thriving communities throughout the Commonwealth,\u00a0without burdening working people and the middle class.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Originally published by the PA Capital-Star on April 24, 2019 Pennsylvania politics remains divided. One side, composed of mostly conservatives, believes that the key to prosperity is to cut taxes for the rich, cut spending for everyone else and\u2014although they don\u2019t say it too loudly\u2014keep wages low. The other side, composed of mostly liberals, believe that a prosperous Pennsylvania needs to close our public investment deficit. They point out that state spending as a share of gross state product has fallen by 12 percent compared to the years 1997-2011. That has left us with: K-12 schools\u00a0that\u00a0remain among the most unequal in the country,\u00a0leaving too many of our children\u00a0to receive\u00a0an inadequate education; state spending on higher education that is half of what it was in 1983-84, leaving us fourth from the bottom among all states in per capita spending and 40th\u00a0of 50 states in the percentage of adults with more than\u2026 <a class=\"continue-reading-link\" href=\"https:\/\/marcstier.com\/blog2\/?p=9063\">Continue reading<\/a><\/p>\n","protected":false},"author":1896,"featured_media":9064,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[197,108,201],"tags":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/marcstier.com\/blog2\/wp-content\/uploads\/2022\/07\/money-cash-united-states-gold-silver-currency-551949-pxhere.com_.jpg?fit=1280%2C720&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p35YuU-2mb","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/posts\/9063"}],"collection":[{"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/users\/1896"}],"replies":[{"embeddable":true,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9063"}],"version-history":[{"count":1,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/posts\/9063\/revisions"}],"predecessor-version":[{"id":9065,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/posts\/9063\/revisions\/9065"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/media\/9064"}],"wp:attachment":[{"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9063"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9063"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9063"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}