If the facts in this press release are correct and middle and low income families really are paying a higher percentage of their income in state and local taxes than rich families, what is the proper response?
I'm betting that many liberals will use these "stats" to justify higher taxes on the wealthy. The better reaction would be to cut spending so that we can ease the tax burden on those least able to afford it. Of course that would take political will and courage.
As a practical matter though, there is a problem with the Council on Children and Families' numbers. I'm not going to quibble with the percentages they use - I've long thought that most state and local taxes and fees are very regressive - but rather the brackets they use.
Certainly families earning less than $20,000 are poor and unable to absorb any significant amount of taxes or fees. But then they use families making $35,000 to $57,000 as their measure of "middle-income" Wisconsinites. I'd like to see how they arrived at that figure. Also, what about the families making between $20,000 and $35,000?
The real problem I have is that they jump from households making $57,000 all the way to taxpayers who average $1,116,000 a year. The first two categories have specific ranges, what was the range used to arrive at this average? Again, what about the families in between the "middle-income" and the rich? If those families also pay higher than 8% of their incomes in state and local taxes wouldn't it reinforce the Council's point? Even if they paid less than the richest Wisconsinites would it change the fact that poor families pay more?
Based on the conclusion of the Council of Children and Families research director that "Wisconsin lawmakers could make the state’s tax system fairer [by] restoring the state’s estate tax and eliminating income tax breaks that primarily benefit the wealthy, such as the preferential treatment of capital gains" I'm guessing that the Council isn't much interested in lowering spending and taxes. They're pushing a political agenda and makes the questions I raised earlier more important to answer.
Still, even if the figures are correct, my point at the beginning of this post remains the same: wouldn't we be better off cutting spending and then lowering taxes for everyone? Or maybe we should just go to a flat tax for all state and local governments. That would at least solve the problem of making sure everyone pays their share.