Greg Roach's Berkshires Blog
Sunday, April 19, 2009
  Closing Budget Gaps
Representative Dan has a lengthy post on Beacon Hill's budgetary dilemma. No matter how you slice it, there are going to be some big cuts in the commonwealth's budget.

However, Texas (of all places) has found some money for community mental health in a rather unusual place:
The Texas House Friday voted to drain most of GOP Gov. Rick Perry’s office budget and instead spend the money on community mental health crisis services and veterans’ services.
Granted, this appears to be political payback for Perry's secessionist stupidity, and it will never stand in the final budget, but, damn, it's a great way to make a point.

FYI, our own Governor Patrick's proposed FY 2009 office budget in the House's bill is $4,952,646. Hmmmmmm.......

UPDATE: Glenn chimes in on the budget mess and I agree with him except for:
It also seems reluctant to pass a 1 percent increase in the sales tax, which would yield an estimated $750 million in additional revenue while having a negligible effect on the buying public, despite screams of outrage from the usual quarters.
Sales tax is exactly the wrong place to find money in times like these. It is, by far, the most regressive tax. You are effectively increasing the working poor's tax burden by 1% (except for groceries, which are non-taxable) while increasing the upper incomes by only a tiny fraction of that. "Negligible" is not accurate.

Frankly I am tired of seeing the least economically viable groups in this state and country pick up the slack. It has been shown time and time again that the effective tax rates on the bottom half of the incomes in America is far higher than those on the top. Just ask Warren Buffett.

Find the money somewhere else.
Nope. Agree with Glenn. The term "regressive" as part of tax policy is being treated like the word "socialist" when it comes to shades of meaning. A regressive tax, like a socialist policy, ain't always automatically bad.

Say you're working poor and you make $18K per year. You rent, so you get half of that back from the state, you qualify for the EIC, and your adjusted gross income is way less than any withholding. So from an overall income tax liability deal, you're paying virtually diddly.

Clothes and groceries are (mostly) nontaxable, so all that's left are consumption and personal property taxes. So in the end, that guy making $18,000 per year is spending a lot less on taxable purchases than the guy making $180,000, paying FAR fewer overall taxes, and receiving way more in social services.

So now when EVERYBODY has to pay another 3 cents for dish soap and shoe polish, the "regressive" banner gets waved? I dunno, Greg. Eating the rich isn't always the solution. There may be other ways to raise revenue, but when it comes to tax increases, I don't think the sales tax is that unfair a place to start.
Ross- Your argument falls apart when you have a guy who makes $29K year as a janitor. He qualifies for almost no subsidies of any sort, pays both income and payroll taxes, pays the gasoline tax, pays the sales tax, pays for his own health insurance, etc...

I am not sure why lowering the floor is the first option when raising taxes. $750 million off the top half of income earners would hurt a lot less than scraping it off the bottom.

I'm not talking about soaking the rich, but targeting things a little bit is just a wee bit more preferable.

And I'm not sure why you feel that way about the term "regressive." The definition is quite clear, unlike right-wing zealots tossing around "socialism." Sales taxes of all kinds are, by definition, regressive.
My point is that the first argument against a tax being implemented shouldn't always be that it's regressive.

If my guy earning $1500/mo spends $250 of his post-tax dollars on taxable consumer items, his "burden", now $12.50, goes up 1% to $15.00. Two-fitty a month. In return he gets, the EIC, food stamps, reduced price school lunches, subsidized health care, etc. Not that it's GOOD to be poor, but you gotta admit you're more frequently on the receiving end of the free stuff line.

Your guy earning $2400 a month is eligible for less stuff but is still right at 200% of federal poverty income guidelines (for a family of 2) and is eligible for less free stuff, but in hard dollars, his disposable income of $400, using the same formula, means his burden now increases from $20 to $24/mo. Four bucks. You can talk burdens and stuff, but four bucks more per month per person, combined with Obama's federal tax reductions, just doesn't bother me as much as it does you, I guess.

You know me and you know that I've got no problem putting government in the role of a helping hand out of poverty if it can do so. But if you have 4 million people paying an extra $2.50 per month, that's 120 million dollars a year to give back in services--proportionally much less of which Mrs. $180K/yr gets to take advantage of.
I understand your point, but add in $.19 gallon on gas and few bucks more a month at WalMart, etc... and those numbers begin to add up -*especially* during a recession. I am not trying to sound self righteous, but given my profession, I work with and serve the "working poor" on a daily basis. $5 bucks makes a difference. (On a side note, it bothers me that my industry pays awful wages, but such is the cost of the downward market pressures in the food biz. The irony of a full-time grocery store employee being eligible for food stamps grates me.)

Again, my bigger point is that lowering the floor when it comes to raising revenue is counter-productive.
Oh well- I'll jump in---much to Greg's consternation---I alwsy thought that a "progressive " tax was based on one's ability to pay---whether flat income tax rate (Mass) or graduated (US) it's based on your income----yeah yeah I know loopholes etc--- but at least in theory--- propertry tax is " regressive" becuase it's based on the market value--your assessed valution-- not on your ability to pay----now- let's look at the sales tax--same percentage for rich and not so rich---working poor as Greg calls them----yet it really is based on your ability to pay----if you can afford to buy a $40,000 car you can presumably pay the sales tax--- on the other hand if you can only afford a $4000 car- you can presumably pay the sales tax--in both cases if you couldn't afford the sales tax-- you wouldn't buy the product--- so in that sense the sales tax is NOT "regressive" it is "progessive" because it's based on your ability to pay-----spending 5% or 6% on the sales tax-- in other words 1 percent increase is not going to deter me from buying the product----if I can afford it in the first place---same goes for TV's---$3000 plasma-- or 19 inch - for $300-- which ever you can afford- the sales tax is not a deterrent----raise the sales tax up 2 points-- 3 points---I'll still only buy what i can afford and that's the product's list price--tax included-----so whatcha think-- chbpod
Just saw this reply here. Clark, the flaw in your logic is that people's ability to buy is not the same as their ability to pay.

Greg--what's your suggestion to get a better targeting mechanism, especially when everyone on Beacon Hill from Deval to Dan Bosley to the guy behind the counter at the Starbucks on Staniford Street is pretty much talking about raising income taxes as a non-starter?
I miss your point Ross---the ability to buy is not the same as the ability to pay?? You can't buy without paying---and most people don;t buy what they can't pay for---what you can afford-your ability to pay has a direct relationship to what you buy---the rich buy more expensive stuff- the not so rich by less expensive stuff--and the sales tax is based on what stuff you buy--therefore progessive not regressive---sorry- chbpod
For those who wonder about who pays a higher percent of their income in sales tax, click here.
Post a Comment

<< Home
A blog of random thoughts and reactions emanating from the bank of a mountain stream in the farthest reaches of the bluest of blue states.

May 2006 / June 2006 / August 2006 / September 2006 / October 2006 / November 2006 / December 2006 / January 2007 / February 2007 / March 2007 / April 2007 / May 2007 / June 2007 / July 2007 / August 2007 / September 2007 / October 2007 / November 2007 / December 2007 / January 2008 / February 2008 / March 2008 / April 2008 / May 2008 / June 2008 / July 2008 / August 2008 / September 2008 / October 2008 / November 2008 / December 2008 / January 2009 / February 2009 / March 2009 / April 2009 / May 2009 / June 2009 / July 2009 / August 2009 / September 2009 / October 2009 / November 2009 / December 2009 / January 2010 / February 2010 / March 2010 / April 2010 / May 2010 / January 2011 / May 2011 / June 2011 / July 2011 / October 2011 /

greg at gregoryroach dot com

"Livability, not just affordability." - Dick Alcombright

My ongoing campaign for North Adams City Council

iBerkshires' Online Event Calendar

Because a Chart is Worth 1000 Words

Congressional Budget Office data

Powered by Blogger