Progressive Agenda

Taxation Policy

Our values: Fairness, fair share, justice, equal opportunity, level playing field

Our vision: On the federal, state and local levels, our tax policies must be fair to everyone. The fact is, our tax system is thoroughly unfair; it is rigged with loopholes and giveaways that benefit a few, usually rich, individuals and big corporations, at the expense of all the rest of us. Everyone should pay their fair share, and to accomplish that, we must: (1) require disclosure of tax giveaways; (2) eliminate those giveaways that unfairly benefit the rich and powerful; (3) raise tax rates on the rich and where otherwise needed; and (4) cut taxes for people who cannot reasonably afford to pay them.

Require disclosure of tax giveaways

Americans believe, by overwhelming margins, that our tax system is unfair and that rich individuals and large corporations are not paying their fair share. In order to fix the system, we need publicly available information. Governments should list all tax expenditures and require that each must sunset unless regularly renewed. In addition, topline information from the tax returns of large companies should be publicly disclosed. Individuals and big corporations are getting wealthier while simultaneously paying less in taxes. To address the problem, we need to know that they’re doing it and how they’re doing it.

Eliminate unfair tax giveaways

Almost every government’s tax code is riddled with giveaways for the rich and powerful, many of which constitute little more than legalized tax evasion. Citizens want to make these systems fairer. This requires information, analysis, and the political will to put average taxpayers first. State and local governments should hire more auditors, investigators and attorneys to collect from big corporate scofflaws and empower whistleblowers to challenge tax giveaways.

Raise rates on the rich  

Except for the federal income tax, nearly every other type of tax, especially on the state and local levels, is regressive. So nearly every tax could be adjusted to make it fairer to middle class and working families. States with income taxes should make their brackets more progressive and add a surtax on extra-high incomes. States should also raise inheritance taxes on the very richest estates.

Cut taxes on those who can’t afford them

Just as some high-income individuals and businesses are paying too little in taxes, there are some low-income people who are paying too much. States should raise the Earned Income Tax Credit and the dependent care tax credit. States and localities should ensure that there is a property tax circuit breaker and a tax deferral system that prevents low-and moderate-income Americans from losing their homes.

FEATURED POLICIES FOR 2024

Disclose corporate taxes

It is widely understood that large corporations are not paying their fair share of taxes. The first step to fix our broken system is public disclosure. To be specific, all publicly traded companies should disclose a summary of the amount they pay in state income taxes, including their tax rate and basis (income, credits and deductions). It is true that we don’t and shouldn’t require such disclosure of individuals, but corporations are not people. Corporations are legal structures, created by state law, and they do not need or deserve the exact same privacy rights as individuals.

Sunset tax expenditures

A “tax expenditure” is a form of stealth government spending. Giving exemptions, deductions or credits to certain groups or for certain activities has the same effect as handing them money, and governments divert billions of dollars this way. Tax expenditures never receive the same scrutiny that budget expenditures do. While budget line items are reviewed and adjusted every year, few governments have any mechanism for reviewing tax expenditures. The fact is, many tax expenditures are unjustified giveaways to the rich, many were not properly targeted to achieve their stated objective, and others were justified when enacted but no longer make economic sense. Thus, each tax exemption, deduction and credit should be examined periodically to weigh its costs, benefits and relevance to community goals. The only effective way to bring fairness to the tax expenditure system is to require each to undergo a thorough review and be re-approved through the legislative process. This is accomplished by requiring that all tax expenditures “sunset” every few years.

Create a surtax on multi-millionaires

Wealth in the United States has become concentrated among the nation’s richest households to an extent not seen since the 1920s. Compared to the benefits they receive, affluent households pay a disproportionately low share of the tax burden. The Fairness in Taxation Act would add an additional tax of four percent for income earned over one million dollars per year.

Limit property taxes for residents who can’t afford them

Elderly homeowners living on a fixed income as well as under- or unemployed homeowners struggling to pay their bills are at risk of losing their houses because of skyrocketing property value assessments. The Property Tax Limitation and Deferral Act limits the property taxes payable each year by households earning less than a certain income and provides for a program in which eligible individuals may elect to defer amounts owed above that limit by filing an annual application with local tax authorities.

Crack down on tax evasion by the rich

Americans believe many wealthy individuals and corporations evade taxes, and they’re right. One study indicated that people who make between $500,000 and $1 million per year underreport their incomes by more than 20 percent. That means states and localities lose billions of dollars each year to tax evasion. The fact is, most government tax collection agencies don’t have enough auditors and enforcers to get the job done. The solution is to hire more tax enforcers and give them greater enforcement powers. Their work will pay for itself.

Raise the estate tax

Over the past several years, progressives have been completely outmaneuvered on the estate tax. Many believe the federal estate tax applies to them, even though 99.8 percent of Americans are exempt. Nevertheless, the richest one percent in America own over one-third of all the combined wealth in our country—stocks, bonds, businesses, real estate, and personal property like cars and jewelry. The richest five percent own nearly two-thirds of all wealth. We cannot make a dent in the problem of economic inequality without a vigorous estate tax and the effort will never have momentum until states lead the way.

Create or raise the earned income tax credit

The federal Earned Income Tax Credit (EITC), created in 1975, is the most effective anti-poverty measure in America, lifting more working families out of poverty than any other government program. It directly puts extra dollars in the pockets of people who need it the most: those who work for poverty-level wages. Twenty-six states and the District of Columbia have adopted their own EITCs. States can create or raise EITCs with the Earned Income Tax Credit Act.