The Sunday Globe ran an article in the Money & Careers section about how the Obama compromise on extending the Bush era tax cuts will affect families of different income levels.
Check out the full article: http://www.boston.com/business/taxes/gallery/taxdealbythenumbers/
Here's some telling data:
Population Segment by Income Savings (as % of Income)
Bottom 20% $3,342 (10%)
Middle $3,246 (4.3%)
Top 20% $6,538 (4.5%)
Top 1% $6,788 (1.5%)
Top 0.1% $92,658 (4.5%)
As you can see, these tax cuts aren't exactly progressive with the super rich getting a better deal than the middle or upper middle class. This comes at a time when income inequality in the US, which has been growing for the past 40+ years and has especially accelerated since the mid-1980s, is reaching an all time high. There's a lot of debate about the role the income disparity plays in the US, but in general countries that have a better education system than the US, or rate higher on health indicators, or have lower crime rates also have a more equal distribution of wealth and income. The US' inequality is about the highest in the developed world.
The argument for extending the tax cuts is that raising taxes right now would halt any economic growth that we're seeing. That is essentially true, economists agree that this compromise will help spur economic growth. However, most of that growth and job creation will come from the extension of unemployment benefits and the reduction in the payroll tax, not the continued income tax cuts. Additionally, there is a vocal group of Americans and legislators who feel that reducing the impending deficit should be our #1 priority. Extending tax cuts doesn't do this. Letting the tax cuts expire on earnings over $250,000, $500,000 or even $1 million would have been a reasonable way to let most of Americans continue to have money to spend and put back into the economy while using excess discretionary earnings to bring the budget into balance. There need to be additional tax brackets above $250,000 to account for the incredible income growth and disparity that has occurred at the top end of the income scale. There is always a lot of populist anger when people see sports stars or Wall Street bankers walking away with million and billion dollar salaries and bonuses. It would be nice to see some anger directed towards the broken system that protects them and allows our economic growth to walk away without benefiting the vast majority of Americans for whom that growth has been so elusive.
[Additional source - http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States]
Showing posts with label politics. Show all posts
Showing posts with label politics. Show all posts
Wednesday, December 15, 2010
Tuesday, October 26, 2010
Questions, Questions, Questions
This isn't a political blog, although a number of the views expressed do enter into the political arena. However, with the Massachusetts elections a week away, I feel it is a good opportunity for progress Boston to come out with a stance on the three ballot initiatives that are being put forth this November 2.
2010 Statewide Ballot Questions
Question #1 - Repeal the state sales tax on alcoholic beverages
This question is pretty straight forward. When the legislature voted to increase the state sales tax from 5 to 6.25% last year, they also removed the exemption for alcohol. This means that consumers went from paying no tax to the full 6.25% on any beer, wine, or liquor purchased in state.
The argument for the repeal is that a tax on alcohol drives business away from local stores (particularly to New Hampshire) and that this is double taxation since there is an excise tax on alcohol. The double taxation argument is pretty light since a lot of states charge both excise and sales tax on alcohol and MA has one of the lowest excise taxes in the country. Now it is true that there are probably a few stores along the NH border that are going to be hurt by this 6.25% increase in the price of alcohol, but most consumers are more worried about convenience than driving out of their way to save a couple bucks.
I am against repealing the sales tax on alcohol and so will be voting No on Question #1. In my opinion, a sales tax is a fair, broad based way for a state to raise revenue. In MA, the tax is made less regressive by exempting necessities such as food and clothing. I fully support those exemptions. The question then becomes, is alcohol a necessity? I do not think so. Therefore, it should be taxed like other discretionary items.
Question #2 - Repeal Comprehensive Permits for Low- or Moderate-Income Housing
This is certainly the most complex of the bills and probably the least understood. The summary on the MA Elections website doesn't help a whole lot. Essentially, this bill would repeal the ability for a developer to apply for a comprehensive permit from a city or town's Zoning Board of Appeals (ZBA) if his development contains a certain percentage of low- or moderate-income units and the city or town in which he is applying for the permit does not meet a threshold of having 10% of its housing stock affordable for low- or moderate-income families. This comprehensive permit can allow a developer to bypass certain local restrictions on the plan, size, shape, materials, etc of the development by appealing to the state Housing Appeals Committee (HAC) if his permit is denied or made economically unfeasible by the ZBA. The HAC can force the ZBA to grant a permit if they feel the development is in the best interest of the town.
The argument for repeal is that these comprehensive permits allow developers to bypass the local planning process, thus changing the character of a city or town and are a windfall for developers who just want to push large projects through to make more money.
I feel that the need for working class families to be able to have the option to live where is convenient for them to access the labor market in a state where housing costs can be quite astronomical necessitates the distribution of affordable housing across the state. This statute takes a market based approach by providing an incentive for developers to include affordable units in their developments and increases these affordable units, particularly in communities that would tend to prevent them from being built. I do not know of a better alternative to the affordable housing crisis in MA and therefore will be voting No on Question 2 against the repeal of the affordable housing law.
Question #3 - Reduce the State Sales Tax to 3%
As mentioned previously, the legislature, facing a financial crisis, voted to raise the state sales tax from 5 to 6.25%. This question seeks to reduce that rate below the previous rate to 3%.
The argument for the decrease is that charging a lower sales tax will put more money back in citizens' pockets and allow them to spend it and thus help out the economy. Additionally, by taking away a portion of the state's revenues, it would force state government to be more efficient and cut out wasteful spending.
Everyone wants state government to be more efficient. However, this is not the way to do it and I will be voting No on Question 3. MA's annual state budget is about $32 billion. Approximately half of the budget is legally untouchable by the legislature, going to debt payments, medical care for the poor, and pensions. Reducing the sales tax would take away approximately $2.5 billion in revenue which would have to be cut from the remaining $17 billion. With a structural deficit already looming for next year, that is simply too much money to take away. It would lead to massive across the board cuts that would cripple the ability of the state to invest in programs that can lead to a better future for MA. Better state government will come from increased transparency and participation on the part of voters. As I mentioned above, the sales tax is a broad, relatively fair way for a state to raise revenue. MA's sales tax is not significantly above that of other states. Realizing an equitable, sustainable future will require MA to invest in renewable energy, public transportation, and education in a way that a $2.5 billion cut in revenues will simply not allow.
2010 Statewide Ballot Questions
Question #1 - Repeal the state sales tax on alcoholic beverages
This question is pretty straight forward. When the legislature voted to increase the state sales tax from 5 to 6.25% last year, they also removed the exemption for alcohol. This means that consumers went from paying no tax to the full 6.25% on any beer, wine, or liquor purchased in state.
The argument for the repeal is that a tax on alcohol drives business away from local stores (particularly to New Hampshire) and that this is double taxation since there is an excise tax on alcohol. The double taxation argument is pretty light since a lot of states charge both excise and sales tax on alcohol and MA has one of the lowest excise taxes in the country. Now it is true that there are probably a few stores along the NH border that are going to be hurt by this 6.25% increase in the price of alcohol, but most consumers are more worried about convenience than driving out of their way to save a couple bucks.
I am against repealing the sales tax on alcohol and so will be voting No on Question #1. In my opinion, a sales tax is a fair, broad based way for a state to raise revenue. In MA, the tax is made less regressive by exempting necessities such as food and clothing. I fully support those exemptions. The question then becomes, is alcohol a necessity? I do not think so. Therefore, it should be taxed like other discretionary items.
Question #2 - Repeal Comprehensive Permits for Low- or Moderate-Income Housing
This is certainly the most complex of the bills and probably the least understood. The summary on the MA Elections website doesn't help a whole lot. Essentially, this bill would repeal the ability for a developer to apply for a comprehensive permit from a city or town's Zoning Board of Appeals (ZBA) if his development contains a certain percentage of low- or moderate-income units and the city or town in which he is applying for the permit does not meet a threshold of having 10% of its housing stock affordable for low- or moderate-income families. This comprehensive permit can allow a developer to bypass certain local restrictions on the plan, size, shape, materials, etc of the development by appealing to the state Housing Appeals Committee (HAC) if his permit is denied or made economically unfeasible by the ZBA. The HAC can force the ZBA to grant a permit if they feel the development is in the best interest of the town.
The argument for repeal is that these comprehensive permits allow developers to bypass the local planning process, thus changing the character of a city or town and are a windfall for developers who just want to push large projects through to make more money.
I feel that the need for working class families to be able to have the option to live where is convenient for them to access the labor market in a state where housing costs can be quite astronomical necessitates the distribution of affordable housing across the state. This statute takes a market based approach by providing an incentive for developers to include affordable units in their developments and increases these affordable units, particularly in communities that would tend to prevent them from being built. I do not know of a better alternative to the affordable housing crisis in MA and therefore will be voting No on Question 2 against the repeal of the affordable housing law.
Question #3 - Reduce the State Sales Tax to 3%
As mentioned previously, the legislature, facing a financial crisis, voted to raise the state sales tax from 5 to 6.25%. This question seeks to reduce that rate below the previous rate to 3%.
The argument for the decrease is that charging a lower sales tax will put more money back in citizens' pockets and allow them to spend it and thus help out the economy. Additionally, by taking away a portion of the state's revenues, it would force state government to be more efficient and cut out wasteful spending.
Everyone wants state government to be more efficient. However, this is not the way to do it and I will be voting No on Question 3. MA's annual state budget is about $32 billion. Approximately half of the budget is legally untouchable by the legislature, going to debt payments, medical care for the poor, and pensions. Reducing the sales tax would take away approximately $2.5 billion in revenue which would have to be cut from the remaining $17 billion. With a structural deficit already looming for next year, that is simply too much money to take away. It would lead to massive across the board cuts that would cripple the ability of the state to invest in programs that can lead to a better future for MA. Better state government will come from increased transparency and participation on the part of voters. As I mentioned above, the sales tax is a broad, relatively fair way for a state to raise revenue. MA's sales tax is not significantly above that of other states. Realizing an equitable, sustainable future will require MA to invest in renewable energy, public transportation, and education in a way that a $2.5 billion cut in revenues will simply not allow.
Thursday, December 17, 2009
FRA Shuns Northeast Corridor
I read in the Globe today that none of the $8 billion in stimulus money that was set aside for high speed passenger rail is going to be directed to the nation's only functioning high speed corridor, the NEC. Apparently the issue is that the Federal Railroad Administration, which controls the funds, has said that it will not allow funding for projects until a full environmental review has been conducted. Since the planners along the NEC weren't preparing for this, there is not enough time to complete a full review and apply for this year's funds and probably not enough time to apply for next year's $2.5 billion in high speed rail money available next year. To not fund necessary upgrades to the corridor most supportive of rail travel in this country is short-sighted. The Acela high speed train was the only line in Amtrak's entire system to turn a profit last year. The proposed upgrades, which are shovel ready, could decrease travel time between Boston and DC by as much as an hour! If that doesn't get more people riding, I don't know what will. To require a full environmental review for an existing 450 mile corridor that travels through eight states and the District of Columbia because of a few upgrades is byzantine and ridiculous.
That is not to say that other areas of the country are not perhaps more desperately in need of transit funding. In particular, California is a huge potential market for high speed rail and really needs it to improve air quality and reduce sprawl. The silver lining in this announcement is that infrastructure upgrades in other areas could increase the constituency for rail travel and make continuous future investment more of a guarantee than it has been over the past 3+ decades. However, I firmly believe that we should prove the ability for high speed rail to succeed in the US by demonstrating it in the Northeast while the rest of the country improves its infrastructure.
Here is the full article.
That is not to say that other areas of the country are not perhaps more desperately in need of transit funding. In particular, California is a huge potential market for high speed rail and really needs it to improve air quality and reduce sprawl. The silver lining in this announcement is that infrastructure upgrades in other areas could increase the constituency for rail travel and make continuous future investment more of a guarantee than it has been over the past 3+ decades. However, I firmly believe that we should prove the ability for high speed rail to succeed in the US by demonstrating it in the Northeast while the rest of the country improves its infrastructure.
Here is the full article.
Tuesday, March 3, 2009
Gas Tax
So I haven't been doing a great job making posts here, but I'll try and do a better job going forward.
If you pay attention to MA news at all, by now you've probably heard about Governor Deval Patrick's proposed gas tax and statewide transportation reform. You can read an article summarizing it here. The proposal would raise the current gas tax by 19 cents per gallon, making the highest in the country. This additional revenue would be used to improve roads and bridges as well as expand the rails and other public transit. In addition, the transit agencies would all be brought under one roof, bringing further cost savings through efficiencies and reform.
I am optimistically in favor of this proposal. After all, I am comfortable calling myself an envrionmentalist and I strongly support efforts to incentivize sustainable, public transit oriented growth. I feel this is the best way to improve our quality of life and limit the effects of global warming and other pollution. However, do I think he went too far by giving us the highest gas tax in the country and indexing it to the cost of inflation? Probably. Will negotiations with the legislature bring this amount down? Hopefully.
Here's why. A gas tax in itself is not the best way to battle climate change or promote sustainable growth. It only affects one sector of our energy usage. Also, the people who will proportionately be affected most by it are precisely the people who can least afford it. Much of Massachusetts' poor live in areas poorly serviced by public transportation, not to mention small business owners who rely on their vehicles for their livelihood. A carbon cap and trade system would be much more effective at driving sustainable growth and could spread the costs more across society and efficiently towards the worst polluters. If we just need to generate the additional revenue (and we do!), I would propose a smaller inflation indexed gas tax hike combined with a broadening of the sales tax. There is a lot of room to close loopholes in the sales tax or even increase it by a percentage point or two. This would generate at least as steady a revenue source as a gas tax and would broaden the base of people paying into it.
Finally, I think the Patrick administration is missing another opportunity to make some serious transportation reform by ignoring the addition of new tolls on highways leading in and out of Boston. This would generate revenue from the drivers who actually benefit from the improved roadways and give people a more direct choice if they want to commute into the city. Since most of the MBTA commuter rail lines follow a major highway, people could either choose to pay the fare to ride the train and support public transit, or pay the toll to drive in on the highway. Obviously there would be costs associated with operating tolls, but they would certianly pay for themselves and then some. Also, carpool lanes should be expanded on 93 and 90, maybe even Rtes 1 and 2. The current system of lanes is a joke. Traveling into the city on 93 from the north you get maybe 3 miles of carpool lane that restrict you from getting off at certain exits. If we were to make one lane in each direction inside 128 carpool only, it would provide a real incentive for people to carpool. In addition, it might allow express buses to get you into the city faster than traveling alone, providing another incentive to leave your car at home.
I'm generally in favor of the Patrick administration's proposed gas tax, but I think more comprehensive reform is possible and would do more to achieve Deval's stated goals.
If you pay attention to MA news at all, by now you've probably heard about Governor Deval Patrick's proposed gas tax and statewide transportation reform. You can read an article summarizing it here. The proposal would raise the current gas tax by 19 cents per gallon, making the highest in the country. This additional revenue would be used to improve roads and bridges as well as expand the rails and other public transit. In addition, the transit agencies would all be brought under one roof, bringing further cost savings through efficiencies and reform.
I am optimistically in favor of this proposal. After all, I am comfortable calling myself an envrionmentalist and I strongly support efforts to incentivize sustainable, public transit oriented growth. I feel this is the best way to improve our quality of life and limit the effects of global warming and other pollution. However, do I think he went too far by giving us the highest gas tax in the country and indexing it to the cost of inflation? Probably. Will negotiations with the legislature bring this amount down? Hopefully.
Here's why. A gas tax in itself is not the best way to battle climate change or promote sustainable growth. It only affects one sector of our energy usage. Also, the people who will proportionately be affected most by it are precisely the people who can least afford it. Much of Massachusetts' poor live in areas poorly serviced by public transportation, not to mention small business owners who rely on their vehicles for their livelihood. A carbon cap and trade system would be much more effective at driving sustainable growth and could spread the costs more across society and efficiently towards the worst polluters. If we just need to generate the additional revenue (and we do!), I would propose a smaller inflation indexed gas tax hike combined with a broadening of the sales tax. There is a lot of room to close loopholes in the sales tax or even increase it by a percentage point or two. This would generate at least as steady a revenue source as a gas tax and would broaden the base of people paying into it.
Finally, I think the Patrick administration is missing another opportunity to make some serious transportation reform by ignoring the addition of new tolls on highways leading in and out of Boston. This would generate revenue from the drivers who actually benefit from the improved roadways and give people a more direct choice if they want to commute into the city. Since most of the MBTA commuter rail lines follow a major highway, people could either choose to pay the fare to ride the train and support public transit, or pay the toll to drive in on the highway. Obviously there would be costs associated with operating tolls, but they would certianly pay for themselves and then some. Also, carpool lanes should be expanded on 93 and 90, maybe even Rtes 1 and 2. The current system of lanes is a joke. Traveling into the city on 93 from the north you get maybe 3 miles of carpool lane that restrict you from getting off at certain exits. If we were to make one lane in each direction inside 128 carpool only, it would provide a real incentive for people to carpool. In addition, it might allow express buses to get you into the city faster than traveling alone, providing another incentive to leave your car at home.
I'm generally in favor of the Patrick administration's proposed gas tax, but I think more comprehensive reform is possible and would do more to achieve Deval's stated goals.
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