The state and local tax burden has become unbearable. In Chautauqua County New York where I live the school tax and the sales tax are crippling the economy. Many people pay nothing in income tax and those that do pay income taxes have very low effective rates. The result of the plethora of deductions and credits permitted by the IRS is diminishing tax revenues. Nevertheless, the spending never stops. Our military is engaged in two conflicts in Iraq and Afghanistan. We give people money for purchasing cars, appliances and for having children. We have bailed out the banks and bought General Motors and Chrysler.
We have done this to ourselves. For the last forty years, we have begged for more federal aid, for colleges, public schools, fire departments, police departments, economic development, and the list never ends. Health insurance companies and the pharmaceutical companies define health care policy. Corporate lobbyists define domestic policy.
Federal tax policy allows for most folks in the 25% tax bracket to have effective tax rates of less than 10%. Those in the 35% tax bracket may have effective rates far below the 35% rate and some pay no tax at all. Yet there are people with under $20,000 in income that pay $4,000 in property and school taxes, more than 20% of their income.
In the County of Chautauqua and the State of New York we are being ‘nickel and dimed’ to death by the sales tax and the never-ending transaction fees. A sales tax exists on nearly every purchase of goods and services. A bottle deposit on every soft drink, juice drink, sports drink and water. The state has increased taxes on beer and wine. A new fee for retailers to collect sales tax for the state, a preparer fee to sign a tax return, an increased mortgage tax to file a mortgage and this list also never ends.
A person with $20,000 in income may very well be paying 35% of their income in property taxes and sales taxes and fees. It is not sustainable. The people have reached a breaking point. As we move away from progressive taxes to regressive taxes those that have, the rich are able to keep more of what they have, while those with little keep getting less and less.
Property taxes and sales taxes are regressive and place the burden on those that can least afford it. We must implement progressive taxes and return to a system based on the ability to pay. It is time to tell the truth. We must pay for all of the spending. We must increase federal income taxes and reduce spending on all levels. Income taxes should be increased but only with a corresponding decrease of taxation at the state and local level. Everyone should pay something and it should be based on the ability to pay.