Is it “class war” to want tax justice?

Republicans, the Tea Party, the RI Statewide Coalition and the Charlestown Citizens Alliance all think so

First in a series

By Will Collette

Ever since Ronald Reagan was elected president in 1980, we have been cutting taxes for the rich at the national, state and even on the local level.

What has it gotten us? Are the bottom 99% doing any better for it? Do we have more jobs? More businesses? Do our exports exceed our imports? Have we more or less debt? Does the United States still control its economic destiny?

How did Rhode Island benefit from more than eight years of steady tax cutting for top-bracket taxpayers? And what did Charlestown get out of giving million-dollar property owners a tax deal last July?

Between now and the traditional tax day on April 15, we’ll be exploring the topic of taxes, and specifically the issue of Tax Justice. And why there is such a tremendous gap in how people think about taxes and fairness.

The national picture...

At the national level, thirty years of tax cutting, largely for the benefit of the economic elite and corporations, has exploded our national debt, increased the movement of business and jobs overseas, led to control of our national debt by countries who may someday wish to do us grave harm, reduced crucial investments in infrastructure, research and education, and just about destroyed the once-proud American middle class.

Cutting taxes for Rhode Island’s elite began in earnest during the eight-year reign of former Governor Donald Carcieri, but actually started earlier. The tax cuts in the top marginal rates, now given way to a “flat tax,” and virtual elimination of capital gains taxes did not keep Rhode Island’s economy from crashing and perhaps caused the crash to be worse than it would have been otherwise.

...and the picture in Rhode Island

With that crash, and with less tax revenues collected from those who could afford it, the state budget was trashed, leading to cuts to state aid to municipalities and to schools. There is a straight-line cause-and-effect relationship between Rhode Island’s decision to embrace our own version of trickle-down economics and the bankruptcy or near-bankruptcy of cities and towns, school districts and the public pension system.

Yeah, yeah, I know. It’s all the fault of the unions. THEY were the ones who decided to cut the taxes of the rich, chop state revenues and murder the state economy so that retired teachers, cops, firefighters and other public workers can collect an average pension of about $30,000. Forget that these public workers pay into their pensions with their own money. Forget that they negotiated for these pensions in good faith. It’s all their fault.

Deputy Dan Slattery said middle-class home
owners don't deserve a tax break

In Charlestown, the meltdown of the state and national economy hit our real estate market badly. Just about everyone in town saw a lot of their homeowner equity dry up. When the town reassessed town properties and sent out new tax bills, the pain was not shared equally.

During the last year, the town-wide revaluation had a major redistributive effect that was not widely noted. From 2010 to 2011 the average home in the range of $200,000 to $300,000 saw tax bills increase by 6.6%. At the same time homes over $1 million saw their tax bills decline an average of 6 tenths of a percent.

Million-dollar-plus properties made out by having their tax bills go down, on average, from 2010 to 2011. At the same time the tax bills for homes in the range of $200,000 to $300,000 went up by over 6.5 percent. This was a major shift in the local tax burden from expensive properties to the middle class.

About 85% of those middle-class homes are owned by permanent Charlestown residents while about 85% of the millionaire homes have out-of-state owners.

As any homeowner knows, your home assessment is important, first, when your tax bill is calculated. Second, it is important if you want to sell or refinance. But if you are not selling or borrowing on your home’s value, the immediate impact of the reassessments was a shifting of the town’s tax burden from Charlestown’s elite to its middle class.

The definition of insanity is doing the same thing over and over, while expecting a different result. For thirty years, we have been cutting the taxes of the rich at the national, state and local level, expecting this would create a wonderful “trickle-down” effect for the benefit of all.

It didn’t happen in the 1980s or the 1990s – except during the Clinton Administration when the wholesale giveaway process from the 99% to the 1% slowed somewhat AND the economy prospered – and it did not happen in the past twelve years.

Some Democrats are stepping up to say “enough is enough.” President Obama wants to take gazillionaire Warren Buffet at his word when Buffet says it’s wrong that he pays a lower tax rate than his secretary. Our own Senator Sheldon Whitehouse has introduced the lead legislation to actually put the “Buffet Rule” into law.

Senator Whitehouse’s bill would generate $47 billion in new federal revenue.

At the state level, several bills have been introduced, including one by our own state Representative (District 39) Larry Valencia, to stop the hemorrhaging of state revenues by adding a surtax on the very top bracket of taxpayers.

At the town level, the Charlestown Democratic Town Committee has proposed a $1000 Homestead Tax Credit to re-balance the tax load in town after last July’s tax bonus was given to millionaire property owners. Though that tax cut proposal was shot down by the CCA Council majority, it is far from dead.

Over the next couple of weeks, we’ll look in depth at how we dig ourselves out of the hole that tax cuts for the rich has gotten us into. In short, the first thing we do is stop digging.