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Inequality

States Not Shy About Taxes

Blogging Our Great Divide
June 23, 2016

by Josh Hoxie

A look at the growing movement for tax fairness at the state level and the states leading the way.

States across the country are taking on the issue of tax fairness with vigor looking to raise significant revenue and put a halt to the growing economic divide. Revenue raising campaigns in California, Massachusetts, and Oregon look to increase taxes on millionaires and the most profitable corporations at the ballot. In light of growing inequality, states should take notice.

The income of the top one percent is over 25 times higher than the bottom 99 percent is paid across the country. In certain states, according to a new report from the Economic Policy Institute, that figure is more than 40 times higher. Perhaps more troubling, in 15 states the top one percent took all of the income gains in the wake of the Great Recession. Not most of it, all of it.

While there is no panacea for dramatically reducing this level of inequality, one part of the solution comes from the tax code: raising the taxes on the very wealthy and investing the revenue on programs of social uplift.

Members of the Raise Up coalition in Massachusetts

Three states have stepped up to begin to address this rising inequality through changes to the tax code, providing a model other states should consider emulating.

Massachusetts

A ballot initiative campaign is underway in Massachusetts to pass a millionaires tax in the Commonwealth. The Raise Up Massachusetts coalition supporting the campaign claim the initiative received 70 percent approval rating and will raise about $2 billion per year in revenue for education and transportation infrastructure in the Bay State. The campaign recently received support from 135 of the 200 representatives in the state legislature and will appear on ballots in the 2018 election.

California

In 2012, the Golden State temporarily raised state level income taxes on millionaires to the highest in the country with a rate of 13.3 percent on income over $1 million. In the years following, the California economy has seen significant growth, disproving conservative economists predictions that calamity would ensue. Voters will decide in November whether to make the tax increase permanent, along with the $5 billion in annual revenue that comes with it.

Oregon

Corporate taxes on large and profitable corporations in Oregon are the lowest in the country. Voters will weigh in on whether to change that this November thanks to a ballot iniative campaign from A Better Oregon. The initiative raises rates on corporations with over $25 million in sales in the state with revenue earmarked to fund early education, K-12 education, health care, and senior services.

These states are not alone. Efforts to raise taxes on the wealthy are also underway in Minnesota, Maine, and Colorado according to Bloomberg News.

With Congressional inaction guaranteed at least until after the election, and likely long after that, it’ll be up to the states to take the fight against inequality in their own hands. Activist and legislators in states not currently taking action should draw inspiration from these states and consider launching campaigns of their own.

Josh Hoxie directs the Project on Opportunity and Taxation at the Institute for Policy Studies.

Topics
Inequality,
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