| What's New | Publications | Commentary | In the News | Press Releases |
 |
 |
Lester Thurow, renowned author of "The Future of Capitalism" and many other books, wrote, "In the past, egalitarian democracy has been coupled with inegalitarian capitalism on the assumption that government would do three things.
"First government guaranteed that first-class education and skills would be available to children of parents who did not have first-class income and wealth. Second, it would insure that those who cannot compete for whatever reason do not get driven into economic extinction (hence the social safety net). Third, government would use the tax system to make after-tax distribution of income and wealth more equal than before-tax distribution of income and wealth."
Ironically, at the very moment the US seeks to bring democracy to Iraq, we are backing away from all three of these commitments at home.
In New Jersey, the McGreevey administration's response to an anticipated $4+ billion budget shortfall is a proposed budget containing dramatic reductions in funding for education, health care, human services and the arts. The state is beginning to back away from its constitutional commitment to provide a "thorough and efficient" education to all of its children-and the consequences for the next generation will be devastating.
Governor McGreevey has chosen these cuts rather than to embrace a better idea: the "Recapturing the Windfall" plan put forth by the Fairness Alliance, a coalition of more than 90 organizations including Catholic Charities of Trenton, New Jersey League of Municipalities , Housing and Community Development Network of New Jersey, New Jersey School Boards Association and Work Environment Council. Part I of the plan would increase the state income tax rate to 7.5% on family income over $400,000; 8.5% on income over $600,000 and 9.5% on income over $1 million. This would affect about 50,000 very wealthy households -- just fewer than 2% of all tax filers -- and raise about $970 million a year for the three years of its duration. All of these households have gotten back from state and federal tax cuts much more than this tax increase would cost them.
Part II would raise to $25,000 the amount a family can make and be exempt from state income tax. This would remove 230,000 households from the tax rolls, or 9% of all filers, at a cost to the state of $42 million. The Fairness Alliance plan would generated $928 million in additional revenue or roughly a quarter of the state's budget deficit.
On the federal level, meanwhile, we continue to rip holes in the social service safety net by pursuing a "welfare reform" policy, begun under the Clinton administration, which has hurt millions of poor, blameless children in America, barred hundreds of thousands of legal immigrants from receiving disability, old age assistance and food stamps, as well as reducing food-stamp assistance to millions of children of working families. There is a but tattered safety net for the 40 million Americans without health coverage and for the more than two million elderly Americans who must choose between paying their rent and paying for medicine or buying food.
This safety net would be further destroyed by the Bush administration's proposed reductions in funding for Section 8 rental assistance vouchers. These vouchers, available through HUD, are for rent subsidies for those whose income is too low to afford market rate rents. Additional tears in the safety net will occur if the Bush administration is successful in diverting funds from Section 32, which provides a significant portion of the food distributed by food banks throughout the country. The result would be taking food off the tables of thousands of low-income people in our country.
As the Bush administration continues to tear at the safety net, it continues to reduce income taxes for the super-wealthy (under the recent Bush tax cut, those in New Jersey making more than $1 million saved more than $40,000 annually in taxes). Under his most recent proposal, those earning above $200,000 would reap an astronomical $5.4 billion annual tax windfall with the hope that the benefits would "trickle down" to the rest of us. Clearly, based on the state of the economy and most folks' Keogh and IRA accounts, the last Bush tax cut did not have intended stimulus effect.
A nation's tax policy is the ultimate moral statement of what we owe to one another. America should have tax policies that do not favor the few at the expense of the many and put the well-to-do ahead of the needs of all the rest. At federal level, providing tax cuts to the haves while cutting services to the have-nots is morally wrong. At the state level, not considering a targeted, modest tax increase on our state's millionaires while cutting vitally needed services for the masses is also morally wrong.
Irwin S. Stoolmacher heads the Stoolmacher Consulting Group
and is a member of the Board of Trustees of New Jersey Policy Perspective.
| © 2008 New Jersey Policy Perspective |  |