Fair Taxes 101

Friday, March 11, 2011 at 4:26 AM by

The Institute on Taxation and Economic Policy (ITEP) has released Fair State and Local Taxes, a new guide on state and local tax policy. This introduction to tax fundamentals gives a nuts-and-bolts overview of different taxes and who pays them. The report describes the regressive nature of many tax systems and steps we can take towards reform.

Although it’s just coincidence that this report was released in the midst of the state’s budget battles, there’s plenty in the report that speaks indirectly to the choices our state will be facing in the months ahead. Here’s one quote that I found illustrative, considered in the context of Wisconsin’s $3.7 billion biennial budget deficit:

“It’s no wonder that so many states with regressive tax structures are facing long-term structural budget deficits. They’re continually imposing higher taxes on people without much money – the very people who have experienced the most meager growth in income over the past thirty years. These states are largely bypassing – that is, by taxing at very low rates – the people whose incomes have grown the fastest: the rich. In the long run, progressive taxes like the income tax are a more dependable source of revenue for state and local governments precisely because they tax the wealthy state residents who have enjoyed the largest income gains in recent decades.”

The complete report can be accessed here.

Tamarine Cornelius

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