Raising Taxes Is Front Page News (and It’s About Damn Time)

Monday, the Star decided to run a story about many states’ refusal to raise taxes on its front page. For me, the placement of the article is bigger news than the story itself. Front page. That means the editors think it’s something people want to read about. It may be sinking in, finally, that we need to be talking about the fact that perennial tax cuts, especially for the rich, are bad for a state’s health.

There’s not much new in the story. It’s common knowledge that lots of states, Arizona included, have been cutting taxes and services. It’s not as well understood that, as the article states, the level of borrowing in the form of bonding by cities and counties is down at a time when, with interest rates at record lows, borrowing money to fund new projects and fix infrastructure is a bargain.

The article comes to the conclusion:

At some point, something will have to give. Sooner or later they’ll have to raise taxes.

However, the article ignores one very important point. It doesn’t mention that, at a time of growing income inequality, when money is being concentrated in the hands of the rich and super-rich, when wages continue to stagnate as they have for over thirty years, we don’t need across-the-board tax hikes. What we need is for the wealthiest among us to pay their fair share. Bernie Sanders has been shouting about increasing taxes on the rich. Hillary Clinton is saying similar things, though at a lower volume. And Arizona Democrats are making cautious—very cautious, far too cautious—statements in the same direction. We need a steady drumbeat from progressives to counter the thunder of misinformation about taxes coming from conservatives.

In Arizona, we’re not “Taxed Enough Already,” as conservatives claim, certainly not in terms of total state and local taxes. It could be argued that we were taxed enough before, but not now.

Arizonans paid 30 percent less in general-fund taxes in 2015 than they did in 1992, according to the analysis by [Arizona State University’s W.P. Carey School of Business] economists Dennis Hoffman and Tom Rex.

If today’s tax rates were the same as in 1992, we’d have about $4 billion more a year in state revenue. If, say, we put half of that into K-12 education—a $2 billion yearly bump compared to the $350 million added by Prop 123—we’d move up 15 steps in per student funding, from 49th to 34th. And that would still leave another $2 billion a year to take help pay for some of our other under-funded state needs.

People with lower to middle class incomes cringe when they hear talk of raising taxes, as well they should. They’re just scraping by or going into debt because they haven’t benefitted from our country’s increased productivity and wealth over the past four decades. All that newly created wealth has floated upward to the top earners. What needs to be pointed out is, along with growing income inequality, we have a tax system that favors the rich and overburdens everyone else. In Arizona, the less money people make, the more of their income they pay in state and local taxes, making Arizona’s state tax structure the 8th most unfair in the country, according to the Institute on Taxation and Economic Policy.

Anyone making $80,000 or less a year is paying two to three times the tax rate of Arizona’s one percenters. Wealthier people may pay a higher percentage in state income taxes, but they pay a far lower rate when it comes to other taxes, especially sales tax. According to the ITEP figures, people who make less than $22,000 pay a total of 12.5 percent of their income in state and local taxes, while people making over $400,000 only pay 4.6 percent.

Arizona’s regressive tax structure needs to be made more progressive. Hell, it would be a step forward if it were simply made more equitable. That’s the under-reported state tax story which needs a whole lot more coverage.

This article appears in Jun 2-8, 2016.