Which taxes are the fairest?
David Faust argued in a letter to the editor in The Express on Feb. 8 that eliminating the earned income tax and increasing real estate property taxes to offset the loss would be fairer for taxpayers.
My question is, “fairer” for whom?
Since there were some terms recklessly thrown about in that letter, let’s start by defining a few of those terms. A progressive tax is one that the tax rate, that is the percentage of the thing being taxed, increases as the value of the thing being taxed increases. A flat tax is a tax where the rate or percentage of the thing being taxed stays the same, even as the value of the thing being taxed goes up.
The writer claims our state has several regressive taxes. But for a tax to be regressive, the percentage of the thing being taxed would have to go down as the value of the thing being taxed goes up. All of the examples used in that letter referred to as regressive are, in fact, flat taxes.
At one point he even states that “the flat rate personal income and sales tax are examples of regressive taxes.” How can a tax be both flat and regressive at the same time? He states that this income tax is “regressive” because the burden falls mainly on lower and middle-income taxpayers.
What is he talking about? 3% of a $30,000 income is $900 and 3% of a $90,000 income is $2,700.
So, who shares the larger burden?
It could even be argued that the state income tax is progressive because of the state’s Tax Forgiveness Program for lower-income households that, according to the Department of Revenue’s website, nearly one in five households qualify for.
He also says the “regressive” earned income tax is levied only on the “working class,” as if people who make higher incomes don’t pay it. Of course, they do, and they pay a lot more because their incomes are higher.
As for property taxes, they are not even close to being progressive, as the writer seems to think. The rate is flat, i.e. the same rate is applied to all properties, and the only reason more valuable properties are taxed higher is because there is more to tax.
How is that any fairer than flat-rate income taxes?
In my opinion, if the fairest taxes are those based on ability to pay, which he says he advocates for, then the income tax is fairer than real estate taxes. How can you argue that one who makes $90,000 doesn’t have a greater ability to pay than the one who makes $30,000?
But just because someone lives in a $150,000 home doesn’t mean they have a greater ability to pay than someone who lives in a $75,000 home. How about the couple that worked hard all their lives so they could have a nice home for their golden years but are living on Social Security checks? Should they be forced to sell their home and live who knows where so people who want everything for free can cannibalize their house?
How about the guy living in government-subsidized housing getting every government benefit he can get, and thinks is due him, and is making $30,000 a year? Should he not have to pay his fair share?
How about the two families that live in the same town, bringing in exactly the same income? One lives in a $300,000 home and a puts the lions share of their time and money into their home, making it an asset to the neighborhood. The other lives in an $80,000 home and chooses to put little into their home because they would rather take long vacations and eat out every night. What gives you the right to reward the latter and punish the former through the tax system?
The writer should look up the definition of “fair.” Like the words “progressive,” “flat” and “regressive,” he’s not using them correctly.
When he says “fair,” I believe what he really means to say is what is most advantageous to him.