President's Message (Suzanne Meisenzahl)|
Taxes - Who Should Pay
Vote Counts Begin
Con Con Committee (Jean Aoki)
Victory Train and Chicago National Convention
League and Good Government
Taxes - Who Should Pay
Making up revenue shortfalls by increasing taxes on the poor is being proposed at all levels of government City/County, State, and Federal. This is exactly the opposite of League's position on taxation, which essentially is that taxes should be progressive i.e. bearing most heavily upon those best able to pay.
In Honolulu, many public services and facilities formerly paid for out of general tax revenues are now on a "user fee" basis. A $2 fee per person means nothing to an upper income family, but to a low-income family with three children $10 is a major expense.
Furthermore, elimination of the property tax exemptions is being seriously considered. The resulting effective tax increase would be about $125 per home and two or three times that for senior citizens. This might be insignificant for a family with a home assessed at $500,000 but would be a burdensome increase for those living in a $100,000 home. League has suggested lowering the existing tax exemption in steps at increasing assessment levels and eliminating it entirely for homes assessed at more that a stated amount.
There is a general impression that Honolulu tax payers are the most heavily burdened in the United States. This is not true. According to the 1993-94 State Data Book, our residential property tax rate is $0.37 per $100, compared with the median U.S. rate for 51 large cities, of $1.47. Even if school and hospital costs are added, Honolulu's tax rate would approximate $0.80, far less that the National median.
At the State level, elimination of the tax credits for food, the general excise tax, low-income renters, medical expenses, and the like, will bear most heavily on the poor. It was these credits which were widely praised as making our otherwise regressive tax system more progressive. League has suggested that the general excise and food tax credits could be eliminated for families with incomes above a certain amount while being kept or even increased at lower in come levels.
The State income tax is almost a "flat tax", above a certain level, since the same tax rate applies to families with an annual income of $42,000 as to families with $4,200,000. To increase tax revenues, the rate could be increased in steps at the upper income levels.
The State Data Book indicates that combined local and State taxes in Honolulu average 7.8% of a gross family income of $25,000, rising to 10.2% at a $100,000 income level.
At the Federal level the Data Book shows that in 1991 the median Hawaii tax payer's Federal income tax liability was 9.4% of gross income. The proposed "flat tax" is estimated at between 17% and 23%. It would require all tax payers, whatever their income above personal exemptions, to pay the same tax rate. Some of its proponents want to eliminate from taxable income all capital gains, dividends from stocks, interest on bonds, etc.... Only wages, salaries, and pensions would be taxed. Under the "flat tax" proposal under discussion, a person living off the income from inherited wealth would pay no income tax while enjoying the services provided by the taxes of working men and women. Small wonder that multimillionaire Steve Forbes and the coupon-clipping class generally, are urging it.
Congress is also talking about a "middle class" tax cut for families with incomes up to $120,000. The census bureau however, in 1993 determined that only 7.3% of families had incomes of $100,000 or over. The "middle class" 47.2% of the nation's families had incomes between $15,000 and $50,000.
We believe that tax increases and decreases should be applied selectively, with due regard for such factors as family income, age, and number of children. Adopting them across the board can only make our tax system more regressive rather than more progressive.
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