taxes and statistics - help!

Right after 9/11, came 9/15, when individuals not affiliated with any institution or corporation, have to pay their income tax. I had a tea party while I wrote my checks. They were not large, unhappily for the state budgets of the world, but they were significant for me, and I wonder if they will be appreciated by the State of Maine and by the United States.

The current public dialogue about taxes drives me crazy. I believe in progressive taxation, to serve the larger needs of the community, and I do not believe we are close to a fair tax policy, either at the State level nor the federal level today. There are three things that governments can raise taxes on:
1. property - which is traditionally a local tax providing local services like education.
2. income - which is traditionally a federal tax, providing for defense and health care.
3. purchases(or sales) - traditionally a state tax for building roads, universities, etc.
Most governments have a mix and match scenario right now, but it helps to think about where we have deviated from traditional patterns when thinking about these things.

The income tax has been the most progressive, beginning with its 90% tax on high incomes in 1914. Today I believe the highest tax rate is 35%, which on an income of, say $500,000 would be around $175,000. I think that's a tad less than it ought to be and think we should not extend the Bush tax cuts on the wealthy, or those with incomes over $250,000.

The sales tax is the least progressive tax by equally taxing those of all different income levels. Often there are exemptions for things like food and medecine. But soda is so much cheaper than milk that the intention of exempting things for health reasons is a bit obscure.

The property tax is somewhere in between the two, with some people choosing to be land rich and income poor, - like farmers, - and others selling land when they need to in order to retire.
California has so skewed the property tax system that it rewards farmers with federal crop and water subsidies, but has refused so far to reform the property tax structure to account for the extraordinary increases in property values. Anyone moving into California now, pays double or more of the taxes that a neighbor who was there before 1978, pays. The farmer pays on the land values of 1978 or before. It is painfully unfair and totally inadequate for paying for the state's very generous pension and health care plans.

If a state like California refuses to provide a fairly progressive tax structure, it borrows and borrows until today happens - when the banks that lend it money, stop lending. We really don't know what happens next. Does the Army take over? acting on behalf of the federal government?
Does the National Guard defend the state? But ooooops. I forgot. Most of our National Guard troops are over in Iraq and Afghanistan, just as they were for Hurricane Katrina and for the BP oil spill.

Congress' refusal to be intelligent and straightforward about the cost of these wars, and the Bush administration's blindness to that cost, strikes me as positively treasonous. And it is what has led directly to the rise in the Tea Party movement. Thinking of the Tea Party as a metaphor for a primal scream for help by the people, I am sympathetic. But they are not very smart about their solutions. Gutting State, local, and federal services - which makes this country habitable and the future livable, does not strike me as smart.

Looking clearly at where we are spending our federal dollars, as well as how we are raising our tax dollars makes more sense. Returning our military toward a more defensive posture, and our dollars to the local services where they are much needed - for infrastructure redevelopment and education, makes more sense, too. Reevaluating and redesigning our tax structures, and returning to a goal of fairness and progressivity, makes the most sense. Let's hope that not only Congress - in whatever shape it occurs, and all our State and local governments, has the intelligence, sense, and yes - courage - to do this, and soon - before the National Guard comes home and has to defend us from the Army!

Here's to water main redevelopment and property tax reform!