WORKING

OF AND
RELATING TO
LABOR




Taxing Matters
Here's two cents on life's second certainty

by Doug Collins
The Free Press

If you haven't done it already, you'll probably take a sunny Spring day off and cloister yourself at your bedroom desk to figure out the legalese on your 1040 form. I'm sure you'll take comfort in the fact that about half of what you pay in taxes is earmarked for defense spending, military pensions, and interest on government debt. Moreover, you can enjoy thinking about how people who earn much more than you probably pay a much lower percentage of their income in taxes. On these happy notes, here's a list of taxing matters that working people might like to act upon in the coming years. Cheers to Citizens for Tax Justice for providing much of the info.

What We Could Do Without
Republican tax reforms. Reagan-era federal tax reforms in 1986 had one positive aspect: they closed many loopholes for the wealthy. However, current GOP proposals aim to gut these measures by creating much larger deductions for capital investments by corporations, and cutting the capital gains tax. Prior to 1986, similar conditions allowed large legal tax shelters for the wealthy, and a resulting loss of tax revenue that helped start huge budget deficits in the early '80s. With proposals like these, lord knows how the Republican Congress can pretend it would like to balance the budget!

Flat tax proposals. Republican House Majority Leader Richard Armey is in love with his flat tax proposal in which everyone would pay 17% in federal taxes, regardless of income. According to studies by the US Treasury Department, Armey's proposals would result in a revenue loss of about $200 billion per year for the country, and "would result in a significant redistribution of tax liability" from wealthy to average 1040 filers.
Tax breaks for corporations. Government welfare to business in the form of tax breaks and direct subsidies is amounting to about $45 billion per year, according to Labor Secretary Robert Reich, while the GOP proposes instead to cut $36 billion per year from social programs such as school lunches. Large corporations, such as Wal-Mart, have become famous for greasing the wheels of local politics and playing one locality against another in successful efforts to squeeze tax breaks out of middle America. We need tough legislation to outlaw special tax treatment of individual companies.
State sales taxes. Sales taxes are among the most regressive of taxes; that is, they hit lower income people much more than upper income people, who can save or invest much of their earnings without paying sales tax. Washington State, with its high sales tax, has one of the most regressive state tax structures in the whole country. Ironically, sales tax increases are considered more politically easy to fob off on the population than are state income taxes. Except in Oregon, of course.
Forms and complicated procedures. In the US, it is the wage earner's burden to calculate individual taxes, and if Joe Blow doesn't follow painstakingly the fine print in the federal instruction booklets, he may be fined a considerable amount or may overpay unknowingly. Many workers, already strapped for time or unable to decode the gobbledygook, simply hire accountants to ease the pain. Compare this to more advanced (and relaxed) countries, where individual taxes are simply collected by automatic paycheck deduction, there are no yearly forms to fill out, and April 15 is not a grim holiday.

What We Need More Of
Grass roots design of the tax system. In post-war Japan, an American commission was given the task of helping the Japanese design a new tax system. The commission polled average Japanese on the type of tax system they would like to see, and concluded that paying taxes according to the "ability to pay" rule was the most popular notion. Japan has a progressive tax structure with especially high taxes on capital, and also has higher rates of savings and investment than the US. This runs directly contrary to voodoo economic theories of corporate tax cutters in the US.

Strong progessivity in taxation. The average chief exec in a US corporation now earns 149 times what the average factory worker earns. There has been a steep upward surge in executive pay in the last few years. One cause of this is the Reagan tax cuts for the wealthy, which brought the 1980s personal income tax level of the wealthy (29%) to below that of middle-income Americans (32%). This burden has been somewhat shifted upward during the Clinton presidency, but the top rate still remains lower than in most other industrialized countries. Formerly, tax levels for the wealthy have been as high as 70%. If a top company exec is to be taxed at 70% for income above $200,000, there is little incentive to pay the exec much more than $200,000, and execs might instead search for the job they like best rather than the one with the most gold. Lower executive salaries would also mean more efficiently run companies (let's be competitive, right?) and greater equity between workers and managers.
State income taxes. Sales taxes should be dumped because they impact lower and middle income earners far more than the wealthy. State revenue should primarily come from a progressive income tax.
Ecologically-minded taxes. Two types of taxes deserve more consideration. First of all, taxing land value in urban areas, as opposed to taxing the value of buildings, would encourage more efficient use of land and denser urban growth (apartment buildings) rather than environment-devouring suburban sprawl. Applying surtaxes on businesses that cause pollution is also a righteous method of earth-control which should be expanded.
(for more info on tax justice, contact Citizens for Tax Justice, tel.202/626-3780)







Working Around
A real help-wanted ad recently
printed in the Seattle P-I.
SEATTLE. The Service Employees local 1199, representing nurses at Harborview Medical Center, filed a complaint with the Department of Labor and Industries that the hospital is putting its workers at risk to drug-resistant tuberculosis. The hospital was given two state citations and fines of $2,400. The state judged that the violations could have reasonably resulted in injury or death of the workers. (Reports/Washington State Labor Council)

SEATTLE. The Center for Labor Studies at the UW will hold a Labor Studies conference on May 5 and 6. Topics will include Women and the Global Assembly Line, New Organization Strategies, and NAFTA's Effects on US, Mexican, and Canadian Workers. Admission is free. Call 543-6924 for info.

OREGON. The Multnomah County Commission met in January to consider adopting Oregon's Strategic Investment Plan, a bill which attempts to create jobs by giving companies tax breaks and subsidies in return for investments of at least $100 million. A Portland Jobs with Justice chairperson noted at the meeting that giving such tax breaks when companies threaten to move elsewhere is equivalent to "extortion." Washington County last year gave a $56 million tax break to Intel, and Portland attracted the Kantu company by wheeling a similar multimillion dollar deal. (Northwest Labor Press)

UNITED STATES. Labor Party Advocates (LPA) held a national convention last December. Explaining the difference between the Republicans and Democrats, union leader Bob Wages commented at the convention, "It's like the difference between a toothache and a headache." LPA is hopeful that current low US voter turnouts and large union turnouts at LPA rallies mean conditions are ripening for a Labor Party. Some LPA members, however, point to the difficulty of building a party in the "winner-take-all" electoral system of the US, as opposed to the parliamentary systems of most other countries, where a party can more easily grow gradually. In addition, large labor organizations in the US, such as the AFL-CIO, have a policy of not endorsing a Labor Party. (Toledo Blade)

Have a Labor-related story to tell? Good news or bad.. send it to Doug Collins WAfreepress@gmail.com and he'll tell the world.

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Contents on this page were published in the April/May, 1995 edition of the Washington Free Press.
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