#75 May/June 2005
The Washington Free Press Washington's Independent Journal of News, Ideas & Culture
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TOP STORIES

Skykomish One of Nation's Top-Ten Endangered Rivers River is "being loved to death"

The Republic of Vermont: so whatever happened to "Cascadia"?
by Glenn Reed

NORTHWEST & BEYOND news shorts compiled by Sharlynn Cobaugh
WA court strikes down prison labor; Militarization of Port of Olympia; Farming the seas; Monsanto buys Seminis; Homeland food security in Montana

FREE THOUGHTS

Why There is no Five-star treatment in an airplane
by Brenda Desjardins

My Practical Living Will
by Bob Flint

Ducky Defectiveness: Are we simply a defective culture?
by Doug Collins

READER MAIL
UW steamrolling over Icicle Valley; More ways to save watts; Taxing debate; Headstone of the 21st Century; Real reason for Iraq War

TAXES

Shifty Business: A mini-history and critique of the lopsided U.S. tax system
by Kathleen Merrigan

GOOD IDEAS FROM DIFFERENT COUNTRIES
Tax collection in India; "Naked streets" in Holland

ENVIRONMENT

Underground Lab Still Up in the Air
by Sharlynn Cobaugh

TRASH TALK by Dave and Lillian Brummet
Efficiency in the office; Efficiency equals reduction

Gasoline: weapon of mass desctruction
cartoon and commentary by Andrew Wahl

WORKPLACE

Suit Filed To Uphold Union Democracy
from the ACLU of WA

Labor Needs a Radical Vision
by David Bacon

Iraq's Oilworkers Will Defend the Country's Oil: Interview with Hassan Juma'a Awad
story and photo by David Bacon, with cartoon by David Logan

BOOKS

"Tibetan Tales for Little Buddhas"
written by Naomi C. Rose

LAW

State Policies on Ex-felon Voting Need Repair
from the ACLU of WA, with cartoon by John Ambrosavage

BOB'S RANDOM LEGAL WISDOM by Bob Anderton

The payday lending scam

International Project to Stop 'Policy Laundering'
from the ACLU, with cartoon by Andrew Wahl

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Day of Action Against Caterpillar
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MEDIA

MEDIA BEAT by Norman Solomon

When media dogs don't bark: new report on how power shapes the news

Bill Gates to fund WA. Free Press in perpetuity
by delighted editors

WAR & PEACE

Quotes for Peace
compiled by Stan Penner

Challenge to Howard Dean on War
War critics rally support to bring troops home
from the Progressive Democrats of America

MISCELLANEOUS

Citywide Wi-Fi
by Joel Hanson

Biopirates Lose Patent On Seeds Of India's Neem Tree
from Organic Consumers Association

SPIKE'S SCANNER interesting mail we recieved, scanned-in for your enlightenment
Universal health care; Reclaim democracy; Less stuff more time; Help prevent vaccine reactions; Creepy anonymous letter to the editor; Mercury in "silver" amalgam dental fillings

Shifty Business

by Kathleen Merrigan

The following article was originally published in Freedom Socialist newspaper, based in Seattle

If you suspect there's a conspiracy underway to make the rich even richer and the poor much poorer, you're right! And a key force in this rapidly growing fraud is a cataclysmic shift in the country's tax structure. U.S. lawmakers are steadily increasing taxes on wages instead of wealth and on workers instead of corporations.

If everyone had about the same amount of money, it would be reasonable for all to contribute equally to funding social enterprises and government. But, in reality, a very few people own and control most of the resources. Thus, a fair tax system would ask more from those who have more in order to guarantee basic human rights to food, shelter, and healthcare. Simply put, the whole point of taxes, should be to make certain that them that's got, pay.

Taxes that operate according to this principle are called progressive: the wealthiest pay the most. Regressive taxes, on the other hand, impose the heaviest burden on those least able to pay. Through alarming tax cuts for the rich and their corporations, mixed with heightened reliance on sales, property and payroll taxes that hit ordinary people hardest, regressive taxes have taken over with a vengeance. Working people, whose wallets are shrinking while their vital services are vanishing, are paying an insupportably high cost.

The rise and fall of progressive taxation.

In the early days of the republic, government was funded largely through tariffs (duties imposed on imported goods). The few personal assessments that existed--such as taxes on property, which few people had, and sales taxes on luxury items only--chiefly affected the wealthy.

The first income tax was temporarily instituted in 1862 to fund the U.S. Civil War. It was graduated, meaning proportional to income--the higher the income, the higher the rate or percentage at which that income was taxed. In 1913, the 16th Amendment to the Constitution made income tax on wealthy individuals and corporations a permanent feature, with the promise that basic necessities would not be taxed.

This form of tax was won thanks to reformers of the Progressive Era, reacting against a rapidly accelerating concentration of industrial wealth. The majority of people at the time paid no income tax because they had no surplus income.

Steeply graduated income taxes helped to pay for World War I, during which the rate for the wealthiest taxpayers was 71 percent, and World War II, during which the top rate rose to 91 percent. Not until after WWII were most workers even taxed on their wages.

During the two world wars and the Korean War, Congress also enacted an "excess profits" levy to help finance the conflicts and to limit the extent of war profiteering, responding to public revulsion over this.

Times have certainly changed.

In April 2003, at the same time Bush II was promoting huge tax cuts for the rich, the government was awarding sweetheart contracts to companies like Halliburton for massive military destruction and reconstruction in Iraq. Due to some of the largest tax breaks in history, from 2001-2003 the aerospace and defense industries paid taxes at a measly rate of 1.6 percent! The rate at which business is supposed to pay is 35 percent. War profiteering, once disreputable, is now fabulously rewarded.

Corporate coddling.

In the 1950s, business taxes covered more than 25 percent of federal expenses. They now cover a mere 6 percent.

A study of 275 of the largest U.S. companies between 2001 and 2003 found that they were taxed on about half of their $1.1 trillion profits. That's because of endless rate reductions, subsidies and loopholes. Tax shelters--frequently offshore investments that disguise actual profit--are a primary means of evasion.

Some big companies manage to pay no income tax--and even get refunds!

The wealthiest individuals don't pay their share either. They do pay the highest amount of federal tax in total dollars. But proportionate to their soaring incomes, their load is lightest.

For example, since 1979 the federal tax rate for the richest 1 percent has fallen from 37 percent to 33 percent. But their average income leaped by 125 percent! And this leaves out of the picture billions of dollars in unreported, untaxed wealth and the ongoing tax cuts on gifts, investments and inheritance.

Gouging working people's paychecks.

Since its permanent adoption, the federal income tax has always been the biggest tax revenue source for the government, but that is shifting perilously.

Paycheck deductions for Social Security and Medicare are commonly called payroll taxes. They are very regressive because they are not graduated and only the first $90,000 of annual wages are taxed at all. So, while most workers are taxed on their entire wages, the roughly top 15 percent, who rake in almost half of all reported income, are taxed on only a portion.

Since 1962, corporate income tax revenues have plunged, but payroll tax receipts have spiked. The amount of revenue that payroll assessments contribute to the federal government's coffers has doubled, while the corporations have coughed up two-thirds less.

If this trend continues, the regressive payroll tax will replace the progressive income tax as the leading source of federal revenue within a decade.

Goodbye education, public transportation, healthcare...

Federal tax cuts that smile on the rich dump huge financial problems onto the states. Because the states depend heavily on regressive taxes--sales, property, excise--this is bad news for poor and working people.

Regressive taxes are levies on life's necessities: housing, clothing, food, utilities. Since low- and middle-income workers spend a much larger portion of their paychecks on these basics than the wealthy do, they also spend proportionately more on the taxes that go with them. According to www.FairEconomy.org, "In 2002, Americans in the bottom 20% of households paid 11.4% of their income in state and local taxes, while those in the top 1% paid only 5.2%."

Between late 2001 and early 2004, 29 states raised taxes. Over a just slightly longer period, the states cut their budgets by 5.4 percent, which translates into billions of dollars' worth of reduced or eliminated public services. Thirty-four states cut spending on Medicaid and state-subsidized health insurance programs over a recent two-year period, stripping 1.2 to 1.6 million low-income people of health coverage.

Meanwhile, between Bush's tax cuts and his wars, the national debt is the biggest in history and growing faster than ever. As of March 1, 2005, it stood at $7.7 trillion, or roughly $26,000 for every adult and child in the U.S. Future generations are being saddled with insurmountable debt and stark deprivation.

Tax the rich, give workers a break!

The U.S. desperately needs reform of a tax structure that punishes the people who work to create society's wealth while pandering to those who appropriate this wealth for their own. There are two key components to a more fair system.

The first is to establish federal and state income taxes that are much more steeply graduated than at present, raising the percentages that big business and the rich are paying and setting the rate for the lowest-waged workers at zero percent. The second is to abolish sales taxes on everything but purchases of nonresidential luxury items over $100,000. This pair of steps alone would make the system much fairer. (See accompanying boxed platform for more ideas.)

No amount of tax reform by itself, of course, will close the gap between rich and poor that grows daily--or change the gruesome priorities to which tax dollars are dedicated! But it would make a huge difference to millions of beleaguered poor and working people who urgently need relief.

Karl Marx famously said, "From each according to their ability, to each according to their need." Now that would be fair! Revamping the tax system is not going to get us there--but it's a sane, humane step forward worth setting our sights on.

Kathleen Merrigan, a 20-year public worker and retired member of IBEW Local 77, can be reached at OptimisticRebel@igc.org.


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