Transcript The NEA’s Connecting the Dots Series:

TEF Lessons for Members and Citizens
Lesson 4
The Role of Taxes in
Society
4-1
Objective:
Participants will discuss the
purpose and uses of taxes, their
role in society, and characteristics
of good tax policy.
4–2
As a group can we agree that we will:
1) Respect and value differences of
opinions and varying levels of
knowledge
2) Be attentive
4–3
What do we get
for our tax dollars?
4–4
The Angry
Taxpayer!
4–5
• What does this story mean to
you?
• We’ve just talked about many
benefits we receive from tax
dollars, yet people want to have
lower taxes and often have
negative feelings about paying
taxes. Why?
4–6
• People may not be aware of
all the services and things
they use paid for with tax
dollars.
• Cutting taxes is
politically popular.
• People may not agree
with how their tax dollars
are spent.
4–7
“Taxes are the price we
pay for civilization.”
—Oliver Wendell Holmes
4–8
Common
Ground
What is the role of taxes
in our society?
4–9
Reflection on Common Ground
• What did you see or hear during
this activity?
• How did you feel?
4–10
3 TAX STRUCTURES
• Progressive tax = one that takes a
larger share of income as the
taxpayer’s income rises.
4–11
U.S. Federal Tax Filers
Effective Tax Rate by
Adjusted Gross Income Level, 2007
IRS, “Table 1. All Returns: Sources of Income, Adjustments, Deductions and Exemptions, by Size of Adjusted Gross Income, Tax Year 2007”;
David Cay Johnston, “Tax Rates for Top 400 Earners Fall as Income Soars, IRS Data,”
http://www.tax.com/taxcom/features.nsf/Articles/0DEC0EAA7E4D7A2B852576CD00714692?OpenDocument;
http://www.irs.gov/taxstats/indtaxstats/article/0,,id=133414,00.html
4–12
U.S. Federal Tax Filers
Effective Tax Rate by
Adjusted Gross Income Level, 2007
IRS, “Table 1. All Returns: Sources of Income, Adjustments, Deductions and Exemptions, by Size of Adjusted Gross Income, Tax Year 2007”;
David Cay Johnston, “Tax Rates for Top 400 Earners Fall as Income Soars, IRS Data,”
http://www.tax.com/taxcom/features.nsf/Articles/0DEC0EAA7E4D7A2B852576CD00714692?OpenDocument;
http://www.irs.gov/taxstats/indtaxstats/article/0,,id=133414,00.html
4–13
3 TAX STRUCTURES
• Progressive tax = one that takes a
larger share of income as the
taxpayer’s income rises.
• Regressive tax =
one that takes a smaller share of
income as the taxpayer’s income rises.
4–14
Regressive Tax Example:
The State & Local Tax System
12%
10%
8%
6%
4%
2%
0%
Bottom
Income
Second
Income
Middle
Income
Fourth Top 15% of Top 4% of Top 1% of
Income Income Income Income
Earners Earners Earners
Source: “Who Pays? A Distributional Analysis of the Tax System in All 50 States,” 3 rd Edition. Institute on Taxation and Economic Policy, 2009.
4-15
3 TAX STRUCTURES
• Progressive tax = one that takes a larger share of income as
the taxpayer’s income rises.
• Regressive tax = one that takes a smaller share of income
as the taxpayer’s income rises.
• Flat rate tax = income tax would go up
exactly in proportion to income. However,
what is often advocated as a flat tax is to tax
everyone at the same rate, such as the sales
tax.
4–16
The Sales Tax:
Neither Flat nor Fair
• The sales tax is actually regressive.
• As your income goes
you spend on taxes goes
the % of income
• A sales tax provides a skewed burden on the
poor and middle class who have to spend most
all of what they earn, much of it on things that
are subject to sales tax.
4-17
Is the
SAME
always
FAIR?
4-18
3 TAX STRUCTURES
• Progressive tax = one that takes a larger share of
income as the taxpayer’s income rises.
• Regressive tax = one that takes a smaller share of
income as the taxpayer’s income rises.
• Flat rate tax = income tax would go up exactly in
proportion to income. However, what is often
advocated as a flat tax is to tax everyone at the same
rate, such as the sales tax, which is neither flat nor
fair.
4–19
Good Tax Policy:
1. Is progressive (at least not
regressive)
2. Is broad based
3. Does not tax income from work
more than income from investments.
4. Doesn’t allow special interests to
avoid paying their fair share of taxes
4–20
[T]he exemption allowed
buyers of big boats to pay a
small fee in lieu of sales
taxes and shave as much as
$30,000 off the purchase of
a $500,000 boat. Yachts are
treated like baby formula
for the poor – exempt from
state and local sales tax.
February 25, 2010
Missouri boats that qualify
for the exemption have been
given names such as “Tax
Haven” and “Greedy
Bastard,” The Star reported.
The bills
failed.
“Bills Would Close Missouri’s Yacht Loophole,” Mike McGraw, Kansas City Star, 2/25/2010,
available at primebuzz.kcstar.com, accessed 4/20/2010:
(http://www.google.com/url?sa=t&source=web&ct=res&cd=2&ved=0CAsQFjAB&url=http%
3A%2F%2Fprimebuzz.kcstar.com%2F%3Fq%3Dnode%2F21543&ei=g8nNS4TXLcP7lwfqvvShC
w&usg=AFQjCNGkXhs5p_Op_mO9rxMiY8TjpTTzuw&sig2=ppNhg3XRulh8bJ8VSF8sTQ); also
see Mike McGraw, “Missouri Compromise: Cut Schools, but Don't Tax the Yacht,” available
at:
http://www.mcclatchydc.com/2010/02/21/87288/missouri-compromise-cut-schools.html
4–21
Alabama Senate Bill 144
Film Project Tax Incentive Bill
• Efforts by the Alabama Education Association to
stop funding erosion have resulted in
approximately $2 billion a year staying in
education. This amount is 1/3rd of all state
education funding in Alabama.
• As education costs continue to rise, we must
protect the funds before they are given away to
special interest.
4–22
MAKE THE TEF CONNECTION
When they lack the
capacity to
deliver those results…
When tax
structures are
out of sync
with the
economy…
Schools are being
held accountable for
results…
Accountability
School Capacity
When funding is
inadequate and
inequitable…
School Funding
Economy & Tax Structure
And not
everyone
is aware.
Public Support
4-23
REFLECTION
1. What stands out in your mind from today’s
lesson?
2. What does this mean for you? For your
students?
3. How might you act on this knowledge or
awareness?
4-24
TEF Tools and Resources
TEF Website:
http://www.nea.org/tef
1
Publications
Studies supporting TEF concepts:
•
The Effects of State Public K-12
Expenditures on Income Distribution
•
K-12 Education in the U.S. Economy
•
Protecting Public Education from Tax
Giveaways to Corporations.
•
School Funding, Taxes and Economic
Growth
•
TEF Series
Why invest in education makes sense:
Enriching Children, Enriching the Nation
Corporate abuse:
The Great American Job Scam - corporate tax
dodging and the myth of job creation.
Your Tax Dollars At Work…Offshore - foreign
outsourcing firms are capturing state
government contract.
No More Secret Candy Store - A grassroots
guide into investigating corporate
subsidies.
2
State-Specific
Data Sources
States Facing Budget Shortfall – Center
for Policy and Budget Priorities (CBPP)
reports state fiscal profiles.
State-by-state tax news and policy
analysis provided by the Institute of
Economics and Policy Analysis (ITEP).
Economic Policy Institute’s (EPI) new report
analysis rank states by overall unemployment
as well as the change seen since the start of
the recession in December 2007.
Enriching Children, Enriching the Nation show
state returns in budget, salary, crime reduction
by investing in Pre-K thru 12.
Find out how much Wal-Mart is costing your
state in subsidy deals, healthcare cost, and
property tax appeal appeals.
Combined Reporting, How Does Your State
Stack-Up? Institute on Taxation and
Economic Policy (ITEP) This reporting
requires multi-state corporations to report the
income earned by both the parent corporation
and all of its subsidiaries and to determine
their income tax liabilities on that basis.
Good Jobs First state-by-state corporate
subsidy websites.
3
State affiliates in
TEF Action
A few examples…
This video address from Alabama EA
President, John Wright.
Alabama EA sheds light on
corporate tax avoidance in
Alabama
Detroit News, Friday, July 25, 2008
MEA Press Release: Drop-outs One
Too Many, April. 4, 2008
Honolulu Advertiser, Dec, 2006
Honolulu Advertiser, Feb. 2007
Iowa State EA News Article
Kentucky EA - School Funding
Statement.
Michigan’s Business Tax Incentives:
A study commissioned by MEA and
NEA to improve the quality of the
debate on business tax incentives.
Mississippi EA op-ed piece.
State Affiliate TEF Websites:
Colorado, Illinois, Michigan,
Mississippi, New Jersey, Oklahoma
4–25
TEF Tools and Resources
TEF Website: http://www.nea.org/tef
4
Customizable
Tools
Community Organizing
•
Business Outreach
5
Other
Useful Links
6
Introducing a
New TEF
Interactive Tool
NEA Information on establishing a social
networking site to use as an organizing
tool.
Sample Political Action Tools
Others are: (http://www.ning.com/ ) and
•
•
Corporate Legislation
TEF Model Legislation
(http://www.groupsite.com/)
http://www.faireconomy.org/tfoc to
locate your state’s tax fairness
organizing collaborative. These
groups are located in 21 states.
www.nea.org/tef
4–26
Other Resources
7
On Taxes…
Videos
PBS Now, "Taxing the Poor" ((26.03)
Wal-Mart Subsidies (7:48)
Warren Buffett's Tax Rate is Lower than His
Secretary's (4:39)
TAXES: Warren Buffett - Rich Taxed Too Little,
Poor Too Much (5:17)
Eye To Eye With Katie Couric: Buffett's Tax
Code (CBS News) (1:40)
8
On Economic
Policies
Videos
U.S. PIRG on Countdown. Olbermann talks about
U.S. PIRG's report "Tax Shell Game.”
Free Lunch, Corp Welfare, Bill Moyers and
David Cay Johnston (9:49)
David Cay Johnston - A History of
Government Subsidies (3:08)
David Cay Johnston - Are Government
Subsidies Unfair? (4:43)
9
Funding for Schools
Access Quality Education: School
Funding Litigation A National
Network of Advocates Involved in
Education Finance Litigation,
Abbott vs. Burke is the New Jersey
Supreme Court ordered a set of
education programs and reforms
widely recognized to be the most fair
and just in the nation.
David Cay Johnston - A Moral Argument
for Progressive Taxes (3:04)
4–27
“Our lives begin to end the day we become silent
about things that matter.”
— Martin Luther King, Jr.
4–28