This Week:

Anti-war demonstration in the nation’s capital

How you can help to stop the bombs

Students taking stands against Iraq sanctions
Taxes, Minnesota-style
Taxes, American-style

Greetings,

I hope many of you get a chance to listen to the daily news show “Democracy Now,” which airs locally every weekday at noon on KFAI radio 90.3 or 106.7 FM. Host Amy Goodman is the best journalist around, and every day there is by far the best coverage of the current war in Yugoslavia. Check it out.

I was happy to see so many of you at the antiwar demonstration yesterday. It does make a difference. Please consider making a financial contribution, using the information that appears below.

While the wars of our nation have most often been waged for all the wrong reasons and have caused enormous suffering, it is nonetheless appropriate on this Memorial Day weekend to recall the soldiers who have suffered in those wars. The soldiers don’t make the decisions to go to war, but they bear much of the suffering, and that suffering is not only physical. The emotional and psychological wounds that these men and women suffer, sometimes partly stemming from the knowledge that they have fought on the wrong side, often stay with them forever.

And even though it’s highly unlikely that any official notice or event will encourage it, please try to also remember the millions of victims of the wars that these soldiers have been forced to fight.

See you next week,

Nygaard

How you can help to stop the bombs

For those of you who would like to support the antiwar efforts, but can’t go to D.C., here are a couple of things you can do. To support local efforts against the war, you could come to a “Poetry for Peace” benefit tomorrow night, Saturday, May 29th at 7:30 pm at the Walker Church in South Minneapolis (3104 16th Ave So). This event is a benefit to support the delegation going to D.C. I mentioned that subsidies are available; this event is where those subsidies are coming from.

If you can’t make the event but still want to contribute, make out a check to: “Coalition Against U.S./NATO War in Yugoslavia”, and send it to: Twin Cities CISPES 610 West 28th Street Minneapolis, MN 55408

To directly support the national coordinating effort for the D.C. demonstration, make your check out to: “People’s Rights Fund/Stop the War” and send it to them at: 39 West 14th Street, #206 New York, NY 10011-0763

Students taking stands against Iraq sanctions

As of April 30, 1999, the number of universities that have passed resolutions opposing the sanctions policy on Iraq has increased to 10. The universities thus far include: University of Michigan at Ann Arbor, University of Texas at Austin, University of Wisconsin at Milwaukee, Anderson University, Yale University, Macalester College, Wesleyan University, Aquinas College, University of North Carolina at Chapel Hill, and University of Colorado at Boulder.

Nygaard Notes readers: Are you in college? Got kids in college? Hint, hint.

Taxes, Minnesota-style

A think-tank called the Institute on Taxation and Economic Policy (ITEP) released a report this past January headlined “New Study Finds Shift in Minnesota Taxes--Away from Businesses and Onto Individuals.”

The Minnesota legislature just passed permanent tax cuts for everybody in Minnesota, with the governor caving in to the Republicans at the last minute. The Democrats and the governor wanted to cut the tax rates for low- and middle-income taxpayers and not for the wealthier among us, which would have resulted in a move towards a progressive, rather than the current regressive, tax structure for the state. (“Progressive,” in the tax sense, means that those with more money pay proportionally more in taxes than those with less money; “regressive” means the opposite.)

A lot of people think that Minnesota has a progressive tax system already. Not so, according to the recent ITEP study, which states that “Minnesota's overall tax system is slightly regressive, but less regressive than most other states.”

Minnesota does have a relatively high overall rate of taxation, and if you listen to business spokespeople and their kindred spirits in government, this is a terrible thing. “A bad business climate” is what we supposedly have here in Minnesota. This is nonsense if you look at the figures. For example, Minnesota has for many years had an unemployment rate substantially lower than the national average. As the ITEP report puts it, “Minnesota ranks high among the states in taxes and government spending. The state's relatively high level of government spending has coincided with Minnesota being one of the nation's leaders in most important economic and social indicators.” In other words, you get what you pay for.

Here are a few other facts about Minnesota taxes, all from the ITEP report:

• Since 1990, the share of Minnesota property taxes paid by business has fallen from 56 percent to 49 percent. In that same period, the share of property taxes paid by homeowners has grown from 32 percent to 41 percent.
• Similarly, corporate income tax revenues have declined as a source of revenue. In 1979, corporate income taxes were 0.82 percent of Minnesota's gross state product (GSP) and represented seven percent of Minnesota state and local tax collections. By 1994, corporate income taxes had fallen to 0.46 percent of GSP, representing five percent of revenue.
• In 1997, permanent changes in the state's property tax "class rates" further shifted the property tax burden from businesses to homeowners. In the short-run, the class rate shift has been offset by separate tax breaks for homeowners. The homeowners savings, however, are either temporary, designed to erode over time, or subject to the biennial appropriations process.
• In addition to the recent shift in property and income taxes away from businesses and onto families and individuals, there also has been an increased reliance over time on sales and excise taxes, which burden middle- and low-income families the most. In 1978, regressive sales and excise taxes equaled 27 percent of all Minnesota state and local taxes. In 1996, they comprised 31 percent. "Lower business taxes and higher sales and excise taxes threaten to turn Minnesota's slightly regressive tax system into one where middle- and low-income families face substantially greater tax burdens than the well-off," said Slocum.

With our large budget surpluses, we could have chosen to increase spending on a myriad of needed services, from health care to the environment to needed infrastructure. Even in the realm of cutting taxes, our Governor could have chosen this “surplus moment” in our history to attempt to restore some of our lost tax progressivity. The fact that he did not says a lot about the priorities of the man who ain’t got time to bleed.

The permanent tax-rate reductions that were just passed, and of which the Governor is so proud, apply equally to everyone’s income taxes. The opportunity to cut the rate for low- and middle- income taxpayers and not for the rich, which would have increased the progressivity of the tax, was not taken. The Republicans refused, and the Governor caved in. The sales tax was treated differently. As noted above, the sales tax is extremely regressive. The much-ballyhooed “rebate” on this terrible tax is a one-time deal. A permanent cut in the sales tax would have been a sincere gesture toward restoring some of our lost progressivity, but it wasn’t even seriously discussed, to the best of my knowledge.

Taxes, American-style

Perhaps readers of Nygaard Notes have heard of something called “Tax Freedom Day.” This is the day each year until which the “average American” supposedly has to work in order to pay his or her taxes. According to the Tax Foundation, a right-wing anti-tax group that “calculates” the date of Tax Freedom Day, “It is May 11th this year, the latest date ever.” Just in case anyone has recently heard or read this ridiculous bit of propaganda, here are a few facts to keep in mind:

1. The two main sources that the U.S. Congress uses for tax information, the Congressional Budget Office and the Joint Committee on Taxation, both say that taxes on middle-income families have been declining in recent years, not rising.
2. Probably the easiest-to-understand distortion that the Tax Foundation uses to get taxes to look as high as possible is the use of “average” taxes. This is misleading because the U.S. has a progressive income tax. This means that, since the wealthy pay the highest tax rates, and since the income of the wealthy has gone through the roof over the past decade or more, the “average” tax payment has gone way up. Here’s how the Center on Budget and Policy Priorities (CBPP) illustrates it:

“Suppose four families with $25,000 incomes each pay $1,250 in income tax — or five percent of their income — while one wealthy family with $500,000 in income pays $125,000 in income tax, or 25 percent of its income. Under the Tax Foundation approach, these five families pay 22 percent, on average, of their income in federal income taxes. (Total tax payments of $130,000 divided by total income of $600,000 equals 22 percent.) “But the 22 percent figure is misleading. The four moderate-income families pay five percent of their income in income tax, not 22 percent. Using averages in the manner the Tax Foundation does when talking about tax burdens produces skewed results...”

3. The Tax Foundation uses all sorts of other shady methods to get the results to come out like they want, such as failing to count some kinds of income (making taxes appear higher as a percentage of the remaining income), and assuming that every family pays estate taxes (estate taxes are paid on only the largest one to two percent of estates; all smaller estates are exempt).

Tax Foundation reports often state that families must pay more in taxes than they pay for food, clothing, and shelter combined. Turns out that this isn’t quite right, either. Quoting the CBPP again: “It is no doubt true that upper-income families pay more in taxes than they do for basic necessities. At the same time, it also is true that low- and moderate-income families pay less in taxes than they spend for basic necessities; necessities consume most of their income. The precise family income level at which taxes typically exceed expenditures for food, clothing and housing is unclear, and the Foundation's report does not help to answer that question.”

By releasing their report on April 15th each year, the Tax Foundation reinforces the idea that the federal income tax, one of the most progressive of our taxes, is the biggest culprit in pushing “Tax Freedom Day” ever later into the year. In fact, the CBO data indicate that families in the middle of the income spectrum will pay 5.4 percent of income in federal individual income tax this year. In the Tax Foundation's terms, that means it will take only until January 20 for the typical household to pay its federal income taxes. Congressional Budget Office analyses show that three of every four families are paying less than 10 percent of their incomes in federal individual income taxes. For many people, federal income taxes are the lowest they’ve been in years.

Left unsaid in the preceding paragraphs, of course, is the important point that much of the money that goes to the government in taxes is used for purposes that many Americans strongly support. My indigent sister, for example, is currently in a chemical dependency treatment program that is largely funded by federal dollars. Roads, bridges, Medicaid, national parks, the National Weather Service, and innumerable other goods and services come directly from the federal govmint. (Yeah, I know, Stealth bombers and napalm, too, but that’s a different column.) It would thus be an error to allow ourselves to think of the payment of taxes as nothing more than a “burden” from which we should be “liberated.” That is the thinking of a wealthy person, or a libertarian ideologue.

“Tax Freedom Day” is based on bad research and promulgated to promote the right-wing’s anti- government agenda. Nothing more, nothing less.

Most of the information about Tax Freedom Day comes from a new report put out by the Center on Budget and Policy Priorities, entitled “Tax Foundation Figures Produce Misleading and Inaccurate Impressions of Middle Class Tax Burdens.” Check it out at http://www.cbpp.org.