I continue to pontificate about tax matters

I just noticed that TomPaine.com has posted my letter of February 13, which responded to a recent article about the poor paying a disproportionate share of state taxes.

(I think the link is perishable, so here’s the letter as it appeared on the site.)

Re: The Institute on Taxation and Economic Policy’s “Poor Paying More”

Thanks for the cogent summary of the dire state tax situation.

Given that states are experiencing the worst fiscal outlook since World War II, the state tax burden on the poor is likely to grow if voters don’t get involved.

Not only are states relying more heavily on regressive sales and excise taxes, but many states with estate tax systems that piggyback on the federal estate tax scheme have lost large amounts of revenue due to the federal phase-out.

Florida is one state that ties its estate tax to the federal system and is already losing revenue due to the estate tax repeal. Some states are decoupling from the federal system, but some are trying to make up for revenue shortfalls through budget cuts.

Even states considered more traditionally progressive are not immune. Those who live in New York should be aware that Governor Pataki’s 2003 budget proposal calls for eliminating the sales tax exemption for items of clothing costing less than $110. If Pataki’s proposal is passed by the Legislature, the sales tax burden on the poor in the state (as a percentage of personal income) will increase significantly.

The recent astronomical increase in the New York State and City cigarette taxes also disproportionately affects the poor.

Maud Newton


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