By Chris Harrison
"It's your money" - George W. Bush, on his tax-cutting
If you were to listen to the rhetoric of a large number of
politicians today, you would believe that tax cuts were the
latest craze. This mantra of Republican supply-side economics
has been adopted by Democratic candidates and officials as
well. However, the bleating by the collective press about
tax cuts hides the parlor shell game that is currently taking
See, as much as officials don't like to admit it, government
needs tax revenues to fund programs. Maintaining town roads,
building state highways, providing public education, funding
national defense - all of these programs are funded by tax
dollars in one way or another. These government programs really
aren't that different in basic principle than individual consumer
choices. They are all based on the idea that if you want to
receive a decent service, you'd better be prepared to pay
So, with all this tax-cutting going on in our town halls,
statehouses and Washington, the question remains: where are
they getting the money to fund these programs? One of the
answers to this question is conveniently overlooked by the
press: regressive taxes.
Regressive taxes are taxes that affect people of moderate
and lower incomes more than they affect those with higher
incomes. Two examples of regressive taxes are gasoline taxes
and cigarette taxes. Regressive taxes are taxes that are commonly
placed on necessity, rather than luxury, goods. And they often
wreak more havoc on the public sector than they actually help.
The logic behind this conclusion is simple, and it can be
supported by basic mathematics. Let's take cigarette taxes,
Higher taxes on cigarettes were enacted after the wrongful
death lawsuits brought against the tobacco companies in the
mid 1990's. Americans were lead to believe that the tobacco
companies were being forced to do their part in paying for
health care costs of people affected by smoking-related illness.
This was far from the case. In fact, the health care costs
were instead shifted from the insurance companies to the smokers
"Big Tobacco" has knowingly put a harmful and addictive product
on the market for years. They have aggressively marketed this
product toward teenagers and people in lower income brackets.
They have also lied to Congress and the American people about
the harmful nature of their product, along with its addictive
qualities. In short, they have engaged in less-than-ethical
business practices. Now, due to the regressive cigarette tax,
they have been allowed to continue marketing their product
and maintain their profit margins while being absolved of
contributing their fair share to the health care costs associated
with this product.
People in lower-income brackets are statistically more likely
to become addicted to tobacco. This is due to many factors,
from lack of overall education to cigarette marketing strategies.
When these lower-income folks not only pay the cost of their
cigarettes, but also bear the excessive taxation associated
with them, the final cost can take a substantial percentage
of their income. People who earn higher wages pay a lower
percentage of their overall income. This is the nature of
the regressive tax, and it is not fair.
New York Mayor Mike Bloomberg has advocated increasing cigarette
taxes to help account for the city's current budget shortfall.
He has also ruled out raising any sort of income taxes. Given
the fact that the majority of New Yorkers who smoke are poor,
while a large number of people who live and work in Manhattan
are better off, doesn't it become a question of basic fairness?
I will acknowledge that many people find it difficult to
find sympathy for smokers. The choice they made is theirs
to bear, and they also pollute the air that all of us breathe.
I am an ex-smoker myself, and I have to say that quitting
was the best decision I ever made. I will even admit that
I now see people who smoke as having a weaker will than those
of us who don't. But I will also say that quitting smoking
is not easy, and I understand how so many people find it so
difficult, if not impossible, to quit.
Perhaps an even better example for the innate unfairness
of regressive taxation is a gasoline tax. While well-intentioned
advocates of a gasoline tax tout the way it will shift demand
away from gas-guzzling SUV's and toward hybrid cars and public
transit, they fail to recognize how it will devastate large
groups of lower-income commuters.
Many of the rural poor already spend a large percentage of
their income on commuting to and from work. If a sizable gasoline
tax were to be enacted, without the public transportation
infrastructure already in place, many of these lower-wage
earners would be left to choose between gas for commuting
to work, or food on the table. If they choose to immediately
feed their families, they could be left without sufficient
funds for gas, in which case they could lose their jobs due
to their inability to get to work. It's a "catch-22."
Many people say, "Regressive taxes are tough. Deal with it."
That is easy enough to say when you aren't worried about when
your next meal is coming from. That is easy enough to say
when you can afford the $20,000 price tag that goes along
with a new Toyota Prius or Honda Insight. That is easy enough
to say when you live in an urban environment when you already
have access to public transportation. But when you're not
lucky enough to have these advantages, a regressive gasoline
tax can be devastating to your ability to simply survive.
Plainly put, regressive taxes (such as gasoline taxes) are
unfair, and they are wrong. Instead of looking to regulate
fuel consumption through regressive taxation, maybe we should
look at placing additional sales taxes on vehicles with low
fuel efficiency, while eliminating sales tax from high-efficiency
vehicles. The Rocky Mountain Institute (a market-based think
tank) advocates placing a sliding sales tax on automobiles
in this manner, with SUV's like the Ford Excursion and GM
Suburban taxed at a rate of say, 10-12%. High-efficiency vehicles
like the Prius and Insight could have a 0% sales tax. Funds
raised from an "efficiency tax" could be used to fund public
transportation projects. Of course, Congress raising and enforcing
higher CAFÉ standards wouldn't hurt, either.
The real answer to our problems lies in creating and enforcing
a progressive tax system based on fairness and establishing
equality of opportunity. Regressive taxation only places more
of a strain on the people who need the most help from the
very social programs their taxes are funding. This isn't right,
and it must be stopped.
Chris Harrison is a Fair Trade activist in Westchester
County, NY and an overly irate citizen. He can be reached