CTJ's Tax Justice Digest, July 6, 2007

Our Summer Reading List

Like everyone, the CTJ and ITEP staffs have compiled their lists of summer reading to bring to the beach, and believe it or not, there are some books on it that touch upon tax fairness and other progressive causes.

Books that Get Us Fired Up

If you heard that your city government was giving huge checks away to corporations for doing absolutely nothing that they weren't already planning on doing, you would say there's some sort of scam taking place and the people should be outraged. The truth is, this is happening all over America and it's time to be outraged about it. The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation by Greg LeRoy, the Executive Director of Good Jobs First, documents this scandal. Companies are being given huge tax breaks -- meaning the rest of us pay higher taxes and live with less funding for schools and roads and other priorities -- even though the tax breaks have little or no bearing on the companies' decision about where to locate.

Sometime this summer, you may be visiting family, and there's always at least one relative who feels the need to share with you his view that the federal government has no business taking money from the people who make a lot of it and using it to help others who don't have any. If you find yourself in a verbal shootout with someone who thinks that the government does too much for the poor, read Dean Baker's The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer and you'll have all the firepower you need. One of the chapters focuses on tax policy, but all of them make the basic point that the wealthy are benefiting a great deal from government, often in ways that seem unfair. The idea that the wealthy got where they are without any help and that they don't owe anything to anyone is ludicrous -- and this book helps to discredit it.

Many of us already know that the Bush years have brought an incredible shift in tax policy to benefit the richest one percent of Americans at the expense of everyone else. But even those of us familiar with this injustice can still be awed by the details set out in Perfectly Legal: The Secret Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else, by New York Times reporter David Cay Johnston. The book explores the seamy inside of America's tax system, from the absurd tax breaks claimed by millionaire executives to the sly tricks and deceptions used by the powerful to escape paying their fair share in the country that made them fantastically successful.

Books on History

For those of us who occasionally get discouraged and think Congress can never do anything right in the tax code (this includes no one on the CTJ or ITEP payroll, just for clarification) the old classic, Showdown at Gucci Gulch, is always good medicine. It describes in detail how a few people in government who wanted honest tax reform beat the corporate lobbyists -- and maybe offers a few hints for how we could make this happen again.

Why are so many members of Congress against raising or collecting taxes, even when it's obvious we need more revenue to pay for the services we want? Why is it that politicians who support tax cuts for the wealthy are sent to Congress from states where there are not that many wealthy people who benefit from the tax cuts? If our ideas about taxes are so irrational, where in the world did they come from? American Taxation, American Slavery by Robin Einhorn argues that Americans' attitudes towards taxes are in large part passed down from slaveholders. The idea is that slaveholders were afraid that members of Congress who were hostile to slavery could tax it out of existence. Their solution was to convince a lot of other people that taxes and any program they could be used to fund were bad. We have no idea if there is anything to this hypothesis, but it sure is interesting.

Short Papers on Critical Issues

A very lively debate is shaping up over how to expand children's health care and how to pay for it. There is talk in Congress about raising the federal tax on tobacco to fund an expansion of the State Children's Health Insurance Program (SCHIP). This presents something of a dilemma for some of us since the tobacco tax is generally regressive, taking a bigger bite proportionally out of the incomes of low-income people, but on the other hand it would be used to fund a very progressive and important initiative. The Congressional Research Service conveniently has laid out some of the issues in a recent short paper titled The Cigarette Tax Increase to Finance SCHIP.

Many of us who live in a part of the country where property values have been skyrocketing have heard plenty of complaints about property taxes and about attempts by state and local governments to put the breaks on them. Of course, this limits the resources available for education and other important services, but few know that this can even result in higher taxes for the very people who are supposed to benefit. Richard Dye and Daniel McMillen's Surprise! An Unintended Consequence of Assessment Limitations spells out how this occurs and why. This should make property owners think twice before they demand relief from the taxes that rise with the value of their land and homes.