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You are here: Home Newsroom Our Ideas Themes in the News Archive April 2011 Fair Taxation and Distribution of Sacrifice

Fair Taxation and Distribution of Sacrifice

  • 04-22-2011
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Themes in the News for the week of April 18-22, 2011


As the country struggles to recover from the recession, many middle- and lower-income people see drastic cuts to vital services and entitlements. Monday was the deadline to file tax returns and President Obama, touring the nation touting his tax plan, wants wealthier Americans to contribute their fair share. His plan would end some tax breaks for those earning more than $250,000 (Los Angeles Times).

Republicans want to cut spending, and significantly alter (some say, end) Medicare and Medicaid. Education, although a very small portion of federal government expenditures, is also on the chopping block (GOOD). “If we’re asking people who are going to see potentially fewer services in their neighborhoods to make a little sacrifice,” said Obama, “then we can ask millionaires and billionaires to make a little sacrifice”(Reuters).

Indeed, the notion of “shared sacrifice” is a powerful slogan (Hartford Courant). But to say that all must sacrifice might obscure the fact that sacrifice is not felt the same by everyone. As President Obama explains in several of his speeches, everyone finds taxes unpleasant, but a small tax increase for the wealthiest Americans hardly rises to the level of “sacrifice.” Further, many large corporations, like General Electric with its $14 billion in profits, paid no corporate taxes at all (New York Times, Huffington Post).

Obama, speaking at Facebook’s headquarters in Palo Alto argued to his Silicon Valley audience that the nation needs more from those making the most. Nowhere is that argument more salient than in California—with its economic extremes. Some corporations in the Silicon Valley have posted double-digit jumps in profit while the state’s unemployment rate is among the nation’s highest (Wall Street Journal). Even so, the majority of Californians want more support for education and are willing to pay for it (PPIC poll), but Gov. Brown couldn’t get enough Republicans to back a tax-extension measure on the June ballot that would have brought in $9 billion.

Not only is California failing to increase its investment in education, schools are facing up to $4.5 billion in shortfalls. Add to that the state’s convoluted education finance system that forces districts to anticipate their yearly budgets before they know what revenue they will get from an unpassed state budget (The Economist). Passed 30 years ago, Proposition 13 capped local property taxes, cutting a key source of school funding and forcing schools to depend on funds channeled through the state. Proposition 98 tried to guarantee adequate and fair state funding by providing a floor—a minimum requirement for funding, but over the years the floor became a ceiling. Now, the state can fulfill its legal spending requirement with a dramatically lower level of support than what schools require.

California needs comprehensive school finance reform to accompany adjustments to the nation’s tax rates. Middle- and lower-income people are already sacrificing for their children’s education, and they will sacrifice more. But their sacrifice must seem fair. Without fairness, it is very difficult to mobilize the broad public to support education or any of the other infrastructure or “safety net” investments that make for prosperity and security. First, assure fairness, then ask for sacrifice. Until then, piecemeal and unfair measures, like parcel taxes (Educated Guess), will not hold off the tide of further drastic cuts and draconian measures at schools as the state looks to close a $26 billion gap.

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Weekly Themes In The News

Each Friday “Themes in the News” explores one of the current week’s “breaking news” topics—selected by IDEA staff and its partners—for summary and reflection.   Hyperlinks of the news stories, which are cited, allow readers to explore the theme on their own.