Martinez

Some skin in the tax game

CorrespondentApril 21, 2010 

Shortly, Erskine Bowles, president of the UNC system, will head up to Washington to solve our nation's deficit problem. It's a big one. This year's overdraft is projected to be $1.4 trillion, or about $5,000 for every breathing soul in the United States.

If the co-chair of the president's deficit reduction commission expects to make any serious headway, he'll have to address this issue head-on: We've got too many tax freeloaders.

A freeloader is any citizen - and that includes corporations - who legally pays no federal income tax. The progressive Tax Policy Center is among many think tanks calculating that approximately 47 percent of potential federal income taxpayers currently get a free ride off the labor, sweat and brainpower of the 53 percent who pay income tax to Uncle Sam.

Our federal income tax system is designed to be progressive, with rich folks paying a higher percentage of their income in taxes. In fact, the system has become oppressive. Almost half of the folks who should be helping fill the tax pool are only draining it.

As a result, the wealthy are carrying the load to a great degree. The Tax Policy Center notes that the top 20 percent of earners - those making six figures or more - pay about 70 percent of all federal income taxes. By any reasonable standard, the ratio is oppressive, and it gets even more lopsided at higher income levels.

Of course, income tax freeloaders do pay federal taxes - via payroll deductions for Social Security and Medicare. But that's hardly a badge of honor. Since every single American benefits from federal services, all should pay at least some income tax. As President Barack Obama often says, everyone should have some skin in the game.

Making sure everyone is in the game should be the starting point for reforming an oppressive and highly unfair system. Central to reform is that the tax code should be a tool used to fund broad government responsibilities and not a tool of social change.

What's the difference? Chris Fitzsimon of N.C. Policy Watch recently made the distinction well, but by omission, when writing about taxes and services.

Last week, tax protesters were chastised by progressives as self-centered, hypocritical cheapskates. To his credit, Fitzsimon did not resort to name calling. He respectfully asked tax protesters to keep in mind all the government services they benefit from, such as police and fire protection, primary and higher education, safety inspectors and trash collectors.

Wisely, Fitzsimon left out the government social spending programs progressives love, including the latest fad - funding for "green jobs."

Earlier this week the State Energy Office announced it has received and will oversee $132 million in federal stimulus money for weatherization projects. I doubt such weatherization is a priority for the 53 percent of us who have to pay for it. I bet the majority of taxpayers would prefer the money be spent on the core services Fitzsimon described. Or better yet, not spent at all.

North Carolinians aren't likely to freeze next year if the state returns the $132 million, but it is possible that the deficit could be $132 million smaller, a reduction that would benefit every American, not just a select few here in North Carolina.

Spending hundreds of millions of dollars on weatherization programs, while exempting half the tax-paying population from paying at least one dollar in income tax at a time of trillion-dollar deficits, makes no sense. But I suspect it is precisely why eight out of 10 Americans don't trust the federal government, according to a survey just released by the Pew Research Center.

Regaining that trust will take a series of steps that scream common sense. Step one is to make sure everyone pays their fair share by making sure that everyone pays some income tax.

Contributing columnist Rick Martinez (rickjmartinez2@verizon.net) is news director at WPTF, NC News Network and StateGovernmentRadio.com.

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