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Tax system has crippling impacts

by Peter Weinschenk, Record Review

Each of the 400 richest adults in America has the same average wealth as 1,308,440 average working class adults in this country. This staggering wealth gap has many causes, according to University of California economists Emmanuel Saez and Gabriel Zucman, but a chief one is tax policy. The researchers recently report that the working class of this country (that is, the bottom 50 percent of earners) has seen its combined federal, state and local tax rate increase by 23 percent since 1962, while the tax rate paid by the top one percent of earners has seen its rate plummet by 54 percent.

The result is truly absurd. The total combined tax rate of these top 400 richest Americans (23 percent) is less than that paid by working class people (24 percent) who earn less than $18,000 a year.

Ths pro-rich tax policy starts with state and federal income tax cuts, but it gets enforced on the local level. The 2020 Marathon County budget approved recently by the Human Resources, Finance and Property Committee (HRFPC) is a case in point.

Over the years, the state legislature has rolled back income and estate taxes paid by the wealthy and, in turn, reduced aid to local governments while never backing off on mandates. Legislators imposed tax caps to keep local governments from backfilling these cuts.

We get misery. District Attorney Theresa Wetzseon, for example, pleaded with the HRFPC for more prosecutors and offi ce staff, claimimg that she can’t retain experienced, quality lawyers in an office chronically overburdened with cases.

The state has documented the problem, Wetzsteon said, but still leaves her office over five prosecutors short. She told supervisors she understands that the county cannot afford to pay for additional lawyers and, given that hiring prosecutors is a state responsibility, that maybe they shouldn’t. But, she said, the county cannot afford not to hire the added staff, either, Without extra manpower, Wetzsteon said, she will cancel non-mandated drug and OWI courts, as well as jail diversion programs. The result, she suggested, will be a catastrophically expensive, overflowing jail and a sharp increase in social services costs.

Supervisors understood Wetzsteon’s complaint, but, in the end, failed to come up with any strategy to deal with it. One supervisor said the county should cut sheriff’s department dispatchers to pay for more prosecutors. Another said Start Right family services should get cut. But nobody could pass a motion to alter the county budget. They voted to send the sad spending plan to a public hearing.

The county board will deal with this mess (we hope Wetzsteon gets her needed staff), but supervisors, once and for all, should decry this madness. Administrator Brad Karger told supervisors they need to persuade the legislature to grant them wiggle room around levy limits. But this is far too timid. Supervisors should scream like hell. They should reject a status quo that forces them to make impossible budget choices just so the rich people of this state can pay a low tax rate. They should reject a status quo that forces them to borrow for basic things like fixing bridges and leaky roofs - paying interest to this state’s investor class. What is this but another tax on regular people!

Our suggestion, then, is for the county board to pass a 2020 budget resolution with some kind of compromise, but, as part of that resolution, call for a tax task force charged with finding ways for the county to raise taxes on its highest earners, or, if these can’t be found, to demand the state legislature raise taxes on high earners and share the proceeds with local government. The state can stop retail giants from escaping property taxes through “dark store” assessments. It can halt hospitals that, despite millions in the bank, avoid paying property taxes. It can shut down Tax Increment Districts that provide tax benefits to business owners who would put up factories and stores without the incentives. It can roll up tax exemptions enjoyed by the richest of farmers.

The United States no longer has a progressive tax system and, as a result, local government is crippled. Local leaders and citizens must fight back with everything they have.