What States Can Do to Reduce Poverty and Inequality Through Tax Policy

By Sarah Anderson and Chuck Collins

 

States have an opportunity to act to close the loopholes that hide and protect the wealth of the top 1%, remedy the impact of the new federal tax law that lowers taxes on the wealthy, and make critical investments in infrastructure, energy systems, and programs that create broader opportunity and shared prosperity.  Concentrations of wealth are distorting our economy and undermining our democracy and civic health. State administrations and state legislatures can act to close the loopholes, put a brake on economic inequality and concentrations of wealth, and generate significant revenue.

Here is a menu of some of the most promising options.

TAXES ON HIGH-INCOME EARNERS

The strong majority of Americans support progressive taxes on the rich.  A joint Stanford-Treasury Department report showed that high taxes do not drive millionaires to move across state lines.  State legislatures have increased taxes on the wealthy. In 2018, the New Jersey legislature increased taxes on incomes over $5 million. New York State and New York City have both increased taxes on high-income households as has Washington, D.C.

In 2016, tax increases on high-income earners passed in both states where they were on the ballot, California and Maine. In California, voters extended the nation’s highest top tax rate (13.3 percent) on those making more than $1 million per year, delivering an estimated $4 billion to $9 billion in annual revenue for human needs. Maine voters passed a 3 percent surtax on income over $200,000.

In 2018, Maine activists organized the first ballot initiative to fund universal home care through a payroll tax increase of 1.9% on salaries and wages over $127,000 a year. In the face of a heavily funded opposition campaign, the initiative failed to get majority support. But Caring Across Generations and other groups are working to apply lessons from this effort to similar campaigns in other states.

STATE ESTATE TAXATION

The estate tax is a levy on large fortunes when they are transferred from one generation to the next, with exemption thresholds that shield middle and working-class families. Before the Bush tax cuts passed in 2001, every state in the nation collected revenue from the state estate tax credit, which sent the first 16 percent of federal estate tax revenue to the states. Congress phased out this tax credit gradually until fully repealing it in 2005. Re-instating a progressive state estate tax in states that lost their state estate tax could generate significant revenue while reducing the concentration of wealth in intergenerational wealth dynasties.

Posted In: Allied Approaches

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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There is Dignity in All Work

There is Dignity in All Work