Friday, January 19, 2007

Stop the "Heineman Tax Hike"

by Kyle Michaelis
Media Fails to Report That Wealthy Benefit Most Under Governor's Budget

Following up on my earlier post about the lie at the heart of Gov. Dave Heineman's budget and his State of the State Address, I want to delve very briefly into that realm of independent analysis where the Nebraska media fears to tread.

Although Heineman's plan has been laid out for all to see for nearly two weeks, it says some very ugly things about the journalists in this state that no one's reported on the many fronts of Heineman's deception and hypocrisy. The very best that could be said of Nebraska's political reporters and editorial boards is that they are afraid of math or simply can't run a calculator. Alas, I suspect the truth is a tad more sinister.

While I still hope to finish a more thorough dissection of the rhetoric fueling Heineman's budget, for now, I just want to point out one more simple, perfectly obvious, but entirely unreported fact - Dave Heineman wants to raise the income taxes of those least able to afford them.

Don't believe me? Surely, if that were true, it would have been pointed out amidst all the bally-hooing and praise? Right?

Well, let's see: one of the central tenets and biggest selling points of Heineman's proposal is that it will supposedly simplify Nebraska's income tax by reducing its number of tax brackets from 4 to 3. That, by itself, raises concerns because this sort of structural change tends to result in a less progressive system. Such is definitely the case with Heineman's proposal. Yet, it takes a look at the actual numbers to appreciate the true severity of the plan's regressive implications.

Although full calculations can not be made from the marginal tax rates Heineman has provided - which capture only the rate on the last dollar earned by a taxpayer - these numbers are still enough to reveal the general thrust of Heinemean's plan and the priorities reflected therein. It's quite telling that at the same time Heineman proposes a 25% cut in the marginal tax rate for married couples with a joint adjusted gross income of $90,000, he advocates a hike in the marginal tax rate of nearly 20% for every married couple with a joint AGI of less than $4,000. Heineman would also impose that same 20% hike on every Single taxpayer with an AGI less than $2,400.

It's fair to say that all Heineman's done structurally to reduce the number of tax brackets is erase the lowest tax bracket. They pay more in income taxes as the working-class (those married, filing jointly with AGIs up to $50,000) pay the same marginal rate. All to the glorious benefit of Nebraska's upper/upper-middle class.

Except, even that fails to tell the whole story. Heineman's proposal also imposes a much larger tax rate hike of 44% for any unfortunate individuals with Head of Household status and an AGI between $24,000 and $25,000. Meanwhile, single taxpayers earning between $16,000 and $17,500 would see their own rate hike of 44%.

Of course, it may be convenient to dismiss these outrageous tax rate hikes of 20% and 44% as anomalies - the price paid for a better, simpler system. But, imagine how those who actually fall within these categories would feel, come tax time, realizing they and they alone have been asked to pay more so those far wealthier can pay less.

And, if such anomalies/discrepancies were necessary for reform - to make the numbers work - what does it say about Nebraska that our Governor has specifically targeted the poor, the young, the retirees, and the disabled to cover the costs of change? Wouldn't it have made a lot more sense to err on the side of common decency and to ask a little bit more of some tiny segment of the state's wealthiest class that otherwise sees the most benefit from Heineman's plan, particularly in its totally one-sided elimination of the estate tax?

Heineman seems to have gone after Nebraska's weakest and most defenseless (in politics, as in life) for no other reason than their being the easiest target. As constructed, Heineman's plan is a sin - plain and simple. While the public can justify some pretty heinous policies that target the poor under notions that they're lazy and should finally be asked to pay their fair share, many of those in Heineman's sights are going to be students working part-time jobs just to keep themselves afloat and those just starting out in the work force (or who spent part of the year unemployed).

Heineman has asked the rich and the middle class to be complicit in reaping benefits for themselves on the backs of detasselers, dish washers, and dog walkers. He wants the state to stick it hard to those facing hardships in their lives. He honestly thinks a 17 year-old kid working part-time at McDonald's just to cover his car payments should pay more so you can pay less.

Nevermind that Heineman's budget, as proposed, would result in skyrocketing college tuition rates that will close many windows of opportunity for young people at both our universities and state colleges. Now, they should take on a greater share of the tax burden to have that door to progress slammed in their face.

What a repulsive agenda for Nebraska...and what a sad comment on Heineman's low expectations of its people.

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