Tuesday, March 19, 2013

Katherine S. Newman: "In The South And West, A Tax On Being Poor"

In a New York Times commentary, Katherine S. Newman (left) writes that Southern and Western states' higher sales taxes and public service fees (as opposed to more progressive tax policies in the Northeast and Midwest) disproportionately burden the poor. Such policies have especially negative consequences among the poor in the South in terms of health, education and dependence on federal programs. Unfortunately, governors in these states are moving in an even more regressive direction:

...Southern states have steadily increased the tax burden on their poorest citizens by shifting the support of the public sector to sales taxes and fees for public services. ...Sales taxes on clothing and school supplies and fees for bus fare and car registration take up, of course, a far bigger slice of a poor household’s budget than they do from the rich.

...Southern states have far higher rates of strokes, heart disease and infant mortality than the rest of the country. Students drop out of high school in larger numbers. These outcomes are not just a consequence of a love of fried food or higher poverty levels. Holding all those conditions constant, the poor of the South — and increasingly the West — do worse because their states tax them more heavily. They have less money to buy medication, so their health problems get worse. High sales taxes make meals more expensive, so they shift to cheaper, unhealthy food. If people can’t make ends meet, they may turn to the underground economy or to crime.

This self-defeating pattern has plagued the citizens of the “meaner states,” the ones that tax poor people at a higher rate, for a long time. But it is about to get worse. Governors in fiscally strapped states are hoping to roll back state earned-income tax credits. Some — like Bobby Jindal of Louisiana, Dave Heineman of Nebraska and Mary Fallin of Oklahoma — are aiming to cut or even eliminate state income and corporate taxes and raise sales taxes. North Carolina lawmakers are considering the same thing.

...The fact is, the more the poor are taxed, the worse off they are, whether they are working or not. We all pay a huge price for this shortsightedness. Medicaid payments, food stamps, disability benefits — all of these federal programs swoop in to try to patch up a frayed safety net. Consequently, the Southern states reap more dollars in federal benefits than they pay in taxes... As noble as the federal effort to rescue the poor in the “mean states” may be, it is not enough to reverse the impact of regressive taxation.

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