The middle class is becoming poor and the poor are becoming human sacrifices in America. The feds and states are trying to pay down debt on the backs of their most vulnerable, recession-squeezed citizens while protecting elites from the impact of their own economic catastrophe.
Republicans in Congress went to war in December to preserve George W. Bush’s tax breaks for the richest 2 percent, bending President Barack Obama to concede by threatening a tax hike on everyone. Now, claiming Obama’s 2011 budget doesn’t do enough to reduce the deficit, they’ve drawn up a spending bill that defunds healthcare reform, eliminates $747 million in food programs and takes away $2.5 billion in home heating assistance, among other crotch-kicking actions towards the underprivileged.
This same body defunded (and in the process destroyed) ACORN and is now aiming at Planned Parenthood on misguided moral grounds, but bailed out Wall Street and continues to contract withHalliburton.
Meanwhile, the Republican-run state government of Wisconsin is using its $137 million deficit as an excuse to antagonize unions. The governor wants to strip state employees, including teachers, of collective bargaining rights, even though they’re willing to make the concessions. The move is a poke in the eye at organized labor and protestors in Madison are rightfully raising hell over it. The same story might be played out in Ohio, Michigan and Indiana.
But not in Connecticut.
Democratic Gov. Dannel Malloy has taken a pass at this new Monty Burns-style of government. Last week, Malloy unveiled a budget that will seriously eat into the $3.2 billion state deficit his predecessors left. He hopes to reign in $1.8 billion this year through spending cuts and another $1.3 billion with slews of new taxes.
Under Malloy’s progressive income tax structure, 38 percent of the new burden falls on households or individuals making more than $250,000 a year, 26 percent on those making between $100,000 and $250,000, and 13 percent on those making below $50,000. Sales tax will rise a fraction of a percent and the governor will introduce new taxes on stuff like haircuts, yoga and pet grooming. And by levying 80 percent of the new taxes on individuals and only 20 percent on corporations, he won’t scare away many businesses.
Malloy will have to ask for $1 billion in concessions from state worker unions to meet his goals for reducing state government. Everyone will be paying a little more in sales tax and in new taxes on basics like clothes and gas. Also, the state social safety net will get a trim. But it’s not as unreasonable to ask for sacrifices all around after the segment of our society that gets the most from it pays its tab.
This will not cause an exodus of the wealthy from Connecticut. Economist Andrew Leigh’s 2008 study on state income tax rates and migration patterns found no relationship between the two. In 2004, New Jersey placed a tax on those making $400,000 and up. The state did lose $37.7 million in tax revenue from those taxpayers leaving, but got $1 billion from the taxes overall, according to a Princeton study. Hell, rich people define many parts of this state; it’s hard to imagine them abandoning a town like Greenwich to the merely upper-middle class.
The ultra elite are here and they aren’t leaving. The state should get what it can from the only residents who can pay the kind of taxes needed to deal a death blow to a $3.2 billion deficit. And that’s what is most appealing about the Malloy plan: It might actually work.