Graduated Income Tax: An Idea Whose Time Has Come


Overview

Graduated Income Tax ImageOnly seven states have a flat tax. There are 32 states and the District of Columbia with a graduated income tax. And a graduated income tax is a long-standing principle of Catholic Social Teaching.

The National Conference of Catholic Bishops, in their letter Economic Justice for All, state that the tax system should be structured according to the principle of progressivity, so that those with relatively greater financial resources pay a higher rate of taxation. The inclusion of such a principle in tax policies is an important means of reducing the severe inequalities of income and wealth in the nation.

No one likes to pay more taxes! But our roads are a mess, college tuition is soaring, our K-12 schools need more money, Flint and other cities have failing water systems. It's obvious the state needs more revenue, but what to do?

One reasonable solution is to change Michigan's income tax from a flat tax (4.25%) to a graduated income tax. One legislator, Rep. Jim Townsend of Royal Oak, has suggested a rate of 3% on the first $20,000 , growing to 10% on income over $1 million. This plan would realize a reduction for 95% of filers!

Some people think that a flat rate is fair, but to raise enough income to do the things the state should do, would require a high enough percentage that it would be crippling for the poor. Townsend makes a point about fairness. The flat income tax gets sold as fair because everyone pays the same, but 4.25% of $100,000 is not as devastating a bite as 4.25% of an income of $30,000. Townsend also points out that the top 1% pay 5.9% of their income in state income tax, sales excise and property taxes, while middle and low-income people pay over 9% of their income in these various taxes.

For more information on a graduated income tax for Michigan, go here.

Catholic Social Teaching and a Graduated Income Tax

Catholic Social Teaching ImageA longstanding principle of Catholic Social Teaching is a progressive tax rate. Those with more income pay a higher rate of taxes. The federal government and 33 other states have a graduated income tax. With a graduated income tax, there is a way to lower taxes for most people and yet raise needed revenue for roads, schools and the poor. We at Michigan Catholics for the Common Good think that this is a plan well worth considering.

With bad roads, schools underfunded, college student debt, and programs for the poor under attack, it's obvious that we need more revenue in the state of Michigan. But the poor and the middle class are already paying their share of taxes. Rep. Jim Townsend, representing Royal Oak and Madison Heights, is proposing a graduated income tax rate. The plan we support would decrease income taxes somewhat for 95% of the people, but raise it on the wealthy. But the raise would be a reasonable increase. The people in the top brackets would pay about the same percentage total in all state taxes (sales, property and income taxes) as the rest of the population. Currently, tax payers in Michigan living below the poverty line are paying a greater percentage of their income than wealthy people.

P.S. Nov. 1 ends Daylight Savings Time. Don't forget to FALL back an hour!

Graduated Income Tax Websites