Happy Tax Day!

Happy Tax Day!

That might seem like an strange thing to say, but around here we're thankful for all the things our taxes do for us.  Whether it's providing a quality education to our children, protecting our communities, building the road and transit systems that connect us, protecting our food supply, preserving the Chesapeake Bay, or providing healthcare, we're thankful for all the things our taxes pay for that make Maryland a great place to live, work, and play.

Unfortunately, taxes get short shrift much of the time.  Often, people don't make the connection between their taxes and the public structures that our tax dollars pay for. Or they buy in to the various myths about taxes that the right has propagated over the last thirty years.

Fact #1: America is one of the least taxed countries in the developed world. 

According to the Organization for Economic Cooperation and Development, only Mexico and Chile pay less in taxes, as a percentage of gross domestic product.

Fact #2: The share of taxes the rich pay is close to their share of the total income - not a lot more.

Actually, when you look at the tax system as a whole (including sales, property, estate, and corporate taxes), our tax system is just barely progressive.

Fact #3: Almost all Americans pay taxes

Again, when looking at the entire tax system, everyone pays something.  Even those who owe no income tax, or due to various anti-poverty programs have a negative tax liability, still pay many other types of taxes (payroll taxes, gas taxes, sales tax, etc.).

Fact #4: Corporations pay only moderate taxes

While the federal corporate tax rate is 35 percent, the effective tax rate for most corporations is far lower.  Citizens for Tax Justice found that the 280 most profitable U.S. corporations sheltered half their profits from taxes, ending up with an effective tax rate of just 18.5 percent.  


Fact #5: Tax cuts can hurt the economy

It ought to be obvious that cutting taxes results in fewer government purchases, declining infrastructure, a weaker social safety net, and layoffs of government workers, reducing overall economic activity, unless you increase deficits.  While low and moderate income households living paycheck to paycheck would be likely to spend any windfall, high income households that already have significant discretionary resources are unlikely to suddenly change their behavior.  And yet somehow it isn't.

The Center for American Progress analyzed the national economy after the 1981 and 2001 tax cuts compared to the 1993 tax increases and found that tax cuts on profits, savings, and the wealthy failed to spur economic growth.

Building a strong economy and creating jobs takes smart investing.  Taxes are how a responsible society pays for those investments.  We can't afford to not invest in Maryland's future.