AMERICA NEEDS REVENUE-RAISING,
PROGRESSIVE TAX REFORM
CHAPTER 1
Steve Wamhoff, Citizens for Tax Justice
America needs tax reform that both raises revenue to support investments in our future and
makes our tax system more progressive.
Tax reform should raise revenue to support public investments. Lawmakers often claim
that tax cuts are the best way to help individuals or businesses, but the truth is that public
investments are often the best way to move Americans ahead. Investments in education
programs such as Head Start, research institutions such as the National Institutes of Health
(NIH), and infrastructure projects such as roads, ports, and bridges are just a few examples of
federal spending that makes our economy thrive in the long term.
Even in the short term, public investments do more to boost our economy than tax cuts.
While many lawmakers claim that lower taxes for businesses will increase hiring and reduce
unemployment, any business owner will tell you that hiring
will commence only when there are customers to buy
“When you account for
all the different types of
their goods and services. And the federal government can
taxes that Americans pay,
provide such customers—for example, by expanding infrait turns out that essentially
structure projects that employ many middle-income people,
everyone is paying taxes,
who consequently will have more money to spend.
and the share of total
Yet today, the budget deficit is used by lawmakers as a
taxes paid by each income
reason to allow automatic cuts (known as sequestration) in
group is roughly equal to
the share of total income
programs such as Head Start and the NIH and to refuse to
received by that group.”
make badly needed infrastructure investments.
There is no reasonable way to address this without
significantly increasing tax revenue. If Congress makes no change to our tax laws, a decade
from now, federal revenue will be 19.1 percent of the U.S. Gross Domestic Product (GDP),
while federal spending is projected to reach 22.6 percent of GDP. Congress cannot reduce
spending dramatically enough to match the projected revenue level without the type of deep
cuts in vital investments that have only just begun. Even during the Reagan administration,
federal spending ranged from 21.3 percent to 23.5 percent of GDP.
Tax reform should make our tax system more progressive. Many people mistakenly believe
that our tax system is already extremely progressive. When you account for all the different
types of taxes that Americans pay, it turns out that essentially everyone is paying taxes, and
the share of total taxes paid by each income group is roughly equal to the share of total income
received by that group.
My organization, Citizens for Tax Justice, estimates that the richest 1 percent of Americans
will pay 24 percent of the total taxes (all federal, state, and local taxes) in 2013. This does not
mean this group is overtaxed; the same group, the richest 1 percent, will receive about 22
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