While the South Dakota Legislature tinkers with our fundamentally regressive sales tax and considers changes to our property tax that tie farmers' tax bill to their potential wealth rather than their real ability to pay, the mostly progressive and sensible federal income tax reaches its 100th anniversary.
South Dakota's Congresswoman wishes we could turn the clock back to before that onerous federal tax... because she longs for the days when her robber-baron donors could concentrate wealth unchecked by regulation or concern for the common good. Robert Reich reminds us that the ratification of the 16th Amendment, which authorized Uncle Sam to tax income, was a crowning achievement of the Progressive movement to protect economic opportunity and democracy for all Americans:
The 1880s and 1890s had been the Gilded Age, the time of robber barons, when a small number controlled almost all the nation’s wealth as well as our democracy, when poverty had risen to record levels, and when it looked as though the country was destined to become a moneyed aristocracy.
But almost without warning, progressives reversed the tide. Teddy Roosevelt became president in 1901, pledging to break up the giant trusts and end the reign of the “malefactors of great wealth.” Laws were enacted protecting the public from impure foods and drugs, and from corrupt legislators [Robert Reich, "Today, an Anniversary of America's First Progressive Revolution," blog, 2013.02.03].
Reich sees obvious parallels to today's threats to democracy and hope for a proper restoration of power to the people:
A progressive backlash against concentrated wealth and power occurred a century ago in America. In the 1880s and 1890s such a movement seemed improbable if not impossible. Only idealists and dreamers thought the nation had the political will to reform itself, let alone enact a constitutional amendment of such importance — analogous, today, to an amendment reversing “Citizens United v. FEC” and limiting the flow of big money into politics.
But it did happen. And it will happen again.
Conservatives cloak their support for regressive taxes and concentration of wealth in false cries of duty and individual responsibility. Don't be fooled: the income tax is good for liberty and democracy.
Dang, now where's my W-2?
How many farmers, ranchers and small business people in South Dakota file with a W-2? Our current federal tax system favors anyone who does not file with a W-2. Under current rules, W-2 wage slaves bear the burden of an income tax and a state income tax would only mirror that. If we want to make the problem worse, start a state income tax.
The federal income tax is here to stay. I have no problem with making it more progressive, either.
We did fine under the Eisenhower administration when the top tier rate was something like 90 percent.
Even as recently as the Nixon years it was around 70 percent.
My fear is that the our politicians will institute a brand new consumption tax at the federal level, in addition to all of the other taxes we have now.
Chances are it would take the form of a value-added tax (VAT) ostensibly to pay for Medicare and perhaps universal health care.
It could just as easily come from the right (Paul Ryan wants it, I think, although he doesn't call it a VAT) as from the left.
Actually, with the rate at which our debt is skyrocketing, I think the VAT is inevitable.
It will likely come under President Hillary Clinton in 2018 or thenabouts.
As for a state income tax, I have considered Montana as one of my possible "off grid" venues. It has an income tax at the state level, but no sales tax.
So as I grow poorer and poorer and poorer, that state looks better and better and better.
But it ain't there yet. South Dakota taxes my food; Montana would tax my Social Security and annuity payments.
Wyoming would tax neither.
One good thing about a state income tax here in South Dakota: It would get me off my butt and on my way to off-the-grid living in Wyoming.
Black Hills Power might manage that motivation all by itself, but that's a topic for another rant.