When I discuss taxes and equity, I teach my students about the benefits principle of tax equity (i.e., who pays the tax should correspond to who receives the benefits) and discuss this as one rationale for why we have a progressive income tax system. But students always have a hard time grasping the possibility that "rich" people benefit from government as much as "poor" people. This attitude is also contributing to California's budget difficulties since Republicans are insisting that the budget gap must be closed entirely with spending cuts - I can only assume that those who support this position are seriously underestimating the benefits they personally receive from government services. So I LOVED this editorial from the Sac Bee that points out the many ways that not-poor people benefit from state spending. I'll be using it next semester as the starting point for our discussion of progressive taxes:
The largest portion of the state's general fund budget (more than half, or $51.7 billion) goes toward education. Do no rich and middle-class folks send their children to public schools or to California's public universities? Do UC Berkeley or UCLA or UC Davis have no rich or middle-class kids?
The next-largest portion of the budget goes toward health and human services (about one-third, $31.6 billion). Do middle-class folks have elderly parents who need nursing home care? Costs average $4,500 a month. While some people can afford to pay this bill on their own, most seniors quickly exhaust their savings and assets. In fact, a majority of all the people in nursing homes in California have their care paid for by Medi-Cal.
Then there's the state prison system (more than 10 percent, $10 billion). Who benefits when convicted criminals are taken off the street and sent to prison – only the poor? C'mon.
The state also spends money on transportation and economic development (nearly 3 percent, $2.6 billion). Do the rich and middle class use roads, bridges, trains, airports and ports?
Then there's state spending on California's natural resources (2 percent, $1.9 billion). Do the rich and middle class enjoy the state park system? Do they get protection from wildfires? Do they get clean water supplies from the state's waters? Do they benefit from flood protection levees?
In the current economic downturn, are middle-class folks affected by job cuts? Might they need health insurance coverage or food stamps or unemployment checks while they search for a job?
Here's a modest proposal: Admissions fees to state parks that vary with the zip code of residence. We have zip code based income data, so let's charge higher admissions fees for park visitors who live in higher income zip codes. (I am, by the way, at least 60% serious about this.)
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