Taxing the Poor, Sparing the Rich

Nobody likes paying taxes. I prepare my own returns with pen, paper and calculator, mainly so I can understand exactly how my tax burden is determined. Like many people, I wish the tax code were simpler.

The complications result from hundreds of individual Congressional decisions. Depending on whether you have other income, Social Security benefits could be tax free or up to 85% of them could be taxed. If you itemize deductions, you can deduct medical expenses that are more than 10% of your gross income, unless you are a senior, in which case anything over 7.5%. You can deduct business costs incurred as an employee that are more than 2% of your income.

Some parts of the tax code are so complicated that the IRS recommends not doing it yourself. If you have earned income from which payroll taxes were not deducted, the total amount withheld for federal taxes might be much less than what you owe. In that case you have to pay a penalty determined by form 2210, about which the instructions say, “Because Form 2210 is complicated, you can leave line 79 blank and the IRS will figure the penalty and send you a bill.”

It’s hard to see the forest for the trees in our tax system. We can miss the big issues, because the details are so convoluted. Why are we allowed to deduct fewer medical expenses than employee business expenses? If your income is $50,000, you can only deduct medical expenses more than $5000, but employee expenses over $1000 are deductible. That’s a benefit for high-spending professionals who can deduct travel expenses, while poorer families might face crushing medical bills with no tax break.

One feature of the forest that we often miss is the presence of other taxes. Illinois has a flat income tax of 3.75% and a state sales tax of 6.25%. Even the website Investopedia considers the sales tax regressive, meaning it “takes a larger percentage from low-income people than from high-income people”.

Nearly all the discussion in Illinois is about the income tax. Across the nation, and in Illinois, income taxes are the only tax that is not regressive. The proportion of their incomes that poor people pay in sales taxes across the country is an amazing eight times more than the proportion paid by the top 1%.

A non-partisan study of each state’s tax system finds this: “Combining all state and local income, property, sales and excise taxes that Americans pay, the nationwide average effective state and local tax rates by income group are 10.9 percent for the poorest 20 percent of individuals and families, 9.4 percent for the middle 20 percent and 5.4 percent for the top 1 percent.” That is, at the state level, total taxes fall heaviest on the poorest people.

Illinois has the fifth most regressive state tax system in the nation. We have the third highest effective tax rate on the poorest fifth of the population, 13.2%. Illinois taxes its poorest residents nearly 3 times as much as its richest 1%.

Republicans have made taxes into enemy #1 of Americans. But the policies they propose mainly help the wealthy. They always attack the income tax, the most progressive tax. They mock the work of the IRS and keep cutting its budget for enforcement, which means less ability to catch wealthy tax cheats. And they try to substitute sales taxes for income taxes.

The tax proposals of Ted Cruz show what conservative tax reform means. He would shift the burden of taxes onto the shoulders of the poor. No more corporate taxes at all. No estate taxes, a boon for the rich passing their wealth to the next generation. No more progressive federal income tax, instead a flat rate of 10%. The wealthy would gain enormously from that provision. And a new 16% sales tax, the most regressive of all taxes.

Overall tax revenue would decline, what Republicans always point to first about their tax plans. That decline, however would come from cutting the yearly burden of the richest taxpayers about $2 million EACH. Middle income taxpayers would get an average cut of about $1800, and over the long run, the poorest 20% would see an INCREASE in their total taxes.

Bruce Rauner won election as Governor of Illinois by demanding that the recent tax hike from 3% to 5% be rolled back. But he doesn’t really believe that Illinois can live with our new lower rate of 3.75%. He admits the need to raise the Illinois income tax again. He just won’t agree to a tax hike unless it is paired with anti-union labor reforms he wants. In his budget speech in February, he said that: “Let’s work together to enact a bipartisan, balanced budget with a mix of reforms, cost reductions and revenue.”

It turns out that even Rauner recognizes that taxes are necessary. The budget impasse in Illinois has mainly hurt the poor, by reducing their social services, by cutting MAP grants which help poor kids go to college, by threatening the existence of Chicago State University, whose students are the least advantaged.

Nobody is proposing reducing the burden on the poor. In that way, the Illinois tax system and the larger federal system are bipartisan and tilted toward the rich.

Steve Hochstadt

Jacksonville IL

Published in the Jacksonville Journal-Courier, May 3, 2016

Women in the Boston Marathon

My daughter-in-law ran the 120th Boston Marathon last week. She was one of 13,000 women in the world’s oldest yearly road race.

The very first marathon race, part of the revival of the Olympics in 1896, was won appropriately by unheralded Greek water carrier Spyridon Louis in under 3 hours. Eight of 17 runners finished, seven Greeks and one Hungarian.

The Boston Marathon was initiated the next year, April 19, 1897, to celebrate Patriots’ Day, which had been invented in Massachusetts in 1894 to commemorate the battles of Lexington and Concord in 1775, as well as the first bloodshed of the Civil War in the Baltimore riot of 1861. The Marathon was added to the patriotic holiday to link the American struggle for independence with Athenian ideals of democracy. The newly formed Boston Athletic Association was well organized: alongside each of the 15 runners rode a militiaman on a bicycle with water, lemons, and wet handkerchiefs.

Over the next 70 years, the race was transformed into an international event for men. The field ballooned from its usual 200 before 1960 to nearly 500 in 1965.

But women were banned in Boston. Into the 1960s, athletic authorities claimed women were incapable of running that distance. The longest AAU-sanctioned race for women was 1.5 miles. Women could not compete further than 800 meters in the Olympics.

By that time, Roberta Gibb was in her 20s. Accepted ideas about what women could and couldn’t do were no longer universally believed. Gibb watched the 1964 Boston Marathon and thought she could try it. She trained on her own for two years, including a trip across the US which combined driving and running. By the time she reached the Pacific Ocean, she could run 40 miles. But she couldn’t run Boston in 1966. The race director wrote: “Women aren't allowed, and furthermore are not physiologically able.”

Gibb took a bus from San Diego to Boston, arrived the night before the race, hid behind a forsythia bush near the start, and blended into the crowd of male runners as they passed by. She had worn a hooded sweatshirt to hide her illegal gender, but soon got too hot. She was worried that taking it off would get her in trouble, but the men around her said not to worry. “We won’t let anyone bother you.” The news that a woman was running spread quickly. As the runners passed through Wellesley, thousands of extra spectators cheered her. Fifty years later, Gibb remembered, “The women of Wellesley College knew I was coming and let out an enormous scream. They were jumping in the air, laughing and crying.” Her feet bled in her new boy’s size 6 running shoes. There were no shoes made for women. She finished in 3:21 in the top third of the pack, faster than average finish times for men today.

The press were excited by her story, but unable to understand her motivations. She was asked whether she had some axe to grind against men. Photographers followed her to her parents’ home, where they wanted to take pictures of her cooking. The BAA released an official statement: “There is no such thing as a marathon for women.”

All around her, Gibb had found acceptance and encouragement from runners and spectators. The authorities, the experts, the people in charge said women couldn’t do that. They meant that women, their idea of women, shouldn’t do that. After she did it, they said she was an anomaly, a freak. We won’t let you do that. Roberta Gibb was a freak in a sense – she was willing to reject their thinking and violate their rules.

That wasn’t enough, though. The next year, Gibb ran again unofficially. Jock Semple, the race director, ran into the street to tear the bib number off Kathrine Switzer, who had entered incognito as K.V. Switzer. Switzer’s running partner, a hammer thrower, body-blocked Semple, and other racers protected her.

In the years after Gibb’s first Boston marathon, the idea that women could do it, too, whatever it was, bubbled through American society. It took a movement to crash through the walls authorities had built around women.

Gibb ran again in 1968, beating four other women. In 1972, women were finally allowed to enter – 8 women started and they all finished. Title IX, opening all forms of school sports to women, was passed in 1972. That year women were allowed to run 1500 meters in the Munich Olympics. The first Olympic women’s marathon was held in Los Angeles in 1984.

The 2016 program of the Boston Marathon celebrates 50 years of women in Boston. Gibb was the Grand Marshall of Boston this year. My daughter-in-law did not have to hide or feel alone when she ran. She didn’t have to be an activist or a freak. She just had to be a runner.

Steve Hochstadt

Jacksonville IL

Published in the Jacksonville Journal-Courier, April 26, 2016

To White Men Who Like Trump

Fellow white men! Listen up, this concerns us. Donald Trump apparently has the most appeal among white men in middle age and beyond. That appeal seems to come from two places.

Some white men appear to be wildly attracted to Trump’s rhetoric about non-whites. People who rally behind the slogan “white power” love Trump, show up at his rallies, call out his name when they take out their rage on innocent non-whites, work in his campaign, and openly urge every upstanding white supremacist to support Trump.

Trump offers just enough tidbits to American racists to keep them happy: calling Mexicans “rapists” as the opening salvo of his campaign, retweeting a message from a racist website, and toying with his response to David Duke’s endorsement for two days.

According to Trump, non-whites here and abroad are the enemy, but they can be beaten back from our borders and held back at home. Nothing new in American political discourse, but harkening back to a past where white men ruled and everything was good.

If you are in that Trump camp, Democrats are certainly your political enemy. They will keep tinkering with American society, trying to reach a promised land of equality and social justice. Despite your objections, they know that we have not gone too far, but rather not far enough. Racial inequalities continue to make America less than it could be. You yourselves are some of the evidence. So vote for the racist of your choice. Even if Trump isn’t on the ballot, many of his Republican colleagues openly or stealthily appeal for your vote by promoting racist ideas.

It’s the white men who like Trump despite his racism who should think again about him. There is no reason to trust him or other Republicans on economic issues.

Listen to what Republicans have said about the economy before and now. In April 2008, presidential candidate Senator John McCain said: “a lot of our problems today, as you know, are psychological — the confidence, trust, the uncertainty about our economic future, ability to keep our own home.” Three months later, his political adviser Phil Gramm said, “You’ve heard of mental depression, this is a mental recession . . . . We may have a recession; we haven’t had one yet. . . . We have sort of become a nation of whiners.” On September 15, the day Lehman Bros. filed for bankruptcy, McCain proclaimed: “I think, still, the fundamentals of our economy are strong.”

By that time, the economy was already in free fall. Employment, the basis of economic well-bring for the majority of Americans, was worse 2008-2009 than it had been since the Depression. The unemployment rate was rising already in March 2008, and kept going up until the end of 2009, when it reached 10%, the worst two years since World War II. The gross domestic product fell in the first quarter of 2008 and after June fell for four consecutive quarters. It did not reach the level of June 2008 until three years later in June 2011.

Republican rhetoric about the economy was deliberately ignorant. They were in charge as the economy tanked, and then lied about it. They offered nothing to American workers and homeowners who were about to fall into economic depression.

Since then Republicans have consistently refused to help average Americans with economic problems. They refused to extend unemployment benefits as the number of long-term unemployed skyrocketed. They cut the food stamp program, which is used mostly by white families. They oppose raising the minimum wage, which has not budged in 7 years. They have tried to obstruct regulations which prevent banks from defrauding home buyers, one of the causes of the 2008 meltdown. And they want to demolish the health care reform which cut the numbers of uninsured Americans to the lowest level in over 20 years, dropping 20% because of the Affordable Care Act.

The economic program Republicans have offered to the American middle class has been remarkably consistent: give more money to the richest Americans by radically cutting their taxes. Here’s the Republican strategy. Appeal to the billionaires who fund their campaigns with the promise of tax cuts. Appeal to the white middle class with coded racism.

Trump, the billionaire who can’t be bought, could be an incorruptible friend of America’s workers. But he’s shown not the slightest sign that he cares about or will do anything for Americans who are struggling. Trump seems to be an opponent of the Republican establishment. But he’s offering the same “you too can be rich” motivational baloney that Republicans have been purveying for decades.

That’s exactly what Trump University proclaimed by using Trump’s face and words in their advertising campaign. It turned out he had nothing to do with those expensive courses taught by people who knew nothing about real estate. Trump University is probably the only institution of “higher learning” ever sued by most of its students.

That same scam is what Trump and the Republicans are offering to Americans who are hurting financially. The last Republican President created economic disaster, and their policies haven’t budged. White men, don’t fall for fake populism. Don’t fall for coded or open racism. Trump got famous for firing people, not hiring them.

Steve Hochstadt

Jacksonville IL

Published in the Jacksonville Journal-Courier, April 12, 2016