David Stockmann was director of the Office of Management and Budget under President Reagan and once a leading advocate of supply-side economics. Yet In a recent New York Times op-ed, he makes a point most frequently heard from liberals and progressives: America is in a period of rapidly and steeply rising inequality. Stockmann contends that both federal budget proposals, one by President Obama and the other by Republican Congessman Paul Ryan, would bring the nation “dangerously close to class war.” He writes:

This lamentable prospect is deeply grounded in the policy-driven transformation of the economy during recent decades that has shifted income and wealth to the top of the economic ladder. While not the stated objective of policy, this reverse Robin Hood outcome cannot be gainsaid: the share of wealth held by the top 1 percent of households has risen to 35 percent from 21 percent since 1979, while their share of income has more than doubled to around 20 percent. Read the rest of this entry »

We’re getting closer to launching the OK Policy Online Guide to Oklahoma Budget and Taxes, a comprehensive resource for understanding state and local government finance in Oklahoma. Most of the guide is factual in nature–how we collect tax dollars, how we spend them, how we make budget decisions, and where you can get more information.

We are an advocacy organization, however, so the Guide points out two major areas where we believe Oklahoma can and must do better. One is the ongoing fiscal gap between our ability to pay for services and our demand for those services. We’ll address that next week. For today, we’ll preview some of the Guide’s discussion of tax fairness.

This graph shows the percentage of income paid in taxes by each of  seven income groups. The regressivity of the system is obvious since the percentage paid in  taxes drops with each increase in income. Those who are in the lowest 20 percent of income earners–making $12,000 or less each year–pay 12 percent (one-eighth) of their income in taxes. The percentage of income paid in taxes falls slightly for each income group above the middle. Those in the top 1 percent–making $250,000 or more each year–pay 8 percent (one-twelfth) of their income.

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As states across the nation face a worsening fiscal crisis and the prospect of deep spending cuts, some policymakers and advocates are attempting to shine additional light on the traditionally dark corner in which reside the large and ever-growing array of credits, deductions, and exemptions written into state tax codes. Our friends at the Center on Budget and Policy Priorities have released an important and timely new report on tax expenditures, making the case for states to do a better job at providing information on the provisions written into the tax code that reduce state revenue. Read the rest of this entry »