Paying taxes is painful… but reading about them shouldn’t be.
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Remember last month when Secretary of the Treasury Timothy Geithner would not rule out a tax increase for the middle class to resolve our budget woes?
Well, apparently he’s changed his mind. Speaking this week, Geithner was asked the same question. This time, his answer was: “I don’t think so, no.”
So there you have it. Yes and no. (I still expect no.)
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This week, both the feds and states have been struggling with the idea of balancing the budget by making cuts or increasing taxes. Today’s Fix the Tax Code Friday question is:
If you had to choose, would you rather see tax increases or spending cuts? If “spending cuts” is your answer, are there any cuts that are completely off the table (i.e. health care, education, transit, military, terrorism protection)?
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With budget deadlines looming, many states felt that there were no alternatives to balancing the budget other than raising taxes or adding new ones. More than half of all states were considering significant tax changes to fill gaping holes… What a difference a few weeks and some angry taxpayers make.
New Jersey recently “found” more money than it had hoped for after setting up an amnesty program. Other states are filling holes by trimming budgets.
Consider Pennsylvania. Governor Ed Rendell had indicated that a 10% increase in income tax would be necessary to head off a budget crisis. It was all but settled until yesterday when a Democratic budget proposal yanked $1.3 billion in funding for some colleges and student-loan program. The result is a $29.1 billion budget offered by Rep. Dwight Evans (D – Phila), chairman of the Appropriations Committee. And Governor Rendell may be on board. Republicans oppose the plan, offering their own version of a bill which makes deeper spending cuts but reportedly lacks about $1 billion of needed revenue. Nonetheless, both parties have agreed that a tax increase isn’t necessarily the answer.
And despite concerns that talks of a tax increase may resurface next year, Illinois managed to pass a budget this week that results in no additional tax. Governor Pat Quinn had indicated that a 50% tax increase would be necessary to keep the state going but this week, the Senate and House voted overwhelmingly to borrow funds and delay other spending. The result is a budget that, for now, keeps Illinois out of a deficit and allows taxpayers a reprieve in tax increases.
Does this mean that tax increases are off the table? Not at all. But it is proof that legislators are listening to taxpayers – the answer doesn’t always have to be “raise taxes.” Other states – from North Carolina to Oregon to California – should take notice.
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