Ending Hunger in America, 2014 Hunger Report Full Report | Page 68

AMERICA NEEDS REVENUE-RAISING,
PROGRESSIVE TAX REFORM
percent of the total income. On the other hand, the poorest fifth of Americans will pay about
2 percent of the total taxes this year and will receive only about 3 percent of the total income.
In other words, our tax system is not extremely progressive, and there is plenty of room to
make it more progressive.
Some proposals for “reform” would make the tax system less progressive. For example,
an influential conservative organization, the Tax Foundation, has recently issued reports
suggesting that the Earned Income Tax Credit (EITC) for low-wage workers should be eliminated while the special low tax rates for capital gains should be preserved.
This is exactly wrong. The EITC helps offset taxes that hit poor people hard, such as federal
payroll taxes and state and local sales taxes, and has been
shown to encourage holding a job. Meanwhile, the special
“Citizens for Tax Justice has
low tax rates for capital gains primarily benefit the richest 1
documented how several
Fortune 500 corporations
percent. These low rates are the reason wealthy investors
earned profits over a
such as Mitt Romney and Warren Buffett can pay a lower
three-year period, or even
effective tax rate than many middle-income Americans.
a five-year period, but had
Other proposals that would make our tax system less
so many tax breaks that
progressive involve expanding corporate tax breaks. While
they completely avoided
corporate income taxes
the corporate income tax is directly paid by corporations,
during that time.”
in the long run it’s borne by the owners of corporate stocks
and other business assets, which are concentrated in the
hands of wealthy people. For this reason, corporate tax breaks help wealthy Americans, not
low- and middle-income people. Citizens for Tax Justice has documented how several Fortune
500 corporations earned profits over a three-year period, or even a five-year period, but had
so many tax breaks that they completely avoided corporate income taxes during that time.
Simplifying our tax system can be another goal, but it’s not nearly as important as
raising revenue and making the system more progressive. Rep. Dave Camp (R-MI) and
Senator Max Baucus (D-MT), who chair the tax-writing committees in the House and Senate
respectively, believe that Congress needs to enact tax reform that has the main purpose of
simplifying our tax code.
In fact, Camp says that tax reform should be “revenue-neutral.” This approach might repeal
or reduce “tax expenditures” (special breaks and subsidies paid for through the tax code), but
the revenue saved would all be used to offset the cost of steep reductions in tax rates. The tax
code might be simpler in the end, but there would be no additional revenue raised.
Baucus says he believes tax reform should be “revenue-positive” to some degree, but he
has been vague and noncommittal. Many Democratic leaders have joined President Obama

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