GPUSA National Green Program

PROGRESSIVE AND ECOLOGICAL TAX REFORM
Back to Program

Taxes should be scaled to ability to pay through progressive, graduated rates that place low taxes on low income people and higher taxes on higher income people. Taxes should also encourage the conservation and restoration of the natural environment, the ecological capital that is the foundation of the human economy.

The Greens thus support two tax shifts: from regressive payroll, sales, and excise taxes to (1) progressive income and wealth taxes and (2) ecological taxes on pollution, resource extraction, harmful products, and the use of our common wealth of natural capital (land sites according to land value; timber and grazing lands; ocean and freshwater resources, oil and minerals, electromagnetic spectrum, satellite orbital zones).

The federal tax system is the nation's biggest welfare system. In 1995, special tax breaks cost $456 billion. Most of these tax breaks went to rich individuals and corporations. Corporations got another $86 billion in direct subsidies. By contrast, welfare for poor people (Aid to Families with Dependent Children) cost the federal government $22 billion. Yet, to hear the politicians talk, social welfare programs are breaking the federal budget.

We favor eliminating tax loopholes. Subsidies should be on the budget, where we can scrutinize and debate them, not hidden as subsidies to corporate special interests in an overly complex tax code.

Since 1960, the tax structure has become less progressive. In the early 1960s, there were the first of many capital gains tax cuts. Then corporate income tax rates were cut. Then tax rates on personal income taxes for the highest tax brackets were cut. Then regressive payroll taxes for Social Security and Medicare were raised dramatically in the early 1980s, while tax rates for the rich were cut once again. Today, the federal tax structure is less progressive than it has ever been. We favor restructuring the federal tax structure so that it is progressive, with higher rates for high-income people than for low income people.

Another serious problem with the existing tax structure is tax rate competition among states and localities. It has a virtual civil war between states and localities offering tax breaks, subsidies, and other government favors to lure corporate investment into their jurisdictions. Instead of corporations competing for customers, we have states and cities competing for corporations. In addition, unfunded federal spending mandates force local governments to raise regressive property and sales taxes, further shifting the costs of government on to middle and low income people. To remedy these problems, we favor centralized collection of most taxes by the federal government, combined with revenue sharing with Community Assemblies, municipalities, counties, and states where decentralized administration of government services is rendered more democratic and accountable.

    The Greens propose:

  • Income Tax Simplicity and Progressivity: Enact a no-loopholes, graduated personal income tax with equal taxation of all income, regardless of source. Provide an income tax credit for each dependent to replace and fully compensate for the current exemptions and deductions that benefit to the average taxpayer, such as the home mortgage deduction and medical deductions.
  • Universal Social Security: A Basic Income Above the Poverty Line for All: Build into the progressive income tax a guaranteed minimum income that maintains a modest standard of living. Everyone will receive a Basic Income Grant, paid in monthly installments like current Social Security. However, this income will be included in the income tax base, so that everyone will receive a basic income floor, but the cost of providing it to those who don't need it will be recovered through the progressive income tax. Universal Social Security will combine entitlement universalism with tax universalism, thus ending the political isolation of means-tested programs and the fiscal irresponsibility of entitlement universalism regardless of need. Universal Social Security would replace the existing Social Security system and the stingy, punitive, and intrusive Temporary Assistance to Needy Families.
  • Maximum Income: Build into the progressive income tax a 100% tax on all income, regardless of source, over ten times the minimum wage. With this Ten Times Rule in effect under today's extremely unequal distribution of income in the U.S., a 100% tax on income above ten times the minimum wage would allow us to cut the income taxes of everyone in the bottom 99%, by over half for the top brackets, by over three-quarters in the middle brackets, and totally for the lower brackets-and still generate about 40% more tax revenues than under the current income tax structure.
  • Ecological Taxes: Phase in ecological taxes on pollution, resource extraction, harmful products, and the use of our common wealth of natural capital (land sites according to land value; timber and grazing lands; ocean and freshwater resources, oil and minerals, electromagnetic spectrum, satellite orbital zones). Ecological taxes will price socially and ecologically damaging production practices and products at their true social and ecological costs. These taxes would steer the economy away from damaging production practices and products and encourage ecologically benign substitute technologies and products to enter the market. Products that might have Eco-Taxes added on to their price include gasoline, pesticides, household and lawn chemicals, air conditioners, jet travel, and disposable products. Eco-Taxes would be revenue neutral, with the revenues received dedicated to subsidizing the development of ecological production and products.
  • End Corporate Welfare: Take the Rich Off Welfare: Eliminate loopholes in the personal income tax such as accelerated depreciation, special capital gains treatment, and home mortgage deductions for mansions and second homes. Replace existing hidden off-budget subsidies in the form of tax breaks on corporate income taxes with direct on-budget subsidies if they serve a vital national interest, such as building low-income housing and developing of worker and community-owned cooperatives. Off-budget tax-break subsidies should not be used as economic incentives. Incentives to the private sector should be direct grants, subsidies that are scrutinized as part of a regular budgetary review process, not covertly distributed by an arcane tax code.
  • Eliminate Regressive Payroll Taxes: Finance increased social security and health care benefits through progressive income taxes instead of regressive payroll taxes.
  • Progressive Taxes on Corporate Revenues and Assets: Since the 1960, corporate income taxes have been cut repeatedly. The share of federal revenues from corporate income taxes has declined from about one-fourth in 1960 to about one-eighth today. The effective corporate tax rate declined from around 49% in 1950 to 26% by 1995 due to the many loopholes and complexities in the tax code. Corporations should pay their fair share. The Greens propose to replace the corporate income tax with progressive taxes on corporate revenues and assets. The a no-loopholes revenue tax would be far simpler to pay and administer than the income tax based on corporate profits, which can be manipulated and hidden in complicated accounting practices. A progressive revenue tax of 5% for businesses with sales less than $500 million and 10% for business with sales over $500 million would raise enough taxes today to bring the corporate share back to its level in 1950. Retail businesses, with high expenses for inventories, should be taxed on net revenues (gross revenues minus cost of inventories). The progressive tax on assets would discourage mergers and acquisitions and encourage more humanly scaled enterprises.
  • Wealth Tax: Enact a steeply progressive tax on net wealth over $2.5 million (the top 5% of households).
  • Inheritance Tax: Replace the loophole-ridden estate tax with a no-loopholes, progressive inheritance tax on inheritances over $1 million.
  • Stock and Bond Transfer Tax: Encourage a shift from speculative to productive investments through a federal stock and bond transfer tax on all securities transactions.
  • Currency Speculation Tax: International currency speculation sabotages domestic policy by affecting the value of the dollar. It diverts firms from using their capital productively and increases international monetary instability. Currencies should trade hands to finance real economic activity, not reap instant windfall profits. The U.S. should support an internationally uniform tax on currency conversion to discourage speculation. Revenues from the currency speculation tax should be channeled through international agencies into ecologically sustainable, democratically controlled development in poor countries.
  • Fiscal Federalism: Revenue Sharing and State and Local Tax Relief: The federal government should be the principal source of tax-revenue collection in order to avoid tax rate competition among jurisdictions and in order to overcome the disparities in tax-base potential among jurisdictions. A federal system of revenue sharing and fiscal federalism should be established which combines centralized tax collection (to discourage tax rate competition) with decentralized administration (to maximize local democracy and accountability). The federal government would fund all federal mandates and, in addition, make substantial block grants to states, counties, municipalities, and citizen assemblies on a per capita basis, with a supplementary adjustment (like the financial-equalization entitlements of the Canadian system of revenue sharing). The supplementary adjustment would equalize the revenue capacity among richer and poorer jurisdictions, so that all jurisdictions have sufficient resources to provide reasonably comparable public services at reasonably comparable levels of taxation. States, counties, municipalities, and Community Assemblies would be free to add their own taxes, but all would have a floor of revenue from the federal government enabling them to provide tax relief from regressive state and local sales, excise, and property taxes.
  • Peace Tax Fund: Until there is complete and general disarmament, we support the U.S. Peace Tax Fund proposal, which would allow citizens to direct their tax payments away from funding the military in a manner analogous to provisions for conscientious objection to military service.


GPUSA members are encouraged to participate
in the re-write of the Green Program.

www.greenparty.org