Tax Day Resources: What Our Taxes Support and How to Make Them Fairer
April 12, 2012
As the deadline for filing state and federal tax returns approaches, we have put together the following resources to help you understand what your tax dollars support. We also highlight reports and educational materials on closing tax loopholes and improving overall tax fairness.
The federal government collects taxes in order to finance various public services, including Social Security, national defense and health care services. As federal policymakers and citizens weigh key decisions about revenues and expenditures, it is instructive to examine what the federal government does with the money it collects. The chart below is from the Center on Budget and Policy Priorities.
Where Do Our Federal Tax Dollars Go? Center on Budget and Policy Priorities
Federal Income Taxes on Middle-Income Families Remain Near Historic Lows, Center on Budget and Policy Priorities
Federal Budget 101, National Priorities Project
Who Pays Taxes in America? Citizens for Tax Justice
Policy Options to Raise Revenue, Citizens for Tax Justice
Ryan Budget Would Cut Taxes for the Rich and Make Seniors, the Disabled, and Children Pay for it, Economic Policy Institute
Tax Cuts in Ryan Budget Would Give Millionaires $265,000 on Top of Bush Tax Cuts, Center on Budget and Policy Priorities
Chairman Ryan Gets 62 Percent of His Huge Budget Cuts from Programs for Lower-Income Americans, Center on Budget and Policy Priorities
The Buffett Rule: A Basic Principle of Tax Fairness, The White House
Public investments by the commonwealth educate our children, keep our communities safe, move people to work over roads and transit systems, and care for seniors, children and people with disabilities. 87 cents of every state General Fund dollar is spent on education, health and human services, or public safety. See the graphic below detailing General Fund spending in 2011-12.
Learn More: Resources from PA Budget and Policy Center
Corporate tax loopholes at the federal level allow corporations to shift foreign profits into accounts in Ireland, the Netherlands, Bermuda and other tax havens to avoid U.S. corporate taxes. These gimmicks are so well known they have nicknames — the Double Irish and the Dutch Sandwich — and they have a huge cost, as much as $90 billion a year.
Corporate tax loopholes are a problem at the state level, too. Large multistate corporations like Wal-Mart and Home Depot use state tax loopholes to shift income earned in Pennsylvania to tax-haven states like Delaware, leaving little or no income on the books in the commonwealth. The Delaware Loophole alone costs Pennsylvania taxpayers $500 million a year.
State Tax Loopholes
Corporations in PA Asked to Disclose State Taxes, Keystone Research Center
Bill to Close Pennsylvania Tax Loopholes Doesn't Get the Job Done, PA Budget and Policy Center
Corporate Tax Dodging In the Fifty States, 2008–2010, Institute on Taxation and Economic Policy/Citizens for Tax Justice
A Majority of States Have Now Adopted a Key Corporate Tax Reform — "Combined Reporting," Center on Budget and Policy Priorities
Strengthening State Fiscal Policies for a Stronger Economy, Center on Budget and Policy Priorities
Commentary: Close the Loopholes: Pennsylvania Needs Fair Taxes, PA Budget and Policy Center
Federal Tax Loopholes
Big No-Tax Corps Just Keep on Dodging, Citizens for Tax Justice
Representation Without Taxation: Fortune 500 Companies that Spend Big on Lobbying and Avoid Taxes, U.S. PIRG and Citizens for Tax Justice
Obama’s Corporate Tax Plan Points the Way to Reform, Center for American Progress
The U.S. Has a Low Corporate Tax, Citizens for Tax Justice
Why We Need A Minimum Tax on U.S. Corporations’ Foreign Profits, Center for American Progress
A fair tax system asks citizens to contribute to the cost of government services based on their ability to pay. Pennsylvania's tax system performs poorly when it comes to tax fairness. The wealthy pay a small portion of their income in taxes, with a higher burden falling on lower- and middle-income families. As the table below shows, in 2007, the poorest 20% paid more than 11% of their income in sales, property and income taxes, while the top 1% paid less than 5%.
The ITEP Guide to Fair State and Local Taxes, Institute on Taxation and Economic Policy
The Impact of State Income Taxes on Low-Income Families in 2011, Center on Budget and Policy Priorities
Rich Americans Are Not Overtaxed, Center for American Progress
Misconceptions and Realities About Who Pays Taxes, Center on Budget and Policy Priorities
Pennsylvania's Tax System Among the Most Regressive
Working families in Pennsylvania pay a far higher share of their income in state and local taxes than their wealthiest counterparts. A study by the Institute on Taxation & Economic Policy found that middle-class earners in 2007 paid nearly double the share of their income in taxes than the very wealthiest Pennsylvanians. For minimum-wage earners, the share of family income spent on taxes was even larger. The study ranked Pennsylvania's tax system as the ninth most regressive in the nation.
Taxes Matter Series, The American Prospect and Demos
Tax Day 2012, National Priorities Project
Thinking About Tax Policy, Part 1: The Most Important Tax Reform Chart, Center on Budget and Policy Priorities' Off the Charts Blog
Thinking About Tax Policy, Part 2: Taxes Today Are Low, Center on Budget and Policy Priorities' Off the Charts Blog
Reality Check on Who Pays Taxes, Center on Budget and Policy Priorities' Off the Charts Blog