Should property and income taxes be abolished?

BY: Scott Hiley| August 22, 2019
Should property and income taxes be abolished?
QWhat is CPUSA stance on the FEDERAL Reserve Banking System? Income taxes and property taxes, should they be abolished?
AHi, and thanks for writing in.  You raise an interesting question. Since I'm a bit more familiar with the tax code than with the Federal Reserve, I'm going to concentrate on that.  But I think the basic idea is the same.  Unless we abolish capitalism, abolishing taxes and a central bank will just help the rich.

From CPUSA's perspective, the problem isn't taxation itself.  It's who pays taxes, how much they pay, and what the money is used for.  Basically, the working class and small business owners get screwed in three ways.

First, our tax system is extremely regressive, meaning less wealthy people bear a disproportionate part of the tax burden. We pay income taxes and property taxes (and sales taxes and gas taxes and cigarette taxes and canoe registration fees...).  Just about everything we earn or own is subject to taxation. That's not the case for the capitalist class.  Their main sources of income--inherited wealth and corporate profits/investment income--are treated more favorably in our tax system than the wages and salaries that provide most income for working people.  On top of that, since Ronald Reagan, successive income tax cuts for the wealthy have brought the top marginal tax rate (currently, the rate paid on whatever slice of your income is above $510,299) to less than half of what it was in the 1960s. So problem number one is that the rich don't pay their fair share of taxes.

Problem number two is that we have to make up the difference, in one of two ways: either by losing public services, or by paying higher taxes to keep them.  Here's an example from my political hometown, Chicago, which gets to the question of property taxes. Through a combination of financial mismanagement, outright graft, and an urban development policy designed to attract the very wealthy, the mayor and his cronies drove the Chicago Public Schools into a deep budget crisis.  They attempted to solve that crisis on the backs of teachers, students, and city residents by cutting teachers' pensions, cutting funding and services for schools, and raising property taxes.  The only option that wasn't on the table was the one that made the most sense:  a financial transaction tax of a fraction of a cent, to make the finance firms and executives pay for the red carpet the mayor rolled out for them.

Finally (and this is screwing-over number three), when it comes to spending the money, a lot of it goes into the pockets of the rich via government contracts.  Military spending is the clearest example.  About half of federal tax dollars go to the Pentagon, and a big chunk of that goes to privately owned contractors like Lockheed, Northrup Grumman, and General Dynamics.  Our tax dollars turn into profits for their shareholders.  The same is true in education, where standardized test companies and all sorts of for-profit hucksters peddling the latest tech fad suck up money that could be used to hire more teachers and counselors, renovate crumbling buildings, etc.

That's three ways in which our tax code is rigged against working people, but we should really add a fourth, the biggest tax of all, which gets paid directly to the capitalist class..  The wages and salaries paid to working people only represent a small portion of the  wealth that our labor creates. Every dollar that goes to the shareholders of a business for owning something, is a dollar that doesn't go to workers for producing something.  "We make it; they take it," as we say in our description of capitalism.

That gets to the real issue here.  Capitalism is based on an inequality.  The owners of capital receive privileges and protections that are denied to the vast majority of us who make a living by selling our physical and intellectual labor-power.  (That includes many doctors and engineers, just as much as construction and retail workers).

Because of this inequality, we can't talk about abolishing taxes without asking, for whom? Right now, abolishing income and property taxes would tip the scales even further in favor of the very wealthy. Whatever benefit most of us got from it would be more than offset by the reductions in public services.

What we need in the short to medium term is anti-monopoly tax reform--in other words, a tax system based on the needs of workers and small businesses rather than billionaire shareholders and huge corporations.  This is an off-the-cuff answer, but given the lopsided economic growth over the past 40 years, it's doubtful that anyone owning one or fewer homes and making less than $100,000 per year should be paying taxes at all.  Tax incentives and subsidies should be reserved for small businesses who create good jobs in their own communities.

In the short term, we are for redistribution of wealth: taxing the very wealthy to provide services for those whose labor creates that wealth.

But redistribution is not enough.  As we've seen with the Republican-led rollback of the New Deal, any gains workers make under capitalism can be taken away.  A real solution requires moving beyond how wealth is distributed to how value is produced.  What we need to abolish is the distinction between capital and labor, between ownership and production.  Put the economy in the hands of workers, rather than handing profits to billionaires and then trying to take them back through taxation.

Here's what I'll leave you with.  There is no such thing as a free market.  It's a fantasy. All markets--all economies and societies--depend on laws and institutions whose character is determined by the class that controls them. They can be set up in favor of the wealthy few, the owners of capital, or they can be set up in favor of the vast working-class majority.  In our new Gilded Age, it is becoming ever clearer that those interests are incompatible, and that the future of the working class depends on its ability to take control of the economy and governance of the state into its own hands.

Like the man said, we have nothing to lose but our chains..

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