In short, the Republicans were plain wrong when they shrieked that President Clinton's taxes were going to whack the middle class and hurt the economy. The tax season is closing with a calm that's frightening only to Republican strategists.
Polls show that high taxes, once a dominant issue, have declined in people's minds relative to other concerns such as crime and health care. That's important because if taxes were politically untouchable, the federal government would be hamstrung in trying to attack domestic problems - including the deficit.
Ideally, in place of the tax-cut fever of the 1980s, there will be a thoughtful discussion of what people need from their government - and to spread those costs among households and businesses. In their new book - America: Who Really Pays the Taxes? - Inquirer staff writers Donald L. Barlett and James B. Steele conclude: "While many people in and out of government maintain that taxes are too high overall - that the combined federal, state and local tax burden is crushing - the real problem is not the
size of the burden, but how it is distributed." We concur.
This year, most of the wannabes for Pennsylvania governor are falling over themselves to offer tax cuts to business. Yes, the total tax burden on Pennsylvania's business is too high for a robust economy, but remember, Pennsylvania does not have high taxes overall compared to other states. There's a danger that this rush to slash business taxes will force the state to scrimp in major problem areas such as education and welfare reform.
Pennsylvania lawmakers would do well to address a basic flaw in the system: The income-tax rate on folks with modest incomes is the same as the rate on millionaires: 2.8 percent. Creating a progressive income tax, with higher rates on the affluent, would bring in more revenue and be more equitable.
At the same time, since this is Tax Day, we'd like to restate our conviction that federal tax cuts for the middle class are unaffordable - and that certain taxes should be increased. Upping the gasoline tax - which annually raises nearly $1 billion per penny per gallon - would slash the deficit while discouraging gas guzzlers.
Another overdue change is to start taxing capital gains on stocks and other
investments after the owner dies - which the Congressional Budget Office estimates would bring in more than $8 billion a year. Just like last year's little bump in the gas tax, the taxpayer wouldn't feel a thing.