Incorruptible Mass

13. How can we fund everything? Progressive taxation is a no-brainer

July 20, 2021 Anna Callahan Season 4 Episode 13
Incorruptible Mass
13. How can we fund everything? Progressive taxation is a no-brainer
Show Notes Transcript

Join us this Saturday, July 24, at 11am on the Boston Common for a live recording of the podcast! Post a limerick about how bad our State House is on twitter with the hashtag #IMjuly24 for your chance to have your limerick read on the air! 

It would be easy to fund everything we want at the state level, if only our State House had the guts to do it. The Fair Share amendment, taxing unearned income, public banking and single payer medical care all play a part.

Jordan Berg Powers, Jonathan Cohn, and Anna Callahan chat about Massachusetts politics. You can watch this episode on youtube.

You’re listening to Incorruptible Massachusetts. Our goal is to help people understand state politics: investigate why it’s so broken, imagine what we could have here in MA if we fixed it, and report on how you can get involved.

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Producer 0:00
[This transcript was produced by a computer program then hand edited. It may still contain inaccuracies. The audio is the authoritative version of this podcast. Last edits were made on 7/21/2021 by CFH and AH.]

Anna Callahan  0:03  
Hey there, welcome to Incorruptible Massachusetts. Our goal here is to help people understand state politics, to investigate why it is so broken, to imagine what we can have here in Massachusetts if we fixed it and to report on how you can get involved. I am, as always, joined by my inimitable co-hosts. Jordan Berg Powers, do you want to introduce yourself?

Jordan Berg Powers  0:28  
My name is Jordan Berg Powers, I use he him and I have 11 years experience in progressive politics in Massachusetts.

Anna Callahan  0:35  
Jonathan Cohn 

Jonathan Cohn  0:36  
Jonathan Cohn, also he him, based out of Boston and I have eight years of experience with progressive issues and electoral advocacy here. We're nearing the eight year anniversary of my moving here. 

Anna Callahan  0:47  
All right!

Jonathan Cohn  0:48  
August 1.

Anna Callahan  0:50  
And I am Anna Callahan from Medford, she her, and I've been around doing some state level stuff for a couple years at least. So today we are going to talk about progressive revenue. But before we do that, we're going to remind you all that we are going to be doing a live broadcast of the podcast this Saturday, July 24, at 11am on the Boston Common. It's going to be super fun, and just to let you know how fun it's going to be, we are going to have a Limerick contest on Twitter. We hope you'll all join in. It's pretty fun. If you want to have your Limerick read on air on Saturday, then you can just tweet it out with the hashtag. #IamJuly24. And we will put that out on Twitter. So I'm just gonna go ahead and read one that we wrote in like five minutes with some of my volunteers from Incorruptible Mass. So here goes our first Limerick: my bill just went into committee, we all know it's gonna be shitty, we can't see their votes or even the notes, it will never get passed what a pity.

Anna Callahan  2:05  
So, you know, it doesn't take but five minutes to write one of these, probably less. That was maybe two minutes. And it's pretty fun. So we look forward to hearing what you have to say on that point. And by the way, any short poem in any language is also invited. We would love to hear those as well. Okay, so first of all, we're gonna kick this off by mentioning the fact that there is a three and a half trillion dollar infrastructure bill at the national level. It has a lot of things in it. And you know, some great stuff: pre K, personal time off. They tried to fit in the pro act. There are a lot of things trying to fit into this bill. And what's probably going to kill most of those things is pay-fors. And you know, at the national level, when you are the part of the government that literally creates all dollars that exist in the world, there is no reason for pay-fors. No reason for pay-fors. Do you guys have any thoughts on this? 

Jonathan Cohn  3:19  
It reminds me that on the federal level it's always funny when politicians start talking about the deficit because anytime any politician invokes the deficit it's always as a smokescreen to talk about whether or not they want something. You never talk about the deficit if you want something. Most politicians are perfectly happy to spend large sums of money on on weapons systems that don't even work and will never invoke the deficit as a consideration of whether or not we can purchase additional weapon systems. But when it comes to things that might actually help ordinary people, 'do we really have the money?' And so that's always a very striking contrast. And the other initial thing I'll comment from following the recent debates is how pathetic it is, to me that a mediocre bipartisan infrastructure deal is getting rocky because republicans don't agree with the idea of using increased IRS enforcement of rich people as a pay-for. It's like, you're just admitting that you support tax evasion by rich people. Yep. Got it. 

Anna Callahan  4:31  
I mean, weapons and tax cuts for the rich are the typical ones that like nobody ever asks how we're going to pay for those. 

Jonathan Cohn  4:37  
Exactly. 

Jordan Berg Powers  4:39  
I mean, we could if people were really concerned about paying for things, then you would tax rich people, right? It's not that complicated to figure out where the money is for all of these things that we would like to spend on. It's going to it's going into space, today with Jeff Bezos and all these rich people. So like we could just tax them, we could close all these loopholes and tax rich people, and then we would have money, right? Like, it's not that complicated at any level of government, where we should be doing as more and more as more and more of our hard work. And then time and hours that we put into the economy gets siphoned off to rich people's bank accounts. We know exactly where to go for the pay-for.

Anna Callahan  5:19  
I love that framing of it. It's like, Where is the money in the economy? Like, it's a simple question. The money in the economy is in the bank accounts of the Uber wealthy. So that's where we tax it.

Jonathan Cohn  5:32  
Reminds me as well that tax enforcement stuff is like you're trying to look after the missing money, should we go to like people who are receiving government benefits, and might have been paid slightly more, or the guy who just took a joy ride into space?

Jordan Berg Powers  5:49  
Right, and had paid less taxes.  Maybe we should figure out what that what happened with that? Yeah. One of the things, because there was a big push in Massachusetts to try to go after poor people for the so-called money that they were losing. And one of the things I would tell people is I will take seriously that Massachusetts cares about its tax revenue, when it starts going to all the boardrooms of the tax breaks it gives to people and starts asking them to account for all the water bottles and all the things that they're doing with their money, right like all those tax cuts, when we start knocking on fidelity's door, and Susanna [INAUDIBLE] does an audit of the money that we're giving to fidelity, then I will take seriously that they care about how our tax dollars are spent, but it's always poor people who are just like, every dollar needs to be perfect.

Anna Callahan  6:42  
Let's frame this conversation a little bit, because we just mentioned that at the national level, like you don't got to worry about how to pay for it, you really don't. And that's a whole different discussion that people get very into. Right now, what we want to do is contrast the state government from the national government. So our state cannot print money, it could does not create money, like our state, just like any of us, just like a company, has a budget, and it has to bring in revenue, if it wants to be able to pay for anything, for roads and bridges, for education for all of the things that we pull our money for, that money has to come from somewhere. And so the question is how should we bring in more revenue for the state of Massachusetts?

Jordan Berg Powers  7:34  
Yeah, I just want to say that like, one of the things that drove me the most crazy about President Obama is he would say, like the federal government has to live within its means and the federal government, like you and I can't print money, we don't have a money machine. But you can like that's a silly argument. But also like, you know, I don't know, I did pay cash for this house, like I did balance my budget when every month, like every month, I have debt, right? And the state is the same in that way. It is like us, just as you said and it has to either pay its debts, which it has a big debt load, we have a big debt load, or it has to raise revenue, right, we've got to figure out one way or another. And one of the things that I think people don't know about Massachusetts is we have this thing called a structural deficit, which is that we take in less revenue than we purport to spend. So what does that mean? It means we say, as a community, we think that these things are worthwhile: making sure the homeless can be housed, making sure we feed people making sure poor people don't starve on the street, making sure we're doing things with our schools. And the money, the revenue we bring in is less than the things that we have made promises to people, right. We count on people not accessing benefits, we count on people not using the things that they're entitled to, to be able to balance budgets, or we borrow money, right, like that's an unsustainable, it's a terrible way to run it. But we have a structural deficit, we take in less than we spend, that we promised people would spend on them. 

Anna Callahan  9:05  
And this is a decision that our state reps make year after year. 

Jordan Berg Powers  9:09  
Yes. Yeah. And a few years ago, I don't know what the structural deficit is now. A few years ago it was 1.3 billion. So we were just, we were spending way more. We promise people things but we can't deliver.

Jonathan Cohn  9:24  
And I've been thinking about the state. One think that I think so is surprising to people when you remind them of it is that Massachusetts has a constitutional flat tax. So we recognize  that flat taxes are a terrible terrible idea like who was the nine nine guy? Herman Cain? 

Jordan Berg Powers  9:44  
Herman Cain. 999. 

Jonathan Cohn  9:46  
His idea was of basically having like a flat 9% tax, right. We recognize that whenever we see discussion on the federal level of a flat tax hat's terrible. That's terribly regressive. We've long since had a graduated federal income tax. But in Massachusetts, we still have that because of what happened 100 years ago, when they authorized the existence of income taxes at all snd the senate chose to leave out any type of graduation for it. We have a we have a constitutional flat tax.

Anna Callahan  10:20  
 And there there are over 30 other states that have progressive taxes.

Jordan Berg Powers  10:25  
Yeah, in their state revenue, right. So this on income, you know. We haven't been talking about wealth, you know, which is another way that people generally think. So it is bonkers. We think of Massachusetts as a progressive state, but we have a regressive taxation system, you know, the more that you have, the less we ask of you. And it's like, think about that, think about that for a second, you're a poor person, we ask more of you, the state requires you to give it more than somebody who has plenty that's over abundant. Right? We're asking less of that person. Even though they require more of the services, they require more of the protection, right, the protection goes for them to protect their wealth, their privilege, those things, they, you know, they use more resources, they use more roads for whatever, they use more infrastructure, they use more electricity, right for things that generate income for them. They require more services than we do. And yet they pay less of it.

Anna Callahan  11:27  
I was just talking to somebody on the phone who said, 'Oh, but isn't Massachusetts doing a lot better than most other states? And like, no, we are not, in fact, even our capital gains taxes when you talk about you know, income tax, and when you're mentioning wealth tax, well, wow, that'd be a dream. But capital gains taxes, these are this is income people bring in that is not earned. It is income that people are not working for, they don't have to spend a minute. It happens while they're sleeping. And we have very low taxes on that income. We allow wealthy people to simply just get wealthier without taxing them in the way that other states do. And Jonathan, you had a great point you know, you were talking about the different percent of Ingress...

Jonathan Cohn  12:13  
Yeah there's this big graphic from Mass Budget, shout out Mass Budget, from 2018, with a look at the percentage of personal income paid in state and local taxes, by different income brackets. And by their calculations, which I think that they credit the information to the Institute for Taxation and Economic Policy, finds that the bottom 20% of Massachusetts residents pay about 10% of their of their total income and state and local taxes. And that's mix of sales and excise taxes, property taxes and income taxes. And the top 1% can be people making more than $680,000 in the year, they pay 6.8%. So they actually pay a smaller share of their total income in taxes, which is striking when you realize that because such a thing, because when that combination of flat income tax rate, as well the way the way that kind of property taxes and sales taxes will hit people on the lower end more, we're letting that top 1% get away with a lot. Thry get away with paying a lot less than they really should in the state. It also reminds me a,lthough we'll be having a a slightly more graduated system fingers crossed if the fair share amendment passes next year on the ballot, to have a 4% surtax on income above a million dollars. It's good that the legislature made the right call about putting that on the ballot. But it's been disappointing to see the legislature in recent years reject efforts to tax unearned income more. Because unearned income is predominantly something just for the highest tax brackets. There's another thing just last year from Mass Budget that noted the three ways that the tax on unearned income could get to 9%. That's not really affecting anyone in the bottom 80% of earners in the state. It was funny to watch legislators talk about the need to protect the working class people who have like that much money and capital gains income in Massachusetts.

Anna Callahan  14:33  
This is kind of a legislating thing, right? This is like one of those weird, convoluted, illogical pieces of logic that they use to try and defend their positions.

Jonathan Cohn  14:42  
Yeah.

Jordan Berg Powers  14:43  
Yeah, I mean, let's talk about what that feels like for most people. So in Massachusetts, you know, regular people feel overtaxed, even as actually Massachusetts has moved away from the so called taxachusetts and moved right into the middle of taxation, and the reason is that for regular people, especially people who are struggling, Massachusetts acts as more of them than we do rich people, right? So the burden of keeping the state afloat is on the backs of people who can least afford it. I mean, that's such a bonkers thing. And so that's where a lot of that mistrust, that frustration, that feeling like people are getting one over on you comes from. It comes from that direct feeling that people who can afford to go to space as fun, get to do whatever they want. And regular people are struggling to figure out how to pay their next bill, and the government is fee-ing them to death, right? We have a fee for this, we have a fee for that, we have a fee for this. You know, in my dream we're not just having progressive taxation for income, like your speeding ticket should be progressive, you know, the things that you do. And there's there are countries that do this, right, like, the more you have... 

Anna Callahan  16:06  
 Finland? 

Jordan Berg Powers  16:07  
I think it is yeah, so the more that you have, the more that you should pay into the system, right? Like somebody who gets a ticket who can afford it should pay more than somebody who can't, right? There are people who get caught in the criminal justice system because of fees, right? This is a system of oppression that people get put in and we should make all of those progressive, it should be based on what you can afford.

Anna Callahan  16:29  
And you mentioned fees, and I want to bring up public banking. So people this is, it's kind of a wonky subject, I know. But basically, if you think about your city, and all the potholes there are and all of the projects the city wants to do, you know, what normally happens is cities will go to Wall Street, to go to Wall Street banks, they will borrow millions of dollars. And in order to borrow that money, they gotta pay millions of dollars in fees and interest, millions. And that money is leaving the state. That is our money that is just getting like they're getting raked, we are getting raked over the coals, because they can because these cities can't go anywhere else. And so millions of our tax dollars, municipal tax dollars, are just being sent away into Wall Street banks and into the pockets of the Uber wealthy. Whereas our state legislature refuses to pass a bill to enact a public bank. And basically, it's a no brainer, all that would do is save all of our cities and towns millions of dollars. That's all. There's no there's no real downside to having a public bank. And yet, they will not pass that we had a whole podcast on it, you know, in season one if you want to go back and figure out why. But this is another piece of that puzzle, like we should not be allowing that transfer of money up. 

Jonathan Cohn  17:58  
Just a quick thing back to the point about Finland, I was just fact checking that and Finland does have that. A 2015 article in The Atlantic notes that 'the fine was so extreme because in Finland, some traffic fines as well as fines for shoplifting and violating Securities Exchange laws are assessed based on earnings. Exorbitant fines like this are infrequent but not unheard of. In 2002, a Nokia executive was fined the equivalent of $103,000 for going 45 in a 30 zone on his motorcycle.' 

Jordan Berg Powers  18:31  
And we think that's a lot, but that's pocket change for him. 

Jonathan Cohn  18:34  
Exactly. But like that's the thing that if you think about that, if a regular person might get like $100 fine, that actually would be about an equivalent impact on income for them as his $100,000 fine.

Jordan Berg Powers  18:51  
Yep, I just want to say again, that I listened to that podcast about the public bank, and I just cannot encourage it enough. A public bank is one of the most important things that we could do as a state economically, there's just also really fun things we could do. Like we could give the benefit of the money back to residents in Massachusetts, like, you know, a lot of times it goes back into the bank, but there's no reason we don't give that out as a dividend publicly to to citizens, right. Like there for people who like in Alaska, right. So there's so many things, right? Imagine if your tax dollars, went to pay for the roads and the bridges and the stuff in the town, and then they finance that through the public bank and then the benefit of that went back to you. That's a system that we could do tomorrow. It's done in other places. I think North Dakota has a public bank, we could do it tomorrow - if the legislature were serious about caring for regular people. 

Anna Callahan  19:45  
That's right. And I'm let me bring up one more. I'm just going through my pet policies, right. You know, if we passed a Medicare for all style single payer system here in Massachusetts. And I was just kind of looking at the stats. There was a great study done It would save over 15% of our current spending on health care in the state, it would save $21 billion. I believe that's over 10 years, but don't quote me on that. So people ask like, 'Oh, well, you know, how can you pay for it, you know, that's pie in the sky'. It is not, it's not only something that would benefit every person in Massachusetts, to be able to go to the doctor, imagine going to the doctor and never having to worry about paying a bill. Never. And having all your medical expenses, completely regular and lower than what you're paying now. That is what that solution is. And it would save our state money. Our state government would also save money. I mean, it is a total no brainer.

Jordan Berg Powers  20:48  
Yeah, I mean, just think about all your, again, where we're spending, unlike, you know, whenever we do spend money as a state or think about spending as a country on education, the part that we always miss is we just do total dollars, but a good percentage anywhere, depending on the study, you see, 20 to 40% of the dollars we spend on education goes to private health insurance companies, right? We're paying for health care for teachers. So think about that. So like we don't like we think of it as dollar spent in the classroom. But that's not right. When you take out healthcare spending, we're spending not much better than a developing country on education. If you think about all the money that gets siphoned off to things that aren't actually helpful to kids. Now, a healthy teacher is helpful to kids, I guess I should rephrase that. But if we had single payer, that is a cost that would come out of your municipal government, would come out of our state government out of our federal government, and go to where it belongs. And it would obviously lower the cost, as Anna has said, because we would be spending less and less going to all the ways that we misspend on health insurance, as well as having outcomes that, you know, would be better, like when you got sick if you go to the doctor. 

Jonathan Cohn  21:58  
Imagine.

Anna Callahan  21:59  
Imagine. All right, what are some of your other pet revenue, dreams, things we should already be doing, if only our state legislature actually cared about about us?

Jonathan Cohn  22:16  
One thing I'll just give a quick shout out to that's had some organizing locally on and the state needs to effectively authorize municipalities' ability to do it, is taxing high end real estate transactions. because that'd be a good way of raising money for affordable housing, and help to curb speculation happening in some of the higher end real estate markets in the state. Like I can just see out of my window, like the One Dalton project and Back Bay, where it's like, I don't know how many of those are not just like investment properties.

Jordan Berg Powers  22:50  
Yeah. Which is the other thing that we can't that you can't do, but should be able to do, which is there should be an occupancy tax. 

Jonathan Cohn  22:58  
Yeah.

Jordan Berg Powers  22:59  
We should just tax at 90% or 99% apartments, condos, things that are left empty, right? If they're just sitting around, you know, that's? 

Anna Callahan  23:11  
Or fill it with people.

Jordan Berg Powers  23:13  
Well, that's what it would do. It would force you to fill it with people, right? Like it would take those rentals, those places that are just left empty and force people to occupy them with someone. Right. So it doesn't mean that you can't rent out, it just means that like you can't leave it empty for the purposes of leaving it empty as an investment property, which is what a lot of happens downtown. It's just places to sit money. They don't even care if they lose money on it, because it's safer than whatever government they're trying to hide the money from. Yeah, there is so much we could be doing to tax people who have a much... I'll just say the last one for me is corporations themselves. So there's a few things that we do poorly around taxing corporations. The first is we also have sort of a flat tax on corporations. And there is a minimum tax that you're supposed to pay. That's like, I think it's it's a couple $100 is nothing. 

Jonathan Cohn  24:08  
Yeah. 

Jordan Berg Powers  24:08  
And we could make that based on your profits. We could tier it. So if you have lots of profits, we could ensure that you're paying a minimum tax to Massachusetts, to say like, it doesn't matter how many loopholes you have, it doesn't matter how you try to get your fee down, you have to pay this no matter what. And we can lower it. We could keep it the same for small businesses who we obviously think we want to support and be helping and protecting. And then the other thing we could be doing is just generally taxing profits of corporations here in Massachusetts a little bit better. Instead, we continue to give tax cuts to them. Again, Massachusetts passed a tax cut that the federal government was like, 'wow', like even Trump's Trump tax cuts. were like, 'this is too bonkers for us. we're gonna raise taxes on this'. And Massachusetts was like 'let's lower the taxes on that'. Our Democrats were to the right of Trump on taxing corporations, if you ever want to know how bonkers our state is. So there's just no tax cut for corporations that this state won't give away. And meanwhile, other places, even Trump's federal government is like, 'this is extreme, we got to rein this in.' And so that's just a place where whenever we try to tax corporations, they always trot out these small businesses. And one of the things I think, progressives, we as a movement have done poorly, is we really haven't separated small businesses from large corporations. And like, they have nothing in common with each other, they have no shared interests. And if anything, they are an impediment to your survival, right, like Walmart and all of these places want to crush those small businesses. So yes, we have a vested interest in protecting and protecting them more so than the Chamber of Commerce, which does not care about, will never advocate for them. And so that's just a place that we should be separating people. And one of the ways we can make our values clear is through taxation. We should make clear if you make a certain amount of profits, you pay more, end of story.

Anna Callahan  26:17  
I love it, I think we've kind of scratched the surface here of how much our state is not doing what we need it to do. So thank you so much. I hope that we see everybody live in person on July 24th, this upcoming Saturday at 11 o'clock on the Common we'd love to see you there. 

Jordan Berg Powers  26:40  
Yeah, bye.

Jonathan Cohn  26:41  
bye.