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Wealth Inequality


DEL GALLO TAX POLICY

1 – Del Gallo favors become the 34th state to implement a graduated income tax with heavy taxes on the very wealthy far and above 5.10%, especially on incomes above $500,000 per year.

2 – Del Gallo generally supports progressive taxes (or also called “graduated” taxes), does not believe flat tax rates are fair (the same percentage on all income earned), and is generally highly disinclined to support regressive taxes and/or user fees except in some highly select circumstances.  Under regressive tax schemes (such as, but not limited to flat “user fees”), the poor actually pay a higher percentage of their income for a given tax.

3 – Del Gallo favors amending the Massachusetts Constitution to allow for a progressive or graduated income tax and other taxes on other “classes of property.” (Article 44).   Massachusetts would become the 34th state in the nation with a graduated income tax.

4 – Del Gallo supports taxing the income and acquired wealth of the super-rich.

5 – Del Gallo supports “Raise-up Massachusetts” proposed “Millionaires Tax” which is a “constitutional amendment [that] would create an additional tax of four percentage points on annual income above $1 million.”

SOURCE: http://raiseupma.org/2016/05/18/press-release-constitutional-amendment-to-raise-additional-revenue-for-transportation-and-public-education-advanced-by-legislature/

6 – Del Gallo supports increasing the “The Property Tax Circuit Breaker”

Massachusetts imposes a 5.10% tax (effective January 1, 2016) on both earned income (salaries, wages, tips, commissions) and unearned income (interest, dividends and capital gains.); certain capital gains are taxed at 12%.  It actually dropped from 5.15%

SOURCE: http://www.mass.gov/dor/all-taxes/income/
SOURCE: http://www.masslive.com/politics/index.ssf/2015/12/massachusetts_tax_rate_will_dr.html

This is a table of various Massachusetts Tax Rates:
http://www.mass.gov/dor/all-taxes/tax-rate-table.html

Some statistics to keep in mind, repetitiously cited by Bernie Sanders, are:
In America, the top 1/10 of the top 1% of the population has as much wealth as the bottom 90%.
The top 20 people in our country own more wealth than the bottom 150 million Americans, almost ½ of our population;
The Walton Family of Wal-Mart, worth $ 149 billion, has more wealth than the bottom 40% of Americans.”
Despite having the most productive workers in the world, our wages have gone flat while almost all new economic growth is siphoned off by the wealthiest.

And there is another fact to bear in mind:
33 states have a graduated income tax: Massachusetts is not one of them.  We can institute a graduated income tax so the rich pay their fair share.

SOURCE: http://taxfoundation.org/article/state-individual-income-tax-rates-and-brackets-2015

The top income rates were 90% during the Eisenhower administration.
Source: http://www.politifact.com/truth-o-meter/statements/2015/nov/15/bernie-s/income-tax-rates-were-90-percent-under-eisenhower-/

If you click on the link below, you will see a history of the federal income tax, with its nominal rates (that is rates for each range of dollars earned).  As you go up and down the tables, one can quickly see the nominal rates for the wealthiest Americans have changed dramatically.

  • In 1915 the wealthiest paid 15%
  • In 1917, the wealthiest paid 67%
  • In 1918, the wealthiest paid 77%

There was a steady decrease in the top percentages.  By 1929, the year of the crash, the wealthy only paid 25% at highest nominal rates.

  • In 1932, after Franklin D. Roosevelt was elected, the highest income tax rate was returned to 63%
  • In 1936, the very rich had to pay as high as 79%
  • In 1941, the top tax rate went to 81%.
  • In 1942, the top tax rate went to 88%, and the amount lowered to reach 88% was lowered dramatically.
  • In 1944, the highest rate, for people earning over $200,000 was 94%.
  • In 1950, the highest rate was 91%.
  • In 1953, it was 92%.

In fact, this 90% tax rate on the wealthiest Americans existed throughout the 50’s and early 60’s, our nation’s most prosperous years.

  • In 1966, the top rates went down to 70%.  This top rate of 70% lasted until 1981.
  • In 1981, when Ronald Regan was elected president, the top rate went down to 50%
  • In 1987, the top rate went down to 38.5%
  • In 1989, the top rate went down to 28%.
  • In 1992, the top rate went up to 31%.
  • In 1993, it went back up to 39.6%.
  • In 2001, it went 38.6%.
  • In 2003, it went to 35%.
  • In 2013, it went up to 39.6%

http://taxfoundation.org/sites/default/files/docs/fed_individual_rate_history_nominal.pdf

The bad news is that the rich are not paying their fair share, far from the historical highs of 90% in the 50’s and 60’s, when America was at the zenith of its economic strength.  The good news is that since the federal government is taxing the wealthy so little, that leaves more room for Massachusetts to tax income.

Whether it is the graduated income tax, or the so-called “millionaires tax” on incomes over $1,000,000 with just an additional 4% (trifling in the historical context), we can pay to make states colleges and universities tuition and debt free, at both the undergraduate and graduate levels.

And we are only saving the rich from themselves.  When the numbers of our poor dwindle and the middleclass swells, the rich can make more money—and that is why in the 50’s and 60’s we were at the zenith of our economic strength.   And while conservatives and many Democrats decry “class warfare” or criticize how impractical free tuition and debt free college is, we did it then, and today, many countries are doing it now.

AMENDING THE CONSTITUTION TO ALLOW FOR PROGRESSIVE TAXES

One problem is that under the Massachusetts Constitution, income taxes have to be level. “The state constitution currently requires that income tax be a uniform rate, prohibiting progressive or graduated tax rates.”

SOURCE: http://taxfoundation.org/blog/massachusetts-may-set-its-income-tax-rate-constitution-how-unusual

Article 44 of the Massachusetts Constitution reads as follows:
Article XLIV (44)  .Full power and authority are hereby given and granted to the general court to impose and levy a tax on income in the manner hereinafter provided. Such tax may be at different rates upon income derived from different classes of property, but shall be levied at a uniform rate throughout the commonwealth upon incomes derived from the same class of property. The general court may tax income not derived from property at a lower rate than income derived from property, and may grant reasonable exemptions and abatements. Any class of property the income from which is taxed under the provisions of this article may be exempted from the imposition and levying of proportional and reasonable assessments, rates and taxes as at present authorized by the constitution. This article shall not be construed to limit the power of the general court to impose and levy reasonable duties and excises.

Del Gallo favors eliminating this “uniform rate provision” in the Massachusetts Constitution to allow for graduated (or progressive) tax rates.   It is not fair to tax a person the same rate on income earned from $50,000 to $51,000 as the income earned from $250,000 to $251,000.   The poor and those living in the middle class need their income to survive, whereas those in higher tax brackets can afford to pay more without fear of being deprived of money needed to survive.   We should at least require those making more than $250,000 per year to pay a higher percentage of their income than those in poor or middle class.

PROPERTY TAX CIRCUIT BREAKERS

Del Gallo favors following the suggestion of 2014 of Massachusetts Tax Fairness Commission to increase the use of “Property Tax Circuit Breakers,” especially by applying it to the poor and not just seniors.

SOURCE:  http://www.taxcreditsforworkingfamilies.org/state-resources/property-tax-circuit-breaker/

SOURCE: https://malegislature.gov/Content/Documents/Events/TaxFairnessReport.pdf

SOURCE:  http://www.cbpp.org/research/the-property-tax-circuit-breaker#_ftn1

PERSONAL EXEMPTION

Del Gallo favors following the suggestion of 2014 of Massachusetts Tax Fairness Commission to raise the current personal exemption on single filers, heads of households, and married filing jointly.

“A Massachusetts full-year and/or part-year resident is required to file a tax return with the state of Massachusetts if his/her Massachusetts gross income is in excess of $8,000. The tax rate on income such as wages, pensions, business income, rents, etc. and interest and dividend income is 5.20%. Massachusetts offers a personal exemption, which reduces an individual’s taxable income, in the following amounts: $4,400 for single filers and married filing separately, $6,800 for heads of household, and $8,800 for married filing jointly. The personal exemption reflects the notion that income needed for bare subsistence should be free from tax.  Massachusetts should increase the personal income tax rate while raising the personal exemption amounts to offset any tax increase for low-and middle-income individuals and families. This remedy would require income tax to be paid based on a taxpayer’s ability to pay, which would help alleviate the disproportionate tax burden on low- and middle-income taxpayers.”

SOURCE: https://malegislature.gov/Content/Documents/Events/TaxFairnessReport.pdf (page 30)

WEALTH TAX

Del Gallo favors following the suggestion of 2014 of Massachusetts Tax Fairness Commission and instituting a “wealth tax.”  As stated by the Massachusetts Tax Fairness Commission, “The term ‘wealth tax’ is used is used describe a tax on net worth, which may include real property, household assets, stocks, bonds, trusts, unincorporated businesses, etc. Such a tax would target individuals who are income poor but asset rich. Note that without an exemption for real property, this type of ‘wealth tax’ would result in double taxation.”

SOURCE: https://malegislature.gov/Content/Documents/Events/TaxFairnessReport.pdf  (Page 35)

In order to make this effective and fair, we would have to amend the constitution so that the tax could be imposed in a graduated manner.

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