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A Number Of States Are Starting To Sock It To The Rich


Economic Trends

A NUMBER OF STATES ARE STARTING TO SOCK IT TO THE RICH

In The Politics of Rich and Poor, his recent book on emerging political trends, political analyst Kevin Phillips predicts that the widening gap in U.S. income distribution and the decline in tax rates on the wealthy in the 1980s will generate a backlash in the decade ahead. Judging by recent changes in state tax structures, that backlash may already have begun.

The message seems to be that higher income taxes on the affluent are on the way," says economist Steven D. Gold of the Center for the Study of the States at the Nelson A. Rockefeller Institute of Government in Albany, N.Y.

Gold notes that a number of states have begun to target higher-income families and individuals for disproportionate tax increases. Last year, for example, New Jersey raised the tax rate on families with at least $70,000 in income, Arizona restructured its tax system to make it more progressive, Kentucky repealed the deductibility of federal income taxes (a policy that had favored the affluent), and Oklahoma added a new top tax rate for high-income people.

This year, the trend accelerated. California, Minnesota, and North Carolina passed new top rates for high-income taxpayers. New York phased out the benefit of low rates on the first $26,000 of income for taxpayers with incomes over $ 100,000. Maine and Vermont raised taxes for most people but raised them more for those with higher incomes. And Connecticut enacted a flat-rate income tax with substantial deductions and tax credits for low- and middle-income families that are phased out at higher levels.

What about the voting public's supposed antipathy to higher marginal income-tax rates? As one legislative staffer in North Carolina put it: "When legislators realized that only 1% or 2% of taxpayers would have to pay the new top rate, their reservations about boosting the income tax melted away."GENE KORETZ


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