He says he wants to be education president and that education is at the top of his agenda, but George Bush is proposing to take away the largest single contribution the federal government makes to education: allowing taxpayers to deduct the taxes they pay to city, state and school districts from their federal income tax.
At the present time, people paying those state and local taxes know they'll be reducing their federal taxes by a certain amount. So they know that the $100 they pay for their schools is not really costing them $100 but $70, or whatever. If that deduction is removed, there is likely to be pressure to reduce state and local taxes; there certainly will be resistance to any tax increases. And either outcome will make it harder to get adequate support for education.
We have a long-established tradition in this country that people are not taxed on money they've already paid out in taxes. Even when an emergency income tax was levied at the time of the Civil War, one of the greatest crises this country has ever known, this income tax was designed so that people would not have to pay a federal tax on monies that had already been taken by their municipalities, countries and states. And when the income tax became a permanent part of our federal tax code early in this century, the principle ruling out double taxation was part of it.
There's been an attempt to sweeten the administration's proposal (and make it sound like a tax on the rich) by attaching a tax ceiling to it. But this is just a way of getting a foot in the door. If the proposal gets through this year with a ceiling of $10,000, what do you suppose will happen next year when the federal government is looking around for some additional revenue? (As it certainly will be.) And the following year? This proposal is just the first step towards eliminating all deductibility for state and local taxes.
The impact the proposal would have on the services state and local governments provide is even more troubling than its effect on the tax returns and incomes of individual citizens.
The federal government talks a lot about crime in the streets, but almost all the money for police forces and police training comes from state and local governments. It talks about education, but 94 percent of the cost of education is borne by state and local governments. It talks about a war on drugs, but most of the money supporting the troops who fight the war comes from state and local taxes. And the tiny amount of federal money that does go to the states for such programs has declined, in terms of real dollars, throughout the 1980s. If the federal government limits or eliminates the deductibility of state and local income taxes, the 43 states and nearly 3600 local governments that levy personal income taxes will be left holding the bag.
We are already seeing "tax revolts" -- taxpayers protesting the taxes they now pay. With this proposal taxpayers would have to pay higher real taxes just to fund the current level of public services. And who's going to be hurt when there are cutbacks in services because state and local governments are having a hard time raising money? The middle class -- to say nothing of the poor and the needy -- who depend on the public services paid for by tax money. These people will suffer and so will our schools. In fact, for education -- nearly all of which is paid for by state and local money -- the loss of deductibility will be a double whammy.
We have an ambitious set of national education goals for the year 2000. If we can carry them out, we'll be taking a big step towards being competitive again in the international economy. We have school restructuring efforts well under way in some local school districts -- and many more school districts are planning to take the plunge. But if state and local governments have to cut back on the money they spend on education, we won't even be able to hire enough teachers or buy enough textbooks -- never mind meet any of the national goals or carry out any of these big plans.
The administration is trying to make their proposal for double taxation palatable by selling it as a tax on the very rich. But if you want to tax the rich, why not just do it? In our lifetime, we've seen 78 percent and 50 percent tax brackets. Now, the top bracket is down to 28 percent. If people in the administration are so progressive that they're interested in taxing the very rich, why do it by hitting at the poor and the middle class? Why not just put the top tax bracket at whatever level is necessary to raise the money they expect to get from their scheme for double taxation?
We take the budget deficit seriously -- we think it hurts the country. And we will support a proposal that leads to fiscal responsibility. But we will oppose any tax package that includes double taxation.