Monday, June 18, 2012

Organizing for a progressive tax system

KFTC members. Source: FB.
The tax system of Kentucky is overall regressive: those who earn less contribute with a higher percentage of their income to the common good than the better-off - largely due to the fact that sales taxes take a bigger bite out of the incomes of low-income households than they do out of the incomes of wealthy households. Kentuckians For The Commonwealth (KFTC) says that as a result of the current income tax system, tax exemptions for luxury services and the dated estate tax, the state loses income of $363 million each year. KFTC started a campaign for tax justive to replace the decade-old, outdated tax laws. Lisa Abbott, KFTC's Director of Organizing and Leadership Development, and Jessica Hays Lucas, KFTC's community organizer, tells us more about the campaign.

Is it tough to mobilize, build local chapters, and sustain continuous work around such a dry and overarching issue?
Jessica: It is always a dilemma whether the campaign goal should be overarching, which is harder to achieve but may bring real, systemic changes, or we should strive for smaller results, which bring only partial solutions. In KFTC, after several smaller economic justice campaigns, we decided to shoot for something big. In the 1980s, the organization gained its reputation in part by eliminating a property tax exemption on unmined coal. By the mid-90s, our members thought that we should diversify our agenda and fight for economic justice issues, too. A couple of years later, Bill Clinton, then the President of the U.S., severely cut social benefits for low-income people. As a result, KFTC started to work with a small segment of the affected population, with single, low-income parents with children, enrolled in post-secondary education. We won a partial victory.
Then our new goal was for the Kentucky state government to compensate for the regressive tax system and add 15 per cent equal to the earned income tax credit, a federal tax refund the federal government pays to low-income and moderate-income people. We haven't won this issue yet. This benefit would be useful for those who have an income. After all these fights, we decided to work on a campaign which is beneficial for everybody and helps a larger interest group. An overall tax reform proposal proved to be a good one.

An element of these severe welfare cuts of the 1990s, which Jessica mentioned, was that those being on public assistance were obliged to work a specific amount of time in order to be eligible to receive the benefit. This bears similarities to recent measures on welfare and public works in Hungary. How did you organize around this issue?
Lisa: As a result of the welfare cuts, those who were eligible for welfare benefit had to work for 20 or 30 hours weekly in return. If they did not accept the job the state agency offered to them (because it did not comply with their education, etc.), they did not get the benefit. In the very first period, people were sent to work for private businesses too, but that quickly undermined the opportunities of people in the labor market searching for jobs. Later they were only delegated to public institutions. These cuts had a severe impact on a whole generation of single, mostly female, low-income parents who were enrolled in post-secondary education. These women may have had a child at an early age, left an often abusive relationship and later on continued their studies. Being enrolled in post-secondary education meant for them a whole new opportunity for starting a new life. After the reform they had to work for 20 hours (e.g., sweeping a public building) because their studies did not count as work. We started to cooperate, lobbied together, and they told the decision-makers how their life became a mess due to the new law and cuts, etc. As Jessica said, we won only a partial victory: the state adopted a model policy that allowed that two years of post-secondary education counted as work for those welfare recipients.

What mobilization techniques do you use in the tax justice campaign?
Jessica: First of all, we start to make this tough issue tangible. We organize workshops for groups which are already active, for congregations, KFTC chapters, etc. We structured these discussions in a way that we talked about what is terrible in Kentucky (which services are missing, what makes the place unbearable, etc.), and how that relates to the regressive tax system. But later we tried to reframe the relation between the government and the people. We don't necessarily want people to hate the government, we want them to feel ownership over the state and the government.
So we used this frame to talk about the benefits of the progressive tax system for Kentucky and its residents. We discuss what changes people want to see in Kentucky, and what demands we could make to the state. This gives a perspective to the campaign and to the participants. The people have to differentiate between the state and the politicians. The citizens must reclaim the state. Now we are preparing and mobilizing for a wonderful lobby opportunity. The government of Kentucky has recently set up the Blue Ribbon Commission on Tax Reform, a commission elaborating recommendations on tax reforms that raise revenue. Between May and August the commission holds public meetings in all the six districts of Kentucky. This is a wonderful opportunity for us to communicate our ideas to the government. We recognized that it is helpful for people to have a framework to shape their thoughts into words. So based on this framework, our members first talk about who they are and what changes they want to see in Kentucky, then they list the tax- and revenue-related obstacles standing in our way and finally, they come up with good solutions. The commission will put forward its recommendations in November.

How does the campaign look like?
Jessica: We first prepared a bill. It was community-driven. Our members elaborated a preliminary framework - they put down the principles, aspects that are important for them and what they want to see in a tax reform. Based on this detailed document, our expert allies formulated the bill. For example, in Kentucky there are a lot of untaxed services which are mostly used by rich people. Our members put down what kind of services they would like to see taxed, and they discussed the list with other grassroots organizations so that they make sure that there are no services included which may be used by public institutions or organizations. The Kentucky General Assembly (the legislative body), however, debates tax-related issues only every second year. On the one hand, this gives us time for preparation, but we also have to be smart so that our campaign does not lose impetus.
Overall, we want to reform our outdated estate tax, we recommend the stair-stepped rate structure of our income tax, and the taxation of luxury services (such as membership fees to private clubs, golf course fees, limousine rides, etc.) and the taxation of film production, which is currently untaxed in Kentucky. We also want Kentucky government to add 15 percent equal to the federal earned income tax credit. This would mean a total of $363 million annual income and the last one would mean an expense of $100 million.

Lisa: We hear many times that topping up the earned income tax credit is just handing out a benefit. We, however, think that this is a rightful compensation to low-income people who contribute with a higher percentage of their income as a result of our regressive tax system.

Read it in Hungarian.

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