Monday, June 3, 2013

Killer taxes on the poor

As North Carolina Republicans prepare to steam-roll their sweeping, regressive tax changes through the House and Senate, it's worth considering the terrible harm that could result.

In their 2011 book, Taxing the Poor: Doing Damage to the Truly Disadvantaged, Katherine Newman, a Professor and Dean at Johns Hopkins University, and Rourke O'Brien, a graduate student at Princeton University, found that increasing the regressivity of state and local taxes--as NC Republicans are proposing--led to to
  • higher mortality rates--"for every $100 increase in taxes on the poor, the mortality rates increased by 6.6 per 100,000" (p. 102),
  • increased violent and property crime rates--"the same dollar increase in taxes is associated with an increase in the state property crime rate of 78.3 per 100,000" and "an increase in the state violent crime rate of 12.3 per 100,000" (p. 103),
  • lower high school completion rates--"for every $100 increase in taxes on the poor...the state high school completion rate decreases by 0.26 percentage points" (p. 103), and
  • greater proportions of out-of-wedlock births--"a $100 increase in taxes on the poor is associated with a 0.07 percentage point increase in the percentage of births to unmarried mothers" (pp. 103-4).
Newman and O'Brien's estimated multivariate statistical models that accounted for the ethic make-up of states, poverty rates, GDP, unemployment, government expenditures and revenues, and inequality; thus, they controlled for indirect effects of the tax system on these other outcomes. For instance, states with regressive tax systems also tend to have lower expenditures and revenues; the effects that Newman and O'Brien found would be on top of any expenditure effects.

Also, the researchers considered changes within states in these outcomes and in tax regressivity over time; thus, their analyses accounted for unique permanent characteristics of the states, like the health or legal systems, that could give rise to spurious correlations.

Newman and O'Brien also looked specifically at grocery taxes (one of the taxes that would be raised under the Senate leadership's plan). Besides the harmful effects listed above, Newman and O'Brien found that higher food taxes led to increased rates of obesity, as poor people substituted from high-cost healthy foods to lower-cost unhealthy foods.

Rank-and-file Republicans who profess to respect life, be tough on crime, and promote family values would do well to consider the deaths, crimes, high school drop-outs, out-of-wedlock births, and worse health that their leaders' tax policies will deliver.