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A report issued by the nonpartisan Washington-based Tax Foundations states that while it is commonly asserted that wealth inequality is too high and rapidly growing over time, “New research from Federal Reserve Bank of Boston economists suggests wealth inequality has grown less than previously estimated and that shares of wealth held by top earners drops significantly when accounting for sources of lower- and middle-class wealth that are often overlooked.”

The Federal Reserve Board’s Survey of Consumer Finances (SCF) is often used to measure wealth inequality, but it fails to adequately capture two sources of retirement wealth that are important for many low- and middle-class households: Defined-benefit (DB) pensions and Social Security (SS) benefits, writes the foundation’s Alex Durante.

Durante states that “Normally, these two sources of wealth are challenging to capture in surveys because it is difficult for people to accurately calculate their future income streams from DB pensions and Social Security. But they are important sources of wealth for certain households so excluding them from the picture will understate wealth at the lower and middle parts of the distribution.”

The Federal Reserve authors of the study found that “When accounting for both defined-benefit and defined-contribution plans, the share of wealth for the top 5 percent of earners drops from 72 percent to 51 percent in 2019. It drops even further, to 45 percent, when adding in SS benefits. Although the share of wealth held by the top 5 percent does still rise from 1989 to 2019, it does so by eight fewer percentage points after these adjustments.”

“This is an important study,” said Jim Tobin, economist, former Federal Reserve auditor, and president of Taxpayers United of America (TUA). “While politicians frequently express ‘concerns’ about wealth inequality, the study clearly shows that the issue is often based on an incomplete picture of the underlying data.”

Source: https://taxfoundation.org/wealth-inequality/


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Fifteen states have a marriage penalty built into their tax-bracket structure, according to the nonpartisan Washington-based Tax Foundation, and this nonneutral tax treatment is particularly harmful to owners of pass-through businesses, who pay taxes on their business income under the individual income tax system, writes the foundation’s Janelle Cammenga.

Under a graduated-rate income tax system, married couples who file jointly under this scenario face a higher effective tax rate than they would if they filed as two single individuals with the same amount of combined income. With a marriage penalty, married business owners are subject to higher effective tax rates on their business income than they would be otherwise.

According to the New Jersey Business and Industry Association, the 15 states with a marriage penalty built into their income tax bracket structure are California, Georgia, Maryland, Minnesota, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, Vermont, Virginia and Wisconsin.

“It’s no surprise that these 15 states include the notorious Blue States of California, New York and New Jersey,” said Jim Tobin, economist and president of Taxpayers United of America (TUA). “These greedy state governments squeeze every penny out of taxpayers unlucky enough to reside in their states.”

“Marriage-tax-penalties should be done away with,” said Tobin. “But an even better solution would be to do away with state income taxes altogether.”

Sources: https://taxfoundation.org/state-marriage-penalty-2020/



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Earlier this year, Val Zimnicki, Director of Outreach for Taxpayers United of America (TUA), addressed the Chicago Transit Authority (CTA) Board of Directors to convey our views opposing the board’s proposed multi-billion-dollar expansion of the city’s obsolete, nineteenth-century rail line.

Now that President Joseph “Uncle Joe” Biden is promoting spending literally trillions of dollars on so-called “infrastructure” projects, consisting mostly of “green” pet projects but still containing billions of dollars to be spent on obsolete technologies, Zimnicki’s statement is especially relevant.

The Chicago Transit Authority (CTA) is proposing to extend the Red Line from the existing terminal at 95th/Dan Ryan to 130th Street. This boondoggle is a part of the Red Ahead Program and is estimated to cost $2.3 billion, which is the largest amount ever by the CTA to be spent for a particular project. As a quick side-note, have these projects ever come in on time let alone without waste and overspending? This proposed 5.6-mile extension would include four new stations near 103rd Street, 111th Street, Michigan Avenue, and 130th Street, and each new station would include bus and parking facilities. But where is the money coming from? The CTA’s 2021 budget already has a $375 million deficit.

The CTA claims it can pay for half the project and hope the rest of the money will come from the federal government. Actually, Chicago citizens should prepare for new tax line-items on their real estate taxes to pay for this. That has been the unfortunate normal procedure that citizens of Chicago and Illinois have endured for virtually every over-budget, behind schedule and unnecessary program devised by legislators and bureaucrats. Their theme seems to be, “If we build it, maybe they won’t come, but for sure we will tax them to pay for it.”

The Red Line extension is unnecessary and expensive. How many people will use it? Projections are always optimistic and always seem to fall short. At a staggering $410 million a mile, will it pay for itself? Indeed, in the last 5 years general transit ridership fell by 2.8 million trips while ride-hailing grew by almost 30 million. Chicago is losing population as its citizens are moving to Indiana, Wisconsin, Florida, Texas and other states where the tax burdens are lower.

The CTA will also need to purchase private property to make room for the Red Ahead Program. Families will be dislocated and some will not want to sell. Will the CTA enforce condemnation procedures? Will “just compensation” be enforced on individual property owners. Will renters be properly relocated?

The CTA wants to extend services to a dwindling population while not all the funding is as yet identified.

Will eminent domain take away property rights? What about the inevitable cost overruns and new taxes to pay for them? For these reasons, we oppose the Red Line extension.