Children’s advocates say state’s tax system unfair

Michele Page

The Tax and Budget Team of Arkansas Advocates for Children and Families addressed a group at the Delta Area Health Education Center concerning the state and federal tax system and its impact on low and middle-income families at a Kids Count Coalition regional meeting.

Ginny Blankenship, research and fiscal policy director, said that the tax system is unfair and unbalanced and puts stress on Arkansas families already at risk. Middle and low-income families already pay more in taxes than upper income families.

According to the AACF, upper middle-income families pay 6 percent on every dollar spent in taxes while lower and middle-income families pay 12 percent.

Blankenship said that Arkansas has the highest sales tax burden in the country and it hurts lower income families and small businesses.

“The keys to a good tax system is that it is balanced, promotes economic growth, is easy to administer and is accountable, provides adequate revenue and is fair and equitable,” said Blankenship.

Large corporations receive more favorable treatment under the current tax system, which leaves small businesses at a competitive disadvantage, explained Blankenship.

The presentation included the topic of Arkansas’s “highly regressive” tax structure, which the AACF says affects the state’s lower income families even more.

A “proportional tax system” shares the tax burden equally among all families and a “progressive tax system” has lower income families paying less than upper income families while a “regressive tax system” has lower income families paying more in taxes than upper income families.

The AACF says that three factors contribute to the “unbalanced tax system” in the state.

The state relies too much on the sales tax and not enough on other sources of revenue. The state does not offer a state earned income tax credit and citizens are not involved in policy-making decisions.

With education and health and human services the largest expenditures in the state budget, the AACF says that a solution that is fair and balanced is attainable and would not deprive citizens of their educational or health needs.

The group advocates that all taxpayers, whether it is low, middle or upper income citizens, pay their fair share, as should small businesses and large corporations.

Taxes should also be based on families or businesses ability to pay.

By balancing the tax system, the state should not have to rely on one source of revenue that places the burden on any one group of taxpayers.

The group also believes that state and local tax systems should be able to generate enough revenue to support services that are critical to the well being of children and families and future growth.

Finally, the impact of state changes can not be viewed independently of local taxes just as local taxes can not be viewed independently of state tax burdens, says the AACF tax and budget network.

Pat Bodenhamer, tax and budget outreach director, goes out into the community and informs the public about the various taxes in the state.

“There have been some wins,” she said explaining that last year, President Bush’s administration issued seven Medicaid regulations that would have forced states to comply and cut critical school-based, case management and rehabilitation services for children. Bodenhamer said that last week, the US Senate adopted the “domestic component of the Supplemental Appropriations Act of 2008” by a veto-proof margin of 75-22. The bill, HR 2642, included a moratoria on the regulations that will allow many of the state’s children and their families continue to receive the same level of Medicaid assistance for the school-based and rehabilitation services.

Bodenhamer said that senators Blanche Lincoln, Mark Pryor and congressmen Marion Berry, John Boozman, Vic Snyder and Mike Ross voted for the piece of legislation.

She also cited the veto override of Farm Bill HR 2419 as a win for children and families as the reauthorization of the $289 million bill included funds for food stamps, school breakfast and lunch programs. The final bill will include $10 billion in nutrition spending for food stamps and the Emergency Food Assistance Program, an increase in funding that should help Arkansas’ food banks meet the growing demand from working families struggling in today’s economy, explained Bodenhamer.

Candice Smith, federal tax and budget director for the AACF, says that her job is to “look at the laws passed at a federal level through the lens of a child” and how these laws impact the low and middle-income families in the state.

She pointed to Juvenile Justice Reform and the low risk-high need children.

Paul Kelly, senior policy analyst, says the secure confinement of juveniles is ineffective, costly and counter-productive.

“Large restrictive confinement is over used,” he said adding that the state was “feeding a system based on school discipline problems, mental health problems and child welfare failures.”

“Almost 83 percent of the kids in the juvenile justice system were served in the child welfare system,” continued Kelly.

He suggested more summer and after school programs and substance abuse treatment facilities.

“The kids are crying out for something and we really need to intervene,” said Kelly. “It will save us money in the long run,” he said as more and more children are unsupervised after school.

Some get involved in crime and drugs but Kelly said that effective after school programs prepare young people for adulthood and keep them out of the juvenile justice system.

“It prepares them as citizens, as workers as family members.”

The Daily World