Kowalko’s income tax plan has little to do with fairness

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Good afternoon,

It was good to hear that Gov. John Carney remains committed to the Budget Stabilization Fund.

In his State of the State speech, Carney credited the fund, which sets aside a small portion of reserve revenues, helped Delaware weather the coronavirus pandemic’s earlier stages. 

Thanks to cautious fiscal policies and federal CARES Act funding, there is no need to raise taxes this year. That’s a big plus given the fragile condition of the economy.

None of this will stop ongoing efforts to raise taxes on wealthier Delawareans.

In recent years,  State Rep. John Kowalko, D-Newark, has introduced legislation that would add higher income tax brackets for those making more than $125,000 annually. The top rate is currently 6.6 percent.

The additional taxes amount to about $625 a year for a taxpayer earning a quarter of a million dollars a year, according to Kowalko’s estimates.

This time around, Kowalko appears to have more support since additional progressive Democrats have taken seats in the House and Senate. The ability of Republicans to stop such measures is lessened since the party lost two seats in the Senate.

As moderate Republican  Dave Burris noted in a recent post, the bill is designed to raise revenue rather than bring more fairness to the tax system.

Burris noted that Kowalko has been a foe of the Budget Stabilization Fund, a bipartisan effort that has already allowed the state, to avoid the most recent budget crisis. In the past, these crises led to cuts that affected the neediest among us.

Instead, progressives are content to shake the couch cushions for nickels and dimes.

A back-of-the-envelope calculation based on the percentage of families making more than $125,000   indicates that the two tax brackets might raise about $100 million.  (feel free to come up with your own estimates).

Even if you double that number, it only adds up to about five percent of this year’s $4.7 billion state budget.

The tax brackets and negative marketing from states seeking to steal jobs would mainly hamper efforts to create higher-paying positions.

This is especially true in technology and research, where paychecks can run into the six figures. Higher paying jobs also create support positions with salaries well into the five figures.

If backers of the tax brackets truly want a more progressive tax system,  they will use the added revenue to lower the tax rate for those making $50,000 a year or less. 

Agree or disagree? Let me know. Hit reply and type away. – Doug Rainey, chief content officer.

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