Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity Proceedings of a Workshop (2019) / Chapter Skim
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2 Understanding the Basics of Tax Policy and State Budgets
2 Understanding the Basics of Tax Policy and State Budgets
Pages 7-20
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From page 7... ...
Taxes and tax credits can influence behaviors, such as consuming alcohol, purchasing a home, or even entering the workforce, he said. Taxes can promote investments in social goods, such as affordable housing and medical education, and can pay for services, from trash collection to prekindergarten programs to Social Security.
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From page 8... ...
, and does not reflect any consensus among workshop par ticipants or endorsement by the National Academies of Sciences, Engineering, and Medicine. To provide a foundation for the workshop discussions, Pete Davis of Davis Capital Investment Ideas reviewed the principles of taxation, and examined how well or poorly they are adhered to in some current tax policies.1 This was followed by a discussion of the fiscal environment for state and local budgets by Nick Johnson, senior vice president for state fiscal policy at the Center on Budget and Policy Priorities, and discussion moderator Christopher Brown, financial policy director at PolicyLink.
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From page 9... ...
For example, Davis said, the current federal tax code has many incentives for real estate. Renters pay a subsidy, indirectly through the U.S.
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Davis added that the United States is the only country in the world that involves employers in providing health care. Employer-paid health insurance grew out of the wage and price controls implemented during World War II.
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. Davis recommended starting out small when changing tax policy, for example, piloting a tax increase, credit, deduction, or other approach at the state level to achieve a track record of success.
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Tax credits reduce the tax owed. The earned income tax credit (EITC)
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From page 13... ...
Mallya noted the importance of considering the value of intended and unintended consequences of tax credits, and referred participants to a recent report by the Bipartisan Policy Center on the LIHTC and its effect on health.6 Davis suggested that tax credits are a better policy approach than deductions to reduce income taxes. They are easier to keep track of as they do not vary by the marginal rate, and, unlike itemized deductions, credits apply to everyone.
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From page 14... ...
On average, the poorest 20 percent of the population is paying about 11 percent of their income in state and local taxes, while the top 1 percent might pay around 5 percent of their income in state and local taxes. In the states with the most regressive tax codes, particularly states that do not have income taxes, he said that the differential might be as much as sevenfold between the tax rate paid by the people at the top of the income scale and the rate paid by people at the bottom of the income scale.
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From page 15... ...
Several years ago, Minnesota passed a $1 billion tax increase, raised income taxes on the wealthy, closed corporate tax loopholes, and targeted the money toward community health clinics and education. Tax policy change is possible, and is happening, because people are seeing evidence of what happens when the tax system is eroded.
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From page 16... ...
One example of how federal tax changes could directly affect state revenues is that the calculation of some state income taxes starts with the federal adjusted gross income. Changes to the definition of federal adjusted gross income would directly and immediately affect many states' revenues.
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Tax Policy and Population Health The connection between tax policy and population health is just beginning to enter the discourse. Johnson observed that a number of people in the public health sphere have been speaking up about these connections in the current federal tax debate.
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From page 18... ...
, wondered if it was overcomplicating the solution set to develop tax policies that support specific population health-related programs, rather than simply focusing on income and wealth equity, which are known to be linked to health. Brown agreed and noted that PolicyLink is focused on income inequality as a health issue and is working toward trying to represent low-income communities at tax policy discussions.
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From page 19... ...
BASICS OF TAX POLICY AND STATE BUDGETS 19 In closing, Brown charged participants to engage, and to inform and inspire others to engage, in tax policy discussions about not just raising new revenue but diverting existing money to the households and communities that need it the most.
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