{"id":1513731,"date":"2024-02-22T09:55:00","date_gmt":"2024-02-22T09:55:00","guid":{"rendered":"https:\/\/publicintegrity.org\/?p=127625"},"modified":"2024-02-22T09:55:00","modified_gmt":"2024-02-22T09:55:00","slug":"how-states-can-make-taxes-more-equitable","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2024\/02\/22\/how-states-can-make-taxes-more-equitable\/","title":{"rendered":"How states can make taxes more equitable"},"content":{"rendered":"
\"Overlapping<\/figure>Reading Time: <\/span> 9<\/span> minutes<\/span><\/span>\n

Oregon taxpayers will become some of the first in the nation to have the option to self-identify their race and ethnicity<\/a> when they file their tax returns this year. <\/p>\n\n\n\n

The reason is both simple and complex: Especially at the state level, taxes worsen America\u2019s yawning wealth gaps rather than easing them. A growing number of advocates and policymakers are trying to do something about that.<\/p>\n\n\n\n

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\u201cBy allowing this data to be collected, we can begin to look at how to dismantle the racism intrinsically woven into our tax system, and the race-related distributional impacts,\u201d Creeana Bort, policy and advocacy organizer at the NAYA Action Fund<\/a>, said in written testimony supporting the Oregon race and ethnicity self-identification bill that passed last year. \u201cWe can begin to understand tax policy and how to move forward in creating a tax system that is equitable for all Oregonians.\u201d<\/p>\n\n\n\n

State revenue agencies handling tax collection don\u2019t tend to track demographic data that can make clear how impacts differ by race. But it\u2019s already apparent these disparities exist. People with less money pay a greater share of it in state and local taxes<\/a> than wealthy residents, who are disproportionately white.<\/p>\n\n\n\n

And states more aggressively collect on tax debts from people in financial hardship than the Internal Revenue Service does, in ways that often make it harder for low-income residents to pay what they owe. <\/p>\n\n\n\n

A Center for Public Integrity investigation<\/a> in December found that at least nine states can suspend or decline to renew driver\u2019s licenses over unpaid income taxes, some over small debts. At least 16 states and Washington, D.C., can do the same to professional licenses, cutting people off from their best chance at repayment. <\/p>\n\n\n\n

Low-income taxpayer attorneys and other experts say clear paths exist for states to do better. <\/p>\n\n\n\n\n\n

Having a robust taxpayer advocate\u2019s office to help people navigate collections and other tax problems is one such option. At least 34 states and the District of Columbia have an office, but they vary drastically in how well they are staffed and funded. <\/p>\n\n\n\n

Another option: data collection to better track how tax policies affect people by race and income, and to determine whether some practices are counterproductive.<\/p>\n\n\n\n

States that suspend driver\u2019s or professional licenses can set their debt thresholds higher so lower-income people who need those licenses to work and meet basic needs are less likely to lose them, attorneys and advocates said in interviews. <\/p>\n\n\n\n

And, they say, states could make tax debt collection less harmful to low-income people simply by mirroring IRS standards. The IRS offers more significant hardship options than most states<\/a>.<\/p>\n\n\n\n

“First, collection alternatives based on hardship are necessary,\u201d Anna Gooch with the Center for Taxpayer Rights said in an email. \u201cEven if a state is constitutionally prohibited from compromising debt, there are several alternatives that would limit the harmful effects of enforced collection, including partial pay installment agreements.\u201d <\/p>\n\n\n\n

Second, she said, states must do a better job explaining what their hardship help entails and who can get it. Public Integrity\u2019s investigation found that most states offer incomplete information online, and when we asked them for more details, the answers rarely filled all the gaps.  <\/p>\n\n\n\n

State revenue agencies can make some changes on their own \u2014 offering more publicly available information, for instance.<\/p>\n\n\n\n

Other approaches require legislative action. Local advocates convinced elected officials to change collections policy in Washington, D.C., for example.<\/p>\n\n\n\n

And states can choose to alter their tax structure so it weighs less heavily on those who make less money.<\/p>\n\n\n\n