Earlier this month, President Barack Obama rolled out a new plan to limit the use of offshore tax havens and crack down on corporate abuse of the tax system. These tax havens siphon over $100 billion a year from the government, and have allowed many U.S. banks to duck paying taxes despite receiving massive, taxpayer-funded bailouts. The president's plan is far from perfect, but comes as a welcome acknowledgment of the unfairness embedded in the current tax code.
Amidst the current economic downturn, states legislatures across the country are faced with some of the tightest budget crunches in recent memory. According to the Center on Budget Policy and Priorities,There are currently 20 states facing a combined budget shortfall of $35 billion in 2009, with 8 more projected to enter the red in 2010. With over half the country's states facing immanent deficits and the rest struggling to stay in the black, the temptation in most statehouses has been to "tighten up the belt," slashing spending on crucial social services and trimming back the public workforce wherever possible.
This slapdash strategy is a recipe for disaster. At a time when private spending is already plummeting, laying off state workers and cutting off help to those in need is the last thing our ailing economy needs. A far more humane and farsighted solution would be to seize the current economic challenges as an opportunity to create a fairer tax system; one that would increase state revenues, extend help to those most in need, and ask corporations and the wealthy to do their fair share to help the country through tough times.
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