Skip to main content
Resolutions & Amendments

29th International Convention - Miami, FL (1990)

Social Security, the Federal Deficit and Tax Equity

Resolution No. 139
29th International Convention
June 25-29, 1990
Miami, FL


The total tax burden has shifted away from the wealthy and onto working class families over the last decade. Nine out of ten American families are actually paying more of their incomes in federal taxes in 1990 than they did in 1977. Only the richest ten percent of the population are enjoying a reduction in taxes, the top one percent experiencing a fifteen percent cut since 1977. Despite the tax cuts of 1978, 1981 and the tax reform of 1986 that took many low income people of f the tax rolls, taxes have been rising for working Americans. While the top rate of the personal income tax was reduced for high-income taxpayers, working taxpayers have seen continuous increases in their social security taxes. As a result, the share of tax receipts derived from the progressive income tax has been declining while the share received from regressive taxes such as payroll taxes for social security has been increasing; and


As part of the Reagan-Bush ideology, responsibilities have been shifted down to state and local governments without the corresponding funding to fulfill those responsibilities. Over the last decade, federal grants in aid have fallen from almost thirty-four percent of total state and local government revenues to roughly twenty percent. Since 1980, federal funds for such needs as job training, clean water, public transit, sewage treatment and low-income housing have shrunk by almost $50 billion each year; and


As a result of cuts in federal aid, state and local governments have had to increase taxes. This has been a difficult task, given the "No New Taxes" political environment coming out of Washington, D.C. Many state and local governments have not been able to increase taxes enough to offset reductions from the federal government and are entering the 1990s with limited reserves and a backlog of unmet needs. Much of the tax increases have been in regressive sales and excise taxes which make the total tax burden even more lopsided on low- and middle-income taxpayers. Many states have, in turn, passed responsibilities off to local governments which have turned to increases in the property tax. Since the early 1980s, when sales and property taxes represented roughly 23% of total government revenues, these more regressive taxes have risen to more than 26% of government revenues in 1989; and


A tax cut on capital gains income would only further exacerbate the inequities in the total tax system. Those with high incomes, which usually include capital gains, would be the ones who benefit from any cut. Those with incomes in the top one percent of American families would each save, on average, $25,000 while the average working family would pay the bill. Further, a capital gains tax cut would be a revenue loser for the federal government in the long-run, increasing the federal budget deficit, while causing fiscal instability at the state level. As an alleged tool for increasing investment, a capital gains cut would only reactivate many inefficient tax shelters rather than promote sound economic development; and


The increase in Social Security payroll taxes has built up a surplus in the Social Security Trust Fund that is masking the true size of the federal deficit. The continued use of the Social Security Trust Fund for general federal operating revenues violates a public trust and erodes public confidence in the Social Security system.


That AFSCME continue to expose the shift of the tax burden onto working people, both within the federal tax system and as a result of the shift from federal to state and local funding. AFSCME will continue to oppose additional tax cuts for the wealthy, particularly President Bush's proposal to lower the tax on capital gains income. The federal government must fund its operations with integrity and honesty. AFSCME will continue to oppose the use of payroll taxes or any other regressive taxes for deficit reduction. AFSCME will continue to support progressive tax policies to finance federal operating expenses.


International Executive Board