Position in Brief:

Tax Policy: Support adequate and flexible funding of federal government programs through an equitable tax system that is progressive overall and that relies primarily on a broad-based income tax.

Federal Deficit: Promote responsible deficit policies.

Funding of Entitlements: Support a federal role in providing mandatory, universal, old-age, survivors, disability and health insurance.

Details:

Statement of Position on Fiscal Policy, as Adopted by 1984 Convention and as Announced by National Board, March 1985, January 1986 and June 1986:

The League of Women Voters of the United States believes that federal fiscal policy should provide for: adequate and flexible funding of federal government programs through an equitable tax system that is progressive overall and that relies primarily on a broad-based income tax; responsible deficit policies; and a federal role in providing mandatory, universal, old-age, survivors, disability and health insurance.

Tax Policy

The LWVUS believes that the federal tax system should: be fair and equitable; provide adequate resources for government programs while allowing flexibility for financing future program changes; be understandable to the taxpayer and encourage compliance; accomplish its objectives without creating undue administrative problems.

The League of Women Voters of the United States believes that the federal tax system, taken as a whole, should be progressive, not proportional.

The League: supports income as the major tax base for federal revenues; believes that the federal income tax should be broad-based with minimal tax preferences and a progressive rate structure; opposes a value-added tax or a national sales tax in the federal revenue system.

Further Guidelines

Under this position, the League of Women Voters would support tax measures that broaden the base and improve the equity of the income tax while working to incorporate progressivity into the tax system, taken as a whole. In evaluating specific tax preferences, the League will use the following criteria: whether the tax preference promotes equity and progressivity; whether the tax preference effectively furthers League of Women Voters program goals; whether the tax preference is the most efficient means of achieving its purpose; whether the revenue loss from the tax preference is justifiable.

Federal Deficit

The League of Women Voters of the United States believes that the current federal deficit should be reduced. In order to reduce the deficit, the government should rely primarily on reductions in defense spending through selective cuts and on increased revenue through a tax system that is broad-based with progressive rates. The government also should achieve whatever savings possible through improved efficiency and management. The League opposes across-the-board federal spending cuts.

The League recognizes that deficit spending is sometimes appropriate and therefore opposes a constitutionally mandated balanced budget for the federal government. The League could support deficit spending, if necessary, for stimulating the economy during recession and depression, meeting social needs in times of high unemployment and meeting defense needs in times of national security crises. The League opposes a federal budget line-item veto.

Funding of Entitlements

The League of Women Voters of the United States believes that the federal government has a role in funding and providing for old-age, survivors, disability and health insurance. For such insurance programs, participation should be mandatory and coverage should be universal. Federal deficit reduction should not be achieved by reducing Social Security benefits.

Position History:

The 1984 Convention adopted criteria for evaluating federal tax policies as a League position and a two-year study of U.S. fiscal policy. The three-part study focused on tax policy, deficit issues and entitlement funding.

League members completed the tax policy portion of the study in time to position the League as a major force in the tax reform movement of 1985-86. As Congress debated major legislation to broaden the income tax base, the League became a recognized leader in pushing for passage of reform legislation. The League achieved a major victory after mobilizing League members and activists to urge members of Congress to pass broad-based, fair and progressive legislation. As part of its strong legislative campaign, the League opposed a value-added tax as regressive. The League supported taxing capital gains as ordinary income and urged the removal of loopholes in the tax law.

The final two stages of the study, concluded in 1986, gave the League new tools for responding to federal deficit and budget issues. Under the deficit position, the League has supported selective cuts in defense spending that target military investment rather than readiness, in accord with the LWVUS Military Policy and Defense Spending position.

In determining what national security crises might call for deficit spending, the League is guided by its International Relations positions, including U.S. Relations with Developing Countries. The League also can, if necessary, support selective cuts in nondefense discretionary spending. In determining its stance, the LWVUS will be guided by its Social Policy, Natural Resources, Representative Government and International Relations positions and priorities.

As Congress continued in 1986 to grapple with extraordinary federal deficits and budget dilemmas, the League took a comprehensive approach to the budget battle that combined support for increased funding for human needs, for selective cuts in defense spending and for necessary revenue increases.

The deficit position enabled the League to oppose a balanced budget constitutional amendment in March 1986. The deficit position, like the tax policy position, applies only at the federal level. Thus, LWVUS opposition to the line-item veto and to a constitutionally mandated balanced budget applies only to the federal government. Under the LWVUS deficit position, state Leagues will be expected to oppose state legislative resolutions and other actions calling for a constitutional amendment requiring a balanced budget.

Since the state budgeting process occurs under different constitutional arrangements and laws, the conclusions of the federal deficit study do not overrule any current state League positions on state budgeting processes, nor can they be used at the state level without separate state League study and member agreement on the subjects.

The Funding of Entitlements position enables the LWVUS to support efforts to expand participation in the Social Security system (including participation by state and local government employees and other excluded groups). The League is opposed to measures that allow individuals to opt out of the system or measures to substitute private programs. The League opposes reducing Social Security benefits to achieve deficit reduction.

In 1990, the LWVUS urged the President and Congress to produce actual deficit reductions rather than masking the problem, and prodded them to rely primarily on reductions in defense spending and increased revenues through progressive taxes. In 1992, the LWVUS urged the President and Congress to address the recession and promote economic development. The League called for tax and budget reform and for rebuilding the nation’s infrastructure.

As the federal deficit grew, the “balanced-budget” amendment to the Constitution was introduced in Congress as a political expedient to control the federal budget. The League successfully fought against passage in the House in 1992 and both houses in 1994. The League argued it would dangerously upset the federal balance of powers and hurt the economy.

In 1995, the federal deficit began to shrink, but the push for a constitutional amendment to require a balanced budget grew. The League lobbied and brought grassroots pressure to oppose this dangerous and misleading proposal, arguing that it would hamstring the government’s ability to stimulate the economy in time of recession and to respond to natural disasters. Amendment opponents prevailed then and in 1996-97. League grassroots pressure was key in defeating balanced budget Constitutional amendment efforts.

In December 1998, the League and others signed a letter urging President Clinton to use the budget surplus to invest in programs that benefit the American people, including education, health care, human needs and the environment.

In 1999, when debate over Social Security’s future heated up with various proposals to “privatize” the Social Security system, the LWVUS endorsed the principles of the New Century Alliance for Social Security, emphasizing Social Security’s central role in family income protection. The League’s stance is based on support for a federal role in providing mandatory, universal, old-age, survivors, disability and health insurance.

In the 108th Congress, the League joined with several hundred other organizations, lobbying against tax cut legislation because it was fundamentally unfair and jeopardized the nation’s ability to meet its domestic and foreign responsibilities.

Responding to Congressional efforts to cut funding to the poorest of Americas during the 112th Congress, the League lobbied in support of programs that benefit low income Americans while opposing tax breaks for the wealthiest in the country.