Source: Business Insider reprint from TheNation.com infographic.

A damning series of charts from Business Insider confirms what many of us have felt in our shrinking paychecks for decades. The income gap between the wealthiest one percent and the bottom 90 percent — typically referred to as the middle class — now exceeds the robber baron proportions of 1928 preceding the banking crash. Today, the super rich earn nearly 1,000 times the wage of the majority of Americans.

That gaping income disparity, trending upward since the 1980s, also accounts for two much more worrying realities. The marginal tax rate has dropped considerably for the wealthy and is now just 35 percent — nearly 60 percent lower than the WWII-era rate of 91 percent that ushered in America’s greatest economic period that was largely credited with creating the middle class.

Coinciding with the precipitous tax decline, the captains of industry (and celebrity) now own more than half of U.S. stocks, bonds and mutual funds. That surely explains much of the motive for watering down the Wall Street regulatory reform bill passed by Congress last week. What? Your meager IRA doesn’t come with a lobbyist on speed dial?

For a nation that prides itself on fair monetary policy and the universal capacity to better one’s economic status through smarts and hard work, we’ve got some long overdue reconciling of our perceptions of America’s promise for economic greatness and its present-day realities.

Read the rest of the wealth inequality charts and weep.

Glenn Gustafson can imagine a day when Colorado schools fall apart, prisons close and highways crumble. As chief financial officer for the Colorado Springs school system, Gustafson recently had to cut his budget by 6 percent. But those cuts are nothing compared to the hardship he says the school system would face if voters approve three tax-cutting ballot measures this November. He calls them the “evil triplets.”

If approved, the measures would dramatically hinder the ability of the state and local governments to raise and borrow money. Taxes on income and real estate would be slashed, as would fees on car registration and telecommunications. Strict limits on public borrowing would put future construction projects in doubt. According to some estimates, the state tax cut proposals could hack at least 25 percent out of the state’s general fund, not counting cuts to local governments and school systems.

“Are we really ready for the anarchy of an uneducated population that we can’t lock up in prison?” Gustafson asks.

Even in a year of anti-tax outrage, marked by Tea Party rallies around the country, Colorado stands out. Of the roughly 200 ballot measures that voters will decide on this fall, none would potentially shake the foundations of government as much as Colorado’s Amendments 60 and 61 and Proposition 101. Freda Poundstone, who sponsored Proposition 101, says the proposals are needed to protect taxpayers at a time when many are hurting financially. “It’s time people start getting their money back. It’s tough out there,” Poundstone says. “People are losing their homes, they’ve lost their jobs and they’ve lost their shirts. Government has not been reduced one iota.”

Over the past few months, voters have been sending mixed signals on taxes. Although voters in Arizona and Oregon recently approved higher taxes, several incumbents lost their primaries this week, suggesting that voters may be restless. Dan Smith, a political scientist at the University of Florida who studies ballot measures, says anything is possible in Colorado. “If you look at the type of displeasure with government generally and specifically in Colorado, if you look at the anti-incumbent sentiment, if you look at government spending and problems with balancing state budgets, this environment is probably as opportunistic as any for anti-tax crusaders.”

Billions at stake

The main provision of “>Amendment 60 would make school districts cut property tax rates in half by 2020 and require state funds to backfill those cuts. It also would impose property taxes on so-called “state enterprises” such as universities. Local governments wouldn’t get to keep that windfall — they would have to lower tax rates to offset the extra revenue.

Amendment 61 would ban the state from issuing any kind of debt and impose severe restrictions on the amount of debt that local governments could take on. And Proposition 101 would reduce income taxes, vehicle sale taxes, car title and registration fees and communications fees.

The nonpartisan Bell Policy Center, based in Denver, has calculated that Amendment 60 would cut local property taxes by more than $1 billion and force the state general fund to make up the difference. Proposition 101, meanwhile, would cut state tax revenue by $1.7 billion when fully implemented.

“I think these are very moderate proposals that address tax relief and tax reform,” says Natalie Menten, an anti-tax advocate who helped gather petition signatures. Menten, a longtime activist who often has clipboards sliding around the backseat of her car, says the measures are a way of fending off “unconstitutional tax hikes.”

School officials across the state are worried, however. To balance budgets, they would be forced to rely even more heavily on volatile state funding and would no longer be able to borrow money. Several school boards have come out against the measures and more are scheduled to discuss them in the weeks ahead.

A history of anti-tax sentiment

Arguments over taxes and spending are nothing new in Colorado. While many recession-battered states only recently have begun to ask difficult questions about tax rates and service cuts, Coloradans have been grappling with these issues for almost two decades. Mostly, that’s because it’s relatively easy in Colorado to place constitutional amendments on the ballot.

In 1992, voters approved the Taxpayers’ Bill of Rights, or TABOR, a sweeping measure that became a national model for anti-tax advocates. Authored by the activist Douglas Bruce, TABOR limited revenue increases to that year’s inflation rate plus population growth. Any revenue exceeding those limits had to be returned to taxpayers. And any new revenue-generating plan had to be approved by voters. In practice, these provisions made it very difficult for government revenues to recover from a recession, even as the economy bounced back.

Almost immediately, local governments began chipping away at the provisions of TABOR by petitioning voters to let them keep tax revenue that exceed the act’s limits — a process colloquially known as “de-Brucing.” In 2005, voters approved Referendum C, which allowed the state government to hold onto tax revenue in excess of TABOR’s limitations for a period of five years. A few years later, the Colorado Supreme Court upheld legislation that brought in more property tax revenue. Many observers see this year’s package of ballot measures as an attempt to undo these watering-down efforts.

Yet the implications of the initiatives are unclear. For instance, school districts routinely borrow money from the state to pay teachers until the spring, when property taxes start rolling in. Under Amendment 61, school districts would have no way to pay to keep schools open until April. Gustafson jokes that to make ends meet, he’s considering changing the school calendar or withholding part of teachers’ paychecks until the spring.

Also, it’s unclear how the state will be able to make up for more than $1 billion in property tax cuts called for under Amendment 60. Education already took a $260 million cut this year to balance Colorado’s budget. “To put more money into education out of the state’s general fund you’d have to do something pretty radical: close all the prisons or take all the mentally disabled kids that are in residential facilities and toss them out on the curb,” says state Rep. Joel Judd, chairman of the House Finance Committee. “It’s unlikely that we’d do anything like that.”

So far, Amendments 60 and 61 and Proposition 101 have generated little discussion among voters. But opponents are mounting a campaign bringing together such disparate interests as labor groups and chambers of commerce. Lawmakers from both parties have criticized the measures. So have both parties’ front-runners in this year’s governor’s race. Coloradans can expect to be flooded with ads on the initiatives during the summer and fall.

Meanwhile, opponents have filed a lawsuit claiming that the sponsors of the ballot measures have not disclosed their funding sources. They accuse Douglas Bruce of being involved with the petition drives. Bruce, who some view as an anti-government demagogue and others laud as a taxpayers’ hero, has denied any involvement and refused to testify in the court case.

Smith, the University of Florida professor, sees similarities between this year and 1992, when TABOR was approved after being rejected by voters twice. “It was a matter of commitment. A lot of folks were not focused on TABOR in 1992, as they had been in previous cycles,” he says. “If progressive groups and the business community aren’t vigilant, when the public mood shifts to an anti-government, anti-tax sentiment, these measures have a chance of passing in a state like Colorado that has a very strong libertarian streak.”

For his part, Gustafson has been spending a lot of time talking to people about the three measures. “I’m a Republican. I’m very conservative,” he says. “I’m not in favor of taxes, but I am in favor of a fair amount of taxes to provide government services. I want prisoners locked up in jail, I want indigents to get health care and I want children to be educated and I want all our children to get a college education. And we’re taking away all those things because of a frustration that I don’t quite understand.”

This story was reported by Stateline staff writer David Harrison.

Utah State Representative Chris Herrod has gotten a lot of attention since his bill to explore seizing federal land through eminent domain became law last month.

Colleagues in other Western legislatures have called seeking tips on replicating his success in their states. And the law was a topic of discussion this week when U.S. Interior Secretary Ken Salazar paid a visit to Salt Lake City.

A majority of the land in Utah, as in many Western states, is owned by the federal government. Herrod’s measure treats the federal government like any other property owner in the state. It allows Washington to keep the rights and title to the land but not ultimate jurisdiction over it. That jurisdiction rests with Utah, and it means that federal land holdings may be subject to state eminent domain authority.

To Herrod, the law is an expression of long-simmering anger. Last year, he watched as the new Obama administration canceled 77 leases to oil and gas companies that had been approved by President George W. Bush. Then he saw a leaked administration memo that purported to list 14 sites as possible new national monuments, two of them in Utah.

Outrage over federal land policies is nothing new in Western states, where local officials have long sought to develop public land and collect tax revenue from it. Now, with Democrats in charge in Washington and conservative activists energized in their opposition towards the Obama administration’s health care, energy and budget policies, some in the West are trying to counter what they see as federal heavy-handedness in land-use matters. Herrod, a Republican, has spoken at Tea Party rallies trying to tap into that anger, although he is wary of calling his bill a “Tea Party bill.”

“It’s a natural outflow of the frustration,” he says. “We kind of feel like we’re serfs. We have this land and we have to beg Washington to see if we can use it.”

So far, there are few signs that the West is gearing up for a full-scale renewal of the Sagebrush Rebellion, the 1970s movement that challenged Washington’s control of public lands. While numerous bills have cropped up in Western legislatures attempting to wrest control of land from the federal government, few have been as radical as Herrod’s and few have received anywhere near the same attention. By contrast, when President Bill Clinton designated the Grand Staircase-Escalante National Monument on 1.9 million acres of public land in southern Utah, he touched off a fury in Western states that had many comparing it to the earlier uprising.

“I can’t see really anything in the Obama administration that would be cause to start another Sagebrush Rebellion,” says John Freemuth, a political scientist at Boise State University.

For instance, Interior Secretary Salazar is a Colorado rancher who last year decided to keep wolves off the endangered species list, furthering a Bush-era policy that angered environmentalists but pleased Western ranchers. The administration has spurned calls to list the sage grouse as an endangered species, a move that would close off vast swaths of land to development. Instead, Salazar has indicated he is willing to let states work through their own procedures for protecting the birds, which scientists from the U.S. Fish and Wildlife Service say need to be protected.

George Nickas, executive director of the environment group Wilderness Watch, is not worried. The Utah bill is little more than “political theater,” he says. “Every so often some of these folks in these states kind of rebel. They like to pick on the federal government and say ‘We resist any federal government control on these lands.’ My guess is it’s wrapped up in the anti-Obama, anti-federal government, anti-Washington, D.C., rhetoric that seems to be so hot right now.”

Herrod says his bill was intended to do more than send a message. He wants to use money generated from developing public lands to fund Utah schools. And he believes that if and when the law is subjected to a federal court test, it could win a 5-to-4 decision in the U.S. Supreme Court. Even some of Herrod’s supporters are skeptical of that view. “I’d say go for it but I think that’s a bit of a stretch,” says Lynn Luker, a lawyer and Republican state representative in Idaho.

Luker sits on the State Affairs Committee in the Idaho House, which last month approved a measure to explore suing the federal government to get control of parcels of federal land in Idaho. Members of the committee say that claiming the land could open it up for logging, which, Luker says, would reduce the risk of forest fires while also providing electricity from burning dead timber.

Other Western states are looking for ways to take on the federal government. Wyoming lawmakers approved a resolution that claimed sovereignty from Washington under the 10th Amendment. An almost identical resolution was debated but defeated in Nevada last year. Montana lawmakers voted on — and turned down — a bill to assert the state’s right to manage its own wolf population.

It’s still unclear whether Utah’s sweeping eminent domain legislation is a sign of things to come. “We’ve got this sort of opening shot from the Utah Legislature, and I think it remains to be seen whether any other Western state will adopt or pursue similar sorts of policies,” says Robert Keiter, a law professor and public lands expert at the University of Utah.

Utah’s anti-Washington sentiment did not stop state officials from warmly receiving Salazar this week as he tried to smooth over differences. But lawmakers and Governor Gary Herbert grilled the interior secretary on Utah’s effort to open old roads in federally protected areas and on the new eminent domain law.

Salazar said he got the message.

This story was reported by Stateline staff writer David Harrison.

Tea Party Tax Day protests are planned across the country today, including a few in New Mexico, but some analysts say the common claim associated with the group — that the Obama administration is raising taxes as part of a “socialist agenda” — doesn’t square with reality.

Gerry Bradley is a research director for New Mexico Voices for Children, which does tax policy work through its Fiscal Policy Project. He says the fact is that 99 percent of New Mexicans have actually received tax cuts through last year’s stimulus package.

“Just take the middle 20 percent of the taxpayers in New Mexico. They’re getting an average tax cut of about $650 a year. So, it’s a significant amount of tax relief.”

Bradley says nearly every working New Mexican received some benefit on 2009 income taxes, with the overall average amount being about a thousand dollars.

Bradley says many economists agree that the administration took steps that were necessary given the economic situation.

“Possibly what the Tea Party people don’t understand is that in a recession, it’s a good thing to increase government spending and cut taxes on consumers. And the Obama administration has increased government expenditures and cut taxes.”

Bradley says the study also shows that New Mexicans across a wide spectrum of income levels received tax relief in 2009, from tax credits for low-income households to alternative minimum tax benefits for higher-income earners.

The figures on tax relief in the stimulus package come from a new report by Citizens for Tax Justice, a Washington-based think tank.

Listen to the New Mexico News Connection by Eric Mack.

Wyoming Governor Dave Freudenthal shot ahead of the wind-state pack by becoming the first chief executive to back a tax on wind energy.

Maybe he can take that risk because he is barred from seeking a third term and announced Mar. 4 that he will not challenge the term limit as he once had considered. Funny how term limits free politicians to take stands they might not otherwise. Pennsylvania’s Governor Ed Rendell, also a lame duck, has been traveling around the state promoting tax increases to balance the state budget.

Freudenthal, an easygoing lawyer who will have more time next January to return to his hobby restoring sheepwagons and Airstream trailers, says politics does not enter into his thinking. Imposing an excise tax on wind-energy production is a question of fairness, he says, and his Legislature agreed.

“Wyoming has a fairly long history of setting the terms under which companies can extract energy from the state that’s premised on the obligation of the companies to handle the impacts, take care of reclamation and contribute to the well-being of the state, says the Democratic governor. “Wind energy is no different.” He was interviewed recently by Stateline.org while in Washington for the winter meeting of the National Governors Association.

As you would expect, the wind-energy industry opposes the governor’s proposal to charge the $1-per-megawatt-hour tax. But some of Freudenthal’s fellow wind-state governors, including Democrats, say the tax would impede development of a nascent green industry viewed as a key alternate power source. They see an opening to gain a competitive edge on Wyoming regardless of the merits of the tax.

“I think Wyoming should make the tax higher so companies will come to Montana,” says Governor Brian Schweitzer of neighboring Montana, another top wind-energy state. “We need to embrace wind energy and offer incentives, not tax it.”

Another Democratic governor, Washington’s Christine Gregoire, is pushing a package of tax increases and spending cuts, but not on wind energy. “Right now, I’m trying to promote wind energy. If I tax it, I believe it will do the opposite,” she says.

Colorado Governor Bill Ritter, a Democrat who is not seeking re-election this fall, says his state is evaluating a wind-energy tax, but stressed that does not mean he supports it. “I’m not ready to talk about it,” says Ritter, who has carved out a reputation nationally as an energy governor because of his forward thinking on renewable energy.

Freudenthal says he is not surprised by the pushback. “I would expect Brian to say that,” he says of Schweitzer. He has had an easier time convincing his own Republican-controlled Legislature of the advantages of a wind-energy tax. Both chambers recently approved it and sent it back to him to sign.

Mineral and farm commodities are the backbone of Wyoming’s economy. A Republican governor, Stan Hathaway, shepherded Wyoming’s first severance tax on minerals in 1969 and headed an initiative to create a permanent trust fund in which severance tax money is invested and put back into state government operations.

Freudenthal’s plan is to split the wind-tax revenues, initially estimated at about $4 million a year, between the counties (60 percent) and the state (40 percent). He first called for a $3-per-megawatt tax and 60 percent to the state, but lawmakers revised the proposal.

“Part of the pitch I made was this is the first opportunity in my lifetime to diversify our tax base,” Freudenthal says.

Critics say the industry’s threat to leave the eighth windiest state for more tax-friendly states is baseless. Why would they be any more special than the oil, natural gas, uranium and coal industries that pay state taxes at a higher percentage?

No one wants those massive turbines in their backyard, the governor says, but if companies are going to put them up, it seems reasonable they should pay for the environmental damage they cause. “Lighten up guys,” Freudenthal says of his industry opponents. “This is business.”

This story was reported by Stateline staff writer Stephen C. Fehr.

Source: Retail Systems Research.

The gig is up, according to an interesting, albeit non-scientific 2009 poll by industry watchers Retail Systems Research.

Given the condition of the U.S. and states’ economies and the loss of tax revenues during this recession, the momentum is building across the country to address this issue. Whether the U.S. Congress will deal with it is an entirely different matter. As long ago as 2001 (when internet sales only represented about 1.5% of total retail sales), 40 State Governors sent a letter to Congress asking that a 1998 moratorium on internet sales tax be lifted. But in October 2007, the House of Representatives voted 405-2 to pass the Internet Tax Freedom Act Amendments Act, extending the moratorium on internet access taxes and other taxes unique to the internet until November 2011.

As promised, RSR ran a “quick take” poll to see what our readers think about the prospect of an Internet Sales Tax (the results are in the chart below). Safe to say, colonial Boston’s Rev. Jonathan Mayhew’s 1750 call for “no taxation without representation” still rings in many Americans’ ears! The most interesting data point from this survey is that not one of the 54 people who answered the question had “no opinion.” Twice as many respondents were adamantly opposed to the new tax as those who were in favor of it. If our readers are any indication, this issue is bound to polarize the voting public.

But what does this really mean for the bottom line of cash-strapped states?

By 2012, a staggering $12.65 billion in local and state tax revenues from uncollected e-commerce sales could be left on the table, according to a 2009 study by University of Tennessee researchers.

That could fill an awful lot of pot holes — or in Colorado, blow up a lot of boulders from a rockslide that punched holes in I-70 near Glenwood Springs cutting off the state’s main east-west thoroughfare.