FEDERAL DEFICIT AND TAXATION

WHEREAS, the federal budget deficit continues at an alarming level, has more than doubled during the Reagan administration, and the true deficit for fiscal year 1989 may exceed $170 billion; and

WHEREAS, the staggering increase in the federal deficit is caused primarily by tax cuts benefiting wealthy individuals and corporations, by an unprecedented peace-time growth in defense spending and by rapidly rising interest payments on the national debt; and

WHEREAS, the indebtedness of the United States exerts a continuing pressure for piecemeal reductions in social programs. During the 1980s, federal expenditures for education have significantly decreased as a percentage of gross national product and as a percentage of the total federal budget. This has occurred in spite of statements from the administration and Congress that investment in education is essential for improving American competitiveness in the international economy; and

WHEREAS, the federal deficit and a fear among elected officials of increasing taxes and making equitable tax reform have produced a relentless and regressive attack on tax-sheltered fringe benefits essential to workers and their families. This includes the erosion of tax-sheltered annuities, attacks on employee health and pension benefits and attempts to mandate Medicare taxation of state and local employees; and

WHEREAS, the strangling of federal social programs and the undercutting of worker benefits doubly mortgage the future of working Americans. First, this is done by failing to reduce the federal deficit through an equitable increase in taxes, thus passing the debt to the coming generation. Second, it is done by diminishing essential investments in the future--whether in education, improved health care and other social programs or in pension or retirement programs; and

WHEREAS, in the absence of equitable tax reform and a commitment to raising the necessary taxes to retire the federal deficit, the "nickel and dime-ing" of social programs and attacks on worker fringe benefits will continue, thus eroding 40 years of progress in improving the living standards and opportunities of wor­kers and their families:

RESOLVED, that the American Federation of Teachers support federal legislation to achieve a fair and just tax reform and to produce a tax increase based on ability to pay--such as adding a tax bracket for incomes over $75,000 per year; and

RESOLVED, that the American Federation of Teachers continue to insist upon education and other social investments as a funding priority of the federal government; and

RESOLVED, that the American Federation of Teachers continue to oppose the regressive attacks on worker fringe benefits that have been favorably treated by the tax code.