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Entries tagged "Inequality"Page 1 • 2 • 3 • 4 • 5 Next
January 18, 2013 · By Sarah Anderson
Republicans seem to have something against tax increases. I get that. But it's still not crazy to think we can win some important revenue battles during Obama 2.0. And given this country's pressing needs – from repairing our infrastructure to rehiring teachers – it would be crazy not to try.
A big question, of course, is how to peel off the 17 House Republicans needed to win anything (assuming all Dems and President Obama are in favor). Openings will come, though, when Republicans need votes from across the aisle on something or other. The even more important challenge is to push progressive reforms into the center of the debate so they get plucked when the stars are aligned.
Here are four that are not only solidly progressive but also have bipartisan potential:
1. Close the carried interest loophole
OK, people, if we can't fix this one during the second Obama administration, I'm giving up on Washington once and for all and becoming a goatherder. How can we continue to allow gazillionaires to pay only a 15 percent tax rate on the profit share ("carried interest") they get paid to manage hedge and private equity funds?
Ray Dalio of Bridgewater Associates, for example, was the highest-earning hedge fund manager in 2011, raking in $3 billion. Forbes calculates that if Dalio had paid ordinary income tax rates, he would have contributed an extra $450 million to the Treasury.
The loophole is so off-the-charts absurd even some hedge fund managers are ready to give it up. Bill Ackman, of Pershing Square Capital, has said he expects the loophole to disappear and thinks his peers won't even mind that much.
Formerly problematic Dems have also changed their tune. Back in 2007, a fix passed the House but never made it through the Democratic-controlled Senate because of obstructionism from Senator Chuck Schumer (D-NY). Thankfully the Senator from Wall Street land has had a rethink.
2. Cap the deductibility of executive pay
The more corporations pay their CEO, the less they owe in taxes. A 1993 law aimed to fix this perverse incentive by capping executive pay deductions at $1 million. The problem is it left a huge loophole for "performance-based" pay. Oracle CEO Larry Ellison, for example hauled in $76 million in stock options and other so-called "performance-based" pay in 2011 – all of it fully deductible. And contrary to Clinton era thinking, stock options do not improve performance. This became abundantly clear after the dot-com crash and the 2008 crisis, when boards helped CEOs recoup their losses by handing out boatloads of new options.
As for bipartisan, "purple" potential, Senator John McCain (R-AZ) co-sponsored a bill in 2009 that would've tightened up the loophole and former Senate Finance Chairman Charles Grassley (R-IA) has made supportive comments. There are also two recent precedents. Both the bank bailout and the health care reform legislation included $500,000 caps on pay deductibility with no performance pay exemptions for financial and health insurance executives. Guess what? The world didn't end.
3. Adopt a financial transaction tax
This is the idea of putting a very small tax on each trade of stocks, bonds, and derivatives. Tax the Wall Street casino? Fat chance, you might say. But there's actually huge momentum on this, both at the grassroots and the policy level.
About a dozen European governments have committed to coordinate such a tax. The details still need to be hammered out, but the proposal on the table is for a tax of 0.1 percent on stock and bond trades and 0.01 percent on derivatives.
Sure, you might say, but have Europeans ever met a tax they didn't like? How are you going to sell this in the land of the "free"?
One major selling point is that by taxing each trade, this tax would discourage the controversial high-speed trading that now dominates markets. The chief economist at the Commodity Futures Trading Commission, the nation's top derivatives regulator, recently found that this automated speed trading is sucking significant profits from traditional investors. And a growing number of these traditional investors are coming out in support of financial transaction taxes.
Even for tea partiers, if forced to pick from a menu of options for raising massive revenue, what do you think they'd go for? One of the numerous proposals (e.g., value added taxes) that would hit the middle class? Or one targeted at the bigtime gamblers on Wall Street who benefited the most from the bailout so hated by the tea party?
4. Close offshore tax havens loopholes
The rampant use of tax havens to stiff Uncle Sam has sparked outrage across the political spectrum. In a nationwide poll, nine out of ten small business owners said it was a problem when big businesses used offshore loopholes to avoid paying their taxes. In the same poll, in which Republicans outnumbered Democrats 2-to-1, two-thirds of small business owners said big business did not pay their fair share of taxes. Even Rush Limbaugh has acknowledged that something is wrong when General Electric pays no taxes despite earning tens of billions in profits.
Closing tax haven loopholes could raise at least $100 billion a year. To move in this direction, Congress could increase reporting requirements. Under the Dodd-Frank financial reform legislation, energy corporations will now have to report on their profits, taxes and other government payments, by nation. This should be extended to cover all corporations. The intent of the Dodd-Frank disclosure is to combat corruption, but it could also help combat tax avoidance. A recent survey of chief financial officers of multinational corporations found 75 percent worry about the reputational impact of their company's tax disclosures.
Let's not be intimidated by Grover Norquist and his irrational tax-hating minions. Obama's legacy — and our nation's economic future — will be determined by our ability to build a solid and progressive revenue base.
Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies in Washington, DC and is a co-author of the Institute's yearly Executive Excess reports on CEO pay. www.ips-dc.org Distributed via OtherWords (OtherWords.org)
November 7, 2012 · By Sarah Anderson
Members of Congress who earned good marks in an Institute for Policy Studies "report card" on inequality fared well on Election Day.
We awarded "A+" grades to the 12 House members who did the most to narrow America's economic divide over the past two years. Eleven of these lawmakers won:
Robert Brady (D-PA), Yvette Clarke (D-NY), Steve Cohen (D-TN), John Conyers (D-MI), Marcia Fudge (D-OH), Raul Grijalva (D-AZ), Eddie Bernice Johnson (D-TX), Hank Johnson (D-GA), Barbara Lee (D-CA), Jim McDermott (D-WA), and Jan Schakowsky (D-IL).
Only one of these A+ lawmakers, Rep. Pete Stark (D-CA) lost his seat to a Democratic challenger — making him a notable casualty to California's top-two primary system.
Three of the five senators who nailed top marks for their legislative actions to reduce inequality in America were up for re-election. They all won: Sherrod Brown (D-OH), Bernie Sanders (I-VT), and Sheldon Whitehouse (D-RI).
Republicans identified as the most "99% friendly" within their party also did well. The IPS report card rated three senators and nine House members at a "C" level for doing the most to reduce extreme inequality over the past two years. All seven of the House members on this list who ran for re-election won. None of the three most "99% friendly" Senators was up for re-election this year.
Our report card gave failing grades to 59 lawmakers who consistently favor the interests of the wealthy instead of looking out for the needs of everyone. Of the 45 who were up for re-election, two lost. One was Rep. Nan Hayworth (R-NY), who was the lead sponsor of a bill to repeal a provision in the Dodd-Frank financial reform law that requires corporations to disclose the ratio between what they pay their CEO and their workers.
This new metric could encourage a narrowing of the staggering inequality gaps within companies. In the midst of Hayworth's two-year crusade against that provision, the SEC has failed to implement it.
The other House member who received an "F" grade and lost her seat was tea party-backed Rep. Ann Marie Buerkle, another New York Republican.
The IPS report card also identified the 17 Democrats who have done the least to fight extreme inequality and rated no better than a "C: Of the eight House Democrats on this list who were up for re-election, two lost (Representatives Ben Chandler of Kentucky, and Larry Kissell of North Carolina). Mike McIntyre, another North Carolina House Dem, appeared to be headed for a recount.
Sarah Anderson is a co-author of this Institute's first annual inequality report card, released in September. It rates lawmakers on the basis of their voting records and co-sponsorships of 40 different legislative actions over the last two years. The bills considered range from legislation to establish a "Buffett Rule" minimum tax rate that all wealthy Americans must pay to a measure that would raise the minimum wage and index it to inflation.
October 4, 2012 · By Brian Cruikshank
I've long thought that it would be handy to have a tool that makes it easy to contact our members of Congress though social media networks, rather than email or phone calls.
We've seen the Stop Beck Twitter campaign successfully make advertising on Glenn Beck's TV show toxic to corporate brands. But what about harnessing that kind of power to highlight what's wrong with so many members of Congress?
When I heard that my colleagues at the Institute for Policy Studies were putting together an Inequality Report Card, grading congress members on how well they do on the issue of economic inequality, I jumped at the chance to turn such a tool into reality.
The action map I created lets you not only see your own lawmaker's grade, it invites you to take action. Clicking on a congressional district will pop up a bubble that includes the member's Twitter account, Facebook account, online feedback from, and phone number. It has never been easier contact your representative online and make your voice heard.
Let me know what you think. And, of course, take action.
Brian Cruikshank is the Institute for Policy Studies' web developer.
September 12, 2012 · By Salvatore Babones
According to Census Bureau figures released today, 15 percent of the US population lives in poverty. In 2011, more than 46 million Americans lived below a poverty line that was set more than four decades ago, in 1969.
The poverty rate for children remains more than 20 percent for the third year in a row. More than one-third of black children and Hispanic children live in poverty.
In the words of Rep. Mike Honda (D-California), co-chair of the Congressional Out-of-Poverty Caucus, these figures are "a stark reminder that, although we are the wealthiest nation the world has ever known, far too many children are going to bed hungry."
In fact, the USDA reports that more than 16 million American children are "food insecure."
Today's census report also contained bad news on incomes.
Median household income (adjusted for inflation) was down an additional 1.5 percent from the already-low levels of 2010. Median income is now 8.9 percent lower than it was in 1999.
Income inequality, as measured by the Gini index - the degree of income inequality, with 0 representing total equality and 100 representing total inequality - reached a new record high of 47.7 percent. A Gini index of 50 would be equivalent to half of the population receiving all of the country's income, while the other half got nothing.
All this bad news comes against a backdrop of extraordinarily low employment rates. According to the Bureau of Labor Statistics, just over 58 percent of the adult population has any kind of job at all (full or part time), the lowest figure in 30 years.
Only 64 percent of adult men have a job of any kind, the lowest figure ever.
Today's official poverty rate of 15 percent is among the highest of the past 40 years. When the poverty line was first adopted in 1969, the poverty rate was just 12.1 percent.
The poverty line we use today was officially set on August 29, 1969. It represented a 1969 consensus of the basic minimum standard of living for American families in 1969. Other than adjusting for inflation, it has not been updated since.
In the technical discussions that preceded the official determination of the poverty line, experts considered a methodology that "would have resulted in poverty thresholds that were 25 percent to 30 percent higher than the existing thresholds," according to research published in the Social Security Bulletin.
In essence, 15 percent of Americans today live in what would have been considered poverty in 1969, more than 40 years ago. Had our standards gone up over the past 43 years, even more Americans would now be identified as poor.
In many ways, poor Americans are even worse off than they have been in the past. For example, a record low 69.3 percent of Americans are now covered by private health insurance. Nearly 10 percent of children have no health insurance coverage at all.
And state anti-poverty programs around the country are facing severe budget cuts.
According to figures from the Bureau of Economic Analysis, America's total economic output per person is now more than twice as high as it was in 1969 (adjusted for inflation).
With twice the resources, today's America is much better placed to end poverty than was the America of 43 years ago.
Today's Census Bureau report offers little cause for hope. After 43 years with no progress, poverty is now endemic in America. But we do have the financial means to reverse it, should we ever garner the political will.
September 12, 2012 · By Karen Dolan
We can’t seem to stop having record numbers of people living in poverty in the United States. The richest continue to get richer and the rest of us continue to see our incomes get lower and lower.
New Census Bureau figures released today, show that 15 percent of the U.S. population lived in poverty in 2011. Over 46 million Americans lived at or below the poverty threshold of a household income of $23,201 per year for a family of four. One in five of our children live in poverty and over one-third of black and Latino children are struggling through impoverishment.
In 2011, we saw the first one-year increase in income inequality since 1993. The top 5 percent gained 5.3 percent in income in 2011 over 2010. The lowest quintile saw little change, but the second-lowest, middle, and fourth-lowest quintiles all experienced a decline in income over the year. Sadly, those who “occupied” Wall Street and city squares across the country in 2011, were right: All of the income gains have concentrated at the top, while the rest of us saw a deterioration or stagnation in our wages and income.
This data also confirms that safety programs work. According to the Census Bureau, unemployment benefits kept 2.3 million of us out of poverty in 2011, Social Security benefits kept over 21 million people out of poverty and, if we count the nutrition aid of the Food Stamps program as income, it would show that 3.9 million people were lifted above the poverty line in 2011.
Increasingly, all of the boost in wealth is concentrated at the top and record numbers of poverty persist, while the middle and lower-economic classes are losing ground. Now is not the time to lower taxes on the wealthiest by cutting proven, effective anti-poverty measures such as Unemployment Insurance, Supplemental Nutrition Assistance, the Earned Income Tax Credit, Social Security, and new coverage benefits gained from the health care reform law.
The rich shouldn't be rewarded while the rest of struggle.