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Entries tagged "Taxes"Page Previous 1 • 2 • 3 • 4 • 5 • 6 • 7 Next
September 20, 2011 · By Chuck Collins
If you care about the future of the republic, the health of our communities, and the prospects for a transition to a new green economy – the fight over taxation and concentrated wealth is your fight.
If you care about children – and the kind of society we are going to leave for the next generation – in terms of ecological health, infrastructure, functioning government –the fight to tax the wealthy and close corporate tax abuses is your fight.
President Obama has put forward a revenue proposal worthy of vocal support and organizing. Progressives need to engage the media and our neighbors – and dramatize the reality that a majority of people support increasing taxes on millionaires and corporate tax dodgers.
Why We Should Increase Taxes on the Wealthy
There will be a vigorous debate over this proposal that will flow all the way into the 2012 election. There are four reasons for taxing the wealthy that we should repeat in any conversation we have:
1. Taxes on the Wealthy Have Declined Steadily for Decades. Over the last decade – and really over the last fifty years – the portion of income paid in taxes by our wealthiest citizens has steadily declined. In 1961, when Barack Obama was born, the effective rate paid by households with income over $1 million was 43 percent. Today it is 23 percent. The richer you are, as Warren Buffett has illustrated, the smaller the percentage of your income you pay.
2. The Wealthy Benefit Enormously from U.S. Society. The U.S. wealthy have disproportionately benefited from the public investments we have all made together over the last several generations in technology, scientific research, infrastructure and the system of property rights protections, education and stable market regulations that enable wealth creation to happen. If they have any doubts about the centrality of the U.S. system to their good fortunes, they should try somewhere else.
3. We All Have A Moral Obligation to Future Generations. Those with significant wealth at this time have a moral obligation to pay back the society that made their wealth possible. Progressive taxation is an “economic opportunity recycling” program, enabling present generations to ensure that future generations have the same opportunities they had. We all have a responsibility to future generations – and the wealthy have an obligation to pay their fair share of taxes as their parents and grandparents did.
4. Progressive Taxation will Reduce Extreme Inequalities of Wealth and Power. Over the last thirty years, we’ve seen a dramatic increase in inequalities of income, wealth and opportunity. The wealthiest one percent of households own 35.6 percent of all private wealth, more than the bottom 95 percent of households combined. These extreme inequalities have undermined all that we care about –our democracy, education, mobility, economic stability. This concentrated wealth and power is threatening the fundamental tenets of our democracy –and progressive taxation is one of the few ways to reduce inequality.
President Obama’s Tax Plan
The President’s Tax Reform Plan has many components and covers eight pages of provisions in the summary released, “Living within Our Means and Investing in the Future.” But they fall into three areas:
1. Allowing Bush Tax Cuts Expire and Reform the Estate Tax. President Obama has renewed his campaign pledge to allow the 2001 and 2003 Bush tax cuts for the wealthy expire on households with incomes over $250,000. Since 2001, we’ve effectively borrowed almost $1 trillion to give the highest income households in our nation these tax breaks. Reversing them is part of how we’ll get our fiscal house in order.
The President also proposes restoring the estate tax to 2009 levels when the tax applied to individuals with wealth over $3.5 million and couples with wealth over $7 million. The estate tax is our nation’s only levy on substantial inherited wealth. The combined revenue of these provisions would generate over $866 billion over 10 years, according to the Office of Budget and Management.
2. Millionaire Tax Rates and the Buffett Rule. The Obama proposal includes the “Buffett Rule” that no millionaire should pay an effective rate lower than a middle class taxpayer. It was inspired by the billionaire investor’s disclosure of the ways our tax code gives preferential treatment to higher income taxpayers. Buffett revealed that in 2010 that he paid an effective tax rate of 17.4 percent while many middle class and higher income taxpayers pay over 25 percent of their income.
High wage earners pay at 35 percent rate while income from wealth – capital gains and dividend tax rates – are 15 percent. This preference creates all kinds of distortions, including hedge fund managers who claim their income should be taxed at the lower 15 rate. The President’s tax proposal would eliminate this so called “Carried Interest” loophole and require hedge fund managers to pay at higher rates.
3. Corporate Tax Reform. The Obama proposal includes a number of important tax reforms, including elimination of subsidies for the oil and gas industry and reform of huge loopholes the insurance industry uses. It closes down some of the accounting games that corporations play that contribute little to jobs or economic health.
A Few Missing Pieces
There are few major missing pieces in the President’s revenue plan. There is no proposal for a financial transition tax, a modest levy on transfers of stocks, bonds and other financial instruments. European countries have been pressing the U.S. to join a global move to institute such taxes to slow unproductive currency and financial speculation. A penny tax on every four dollars of transactions could generate over $150 billion a year in revenue.
The president’s proposal unfortunately does not fully address the huge corporate loopholes that encourage offshore tax havens and aggressive corporate tax avoidance by U.S. companies. He should fully embrace Sen. Carl Levin and Rep. Lloyd Doggett’s “Stop Tax Haven Abuse Act,” which would raise an estimated $100 billion a year.
The president’s proposal still gives preferential tax treatment to income from capital over income from work. The tax rate gap between earned wage income and investment income is a glaring problem that creates huge abuses and distortions. We should tax all income under the same rate structure system, whether it comes from dividends or paychecks.
Organizing Time: Celebrate and Get to Work
The principles and policies behind President Obama’s revenue proposals are worth lifting up and defending. They would restore progressivity and fairness to the tax code. They would raise $1.5 trillion over the next decade from those with the greatest capacity to pay.
The push back will be enormous. Hedge fund managers, corporate CEOs, the offshore tax dodgers – together will spend hundreds of millions if not billions to attack these proposals. They believe income from their investments is more virtuous that income from wages. They believe they should get special treatment for everything they do. They would be comfortable living in an American with great disparities of income, wealth and opportunity.
They’ll accuse Obama of class warfare. But as Warren Buffett himself observed, “There is a class war in a America, and my class is winning.” Obama noted that his proposal is not based on class war, but math.
We must talk to our friends, families and neighbors – post articles on social media and send around information. Tell people you know why the fight for fair taxes matters to everything they care about.
If you know a wealthy person who believes their taxes should be raised, tell them to join Wealth for the Common Good and speak out for the tax fairness. It does no good if they keep their position private. Warren Buffett made a difference by telling his story and exposing that there is one tax system for the wealthy and one for the other 98 percent.
If you are a small business owner, don’t let the right wing perpetuate the myth that tax increases on the wealthy and closing corporate tax loopholes are bad for small business and destroy jobs. You have a unique voice in this debate. Join Business for Shared Prosperity along with thousands of other small business people who believe that taxes are the price we pay for an unparalleled business environment and infrastructure.
We should remember to celebrate. The fact that these tax proposals are on the agenda is testament to a decade of work by organizers, netroots activists, workers, researchers, and policy advocates who have made the case for progressive taxation.
It is the result of groups like Patriotic Millionaires and Wealth for the Common Good – that lift up the Warren Buffetts of the world, the thousands of other business leaders and wealthy individuals who believe they should pay more and are willing to face the cameras and say so.
It is a celebration of legislative champions like Sen. Bernie Sanders, Rep. Jan Schakowsky, Rep. Barbara Lee, Sen. Carl Levin, and Rep. Lloyd Doggett who introduced and incubated many of the policies that are in the President’s proposal when they were considered “off the table.”
This fall will be decisive – and the debate over taxes will go to heart of what kind of country we become. All hands on deck!
Chuck Collins is a senior scholar at the Institute for Policy Studies and co-editor of www.inequality.org, a source of data, analysis and commentary on U.S. and global economic inequality.
August 31, 2011 · By Chuck Collins
As the Super Congress eyes trillions in budget cuts that will undermine the quality of life for most Americans, here's a stunning fact to contemplate: 25 hugely profitable U.S. companies paid their CEOs more last year than they paid Uncle Sam in taxes.
In other words, the more CEOs dodge their civic responsibilities, the more lavishly they're paid. That's the key finding of a new Institute for Policy Studies report, Massive CEO Rewards for Tax Dodging, which I co-authored.
These artful dodgers include the CEOs of Verizon, Boeing, Honeywell, General Electric, International Paper, Prudential, eBay, Bank of New York Mellon, Ford, Motorola, Qwest Communications, Dow Chemical, and Stanley Black and Decker. Their average annual compensation totaled $16.7 million, well above last year's average of $10.8 million for the CEOs of S&P 500 companies.
Instead of paying their fair share, these companies spend millions lobbying for additional tax breaks and loopholes. Twenty of the 25 companies spent more lobbying Congress last year than they paid the IRS in federal corporate taxes. General Electric invested $41.8 million in lobbying and got $3.3 billion in tax refunds. Boeing spent $20 million on lobbying and got a $35 billion contract from the U.S. government, while paying a paltry $13 million in U.S. taxes for a company with $4.3 billion in U.S. income last year.
Eighteen of the 25 companies aggressively use off shore tax havens to shift profits around the globe to avoid U.S. taxes. These 18 companies together had 556 subsidiaries in the Cayman Islands, Singapore, Ireland, and other havens. The offshore scam works like this: companies pretend their profits are earned in low-tax or no-tax jurisdictions — and then feign losses from their U.S. operations at tax time.
Whatever happened to corporate civic leadership? A previous generation of CEOs would have been ashamed to be compensated so lavishly while their companies abandoned responsibility for paying their fair share. They would have been embarrassed to go year after year contributing little or nothing to the public investments that make the United States a vibrant business environment.
Here are a few examples of these champion tax-dodgers:
- Chesapeake Energy paid its CEO Aubrey McClendon $21 million last year but paid zero federal corporate income tax in 2010. Chesapeake is fracking the tax code, drilling it for every possible subsidy it can extract — while lobbying to preserve antiquated tax breaks for oil and gas industry.
- Online retailer eBay paid its CEO John Donahoe $21.4 million last year while collecting a federal tax refund of $131 million. eBay' 31 subsidiaries in Switzerland, Singapore, and seven other tax havens facilitate its efforts to move money around the planet as a tax-dodging strategy.
- Insurance brokerage Marsh & McLennan paid its CEO Brian Duperrault $14 million yet collected a $90 million tax refund from Uncle Sam. The company has 105 subsidiaries in 20 off shore tax havens, including 25 in Bermuda — a favorite locale for insurance companies seeking to avoid both taxes and regulation.
These super-moocher companies happily benefit from the privileges and advantages of doing business in the United States. If a competitor tries to steal their product or idea, these corporations rush to the U.S court system and law enforcement agencies for remedies and justice. The U.S. military guards their global assets.
They use the fertile ground of publicly funded research and infrastructure to bolster their own profits. They create new products from a foundation of Uncle Sam's investments in medical and scientific research and government funded technologies like the Internet. Our taxpayer-funded roads, ports, and bridges bolster their business environment. Our public schools and universities educate the workers these companies rely on. In fact 16 of these 25 CEOs attended public universities. They personally were educated with help from U.S. tax dollars.
These CEOs profess to love America. But when it comes time to pay the bills, they'd rather outsource that job over to you or the small business down the road.
Congress should pass the Stop Tax Haven Abuse Act which would limit some of these tax shenanigans. In the face of growing fiscal austerity, these companies should contribute to the solution and pay their fair share of U.S. taxes.
Chuck Collins is a co-author of the new Institute for Policy Studies report, Executive Excess 2011: The Massive CEO Rewards for Tax Dodging.
July 28, 2011 · By Joy Zarembka
Washington, like much of the East Coast, was hit last week with brutally hot temperatures that topped 100 for several days straight. Usually I'm a believer in the science of climate change. My colleague Janet Redman's article, "Connecting Extreme Weather Dots Across the Map" reinforces that belief. But after watching lawmakers in Washington, I'm beginning to think that it’s the hot air emanating from Congress that is behind this recent heat wave.
The rhetoric around the budget and the debt ceiling simply can't get any hotter without melting down the country.
But we continue to be in an era in which Wall Street, instead of Main Street, reigns supreme. IPS expert Sarah Anderson blogged this week about the efforts of Wall Street lobbyists to repeal a simple requirement for companies to report incentive-based pay. Wall Street continues to oppose efforts to shut down overseas tax havens that could restore $1 trillion dollars to U.S. taxpayers, notes IPS expert Chuck Collins. A task force led by IPS expert Miriam Pemberton found that trimming just nine military programs could save $77 billion. And IPS's World Beat editor John Feffer described the devastating effects of President Obama's efforts to push for trade deals that could lead to further job losses and further enrich Wall Street.
Empowering Main Street, as David Korten suggests in his recent New Economy Working Group report, "How to Liberate America from Wall Street Rule," would get us on a better track. So would the commonsense measures that Chuck Collins outlined on the eve of the narrowly averted government shutdown a few months ago.
I tend to agree with the majority of Americans who don't think turning up the rhetorical heat is going to win the day. We need to drop this destructive debate. Our shared economic and physical security depends on all of us working together, bound by shared values of fairness, justice, and equal opportunity.
Meanwhile, we stand in solidarity with the Norwegian people, who suffered a devastating act of violence this week. And we're reminded by Saul Landau's film, Will the Real Terrorist Please Stand Up, which was released nationwide this week, that terrorism is often defined by whose side you are on.
June 7, 2011 · By Sarah Anderson
A swarm of around a thousand nurses in scarlet scrubs descended on the U.S. Chamber of Commerce in downtown Washington today, calling for a new national agenda funded by taxing Wall Street.
At the door to the Chamber’s headquarters, they were greeted by tuxedoed gentlemen with sashes bearing the names of Wall Street firms. They held out buckets for cash donations (I didn’t see much actual money going in).
The rally, organized by National Nurses United, was part of a series of activities to promote what they are calling a “Main Street Contract” to increase spending on jobs, healthcare, education, and other urgent needs.
At a press conference on June 6, NNU Executive Director Rose Ann DeMoro explained that they are calling on Congress to enact a tax on financial transactions as a way to pay for the contract.
Such taxes are designed to generate massive revenue while also discouraging the kind of short-term purely speculative financial activity that serves no social purpose. The way they work is by placing a very small fee (0.25% or less) on each trade of stocks, derivatives, foreign exchange, and other financial instruments.
DeMoro said that NNU members along with other unions and allies plan to demonstrate June 22 on Wall Street as part of an international day of action on financial transactions taxes.
That date was selected because it falls on the eve of a European Council meeting in Brussels. Progress on this issue has been moving fast in Europe and there are high hopes that European countries, at least those in the eurozone, will reach agreement soon to coordinate the adoption of financial transactions taxes. Leaders of Germany and France have been the biggest champions, and there are reports this week that their two governments are coming closer to consensus on the technicalities (instruments covered and at what rates).
This could put healthy pressure on U.S. policymakers to open their minds to an idea that progressives have been pushing for decades.
May 25, 2011 · By Sam Pizzigati
Great wealth, the philosopher Philip Slater once noted, tends to make wealthy people instinctively suspicious because they can never be quite sure whether others love or admire them for their fortunes or themselves.
"If you gain fame, power, or wealth, you won't have any trouble finding lovers," Slated added, "but they will be people who love fame, power, or wealth."
Exhibit A for Philip Slater's wisdom: the long, sad life of Huguette Clark, the copper mining heiress who died this week at the age of 104.
Over a century ago, Clark's father, the fearsome William Andrews Clark, abused mine workers and poisoned the environment on his way to one of the Gilded Age's greatest fortunes. Mark Twain called Clark "as rotten a human being as can be found anywhere under the flag," and the enormous wealth he left daughter Huguette in 1925 would define — and burden —the rest of her life.
Huguette Clark married in 1928, then divorced in 1930. She never had children and, after her mother's 1963 death, lived as a recluse in a 42-room Manhattan Park Avenue apartment. She also owned — but hadn't visited since the 1950s — a beach house in Santa Barbara.
At Clark's third home, a country home in Connecticut now worth $23 million, the guard who had spent almost his entire adult life watching over the property never even knew the name of the estate's owner until a reporter asked him about Clark the day after she died.
Clark did have some cousins, nephews, and nieces, but she refused to see them. Her closest friends, an acquaintance once told MSNBC, "have always been her dolls." She used to pay servants to iron their clothes.
Clark's father died before the stiff federal estate tax rates of the 1940s and 1950s — as high as 77 percent on estate value over $10 million — kicked in. Now estate tax rates are running back close to their 1920s-era levels, and Clark's cousins, nieces, and nephews may eventually inherit most of the $500 million fortune Clark has apparently left behind.
Will congratulations be in order?
Sam Pizzigati, the co-editor of Inequality.Org, also edits Too Much, the online weekly on excess and inequality published by the Washington, DC-based Institute for Policy Studies. Read the current issue or sign up to receive Too Much in your email inbox.