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A few well-written words can convey a wealth of information, particularly when there is no lag time between when they are written and when they are read. The IPS blog gives you an opportunity to hear directly from IPS scholars and staff on ideas large and small and for us to hear back from you.

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Entries since September 2011

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Georgia on My Mind

September 29, 2011 ·

Since the execution of Troy Davis, whose shattering story activated thousands of people across the country to speak out against a flawed justice system and the brutality of capital punishment, Georgia has been on my mind. I was born there, in a small town outside of Atlanta called Austell, and spent many summers in Newnan with my grandparents. Both sides of my family can be traced back there, some as colonists and some from the Cherokee tribe that called Georgia home. For my entire childhood, Georgia represented the soothing, simple life, the one I felt connected to in my blood. Now, as I sit in the midst of my suitcase and talking points and pack for the delegation trip to Atlanta, I am filled with so much heartache… and even shame.

I was invited to join this delegation and bear witness to the testimony of immigrant women and children because of my work with trafficked and exploited migrant women workers here in the DC area, and my connection to the anti-trafficking movement in the United States. I hope to learn more about the daily struggles of immigrant women there, to learn about what impact severe immigration enforcement has on women’s trust in the police. For survivors of trafficking and other crimes, being able to trust law enforcement is essential. As an advocate, I spend a lot of time thinking about ways to build that trust and educate law enforcement about their critical role in identifying victims in immigrant communities. I will take what I learn from the delegation and continue to build the momentum for an end to laws like HB87, helping communities understand legislative cruelty by showing them human stories, and sensitizing law enforcement to their now deeply conflicted dual mission.

So, that is why I was invited, but it’s not why I decided to go.

In my heart, I needed to come back to Georgia to confront reality, to channel theheartache I am feeling and turn it into action. I want to be proud of Georgia, I want to be proud of our country, I want to be proud of my family. The US legacy of genocide, slavery, racism, and cruelty cannot be forgotten, but I am alive now, you are alive now, we can do something now. When I go to visit my father in Lindale after the delegation trip ends, I hope I can start this dialogue about Georgia with him, and I hope my friends in the South will do the same with their families.

Originally posted at MomsRising.

The Lineup: Week of Sept. 26-Oct. 2, 2011

September 26, 2011 ·

In this week's OtherWords editorial package, my colleague Matias Ramos describes his latest immigration ordeal. It began when an employee of a company with a government contract attempted to expedite his deportation even though the Obama administration had announced that cases like Ramos's are officially a low priority. Clearly, that kind of outsourcing raises ethical questions. But there are economic concerns too. As Beth Schulman explains, "on average, Uncle Sam spends nearly twice as much when the government outsources a job as it would if it just hired another 'expensive' federal worker." Get all this and more in your inbox by subscribing to our weekly newsletter. If you haven't signed up yet, please do.

 

  1. MIA: Obama's New Common-Sense Immigration Policy / Matias Ramos
  2. Blocking Palestinian Statehood / Chris Toensing
  3. America's Government Contracting Bonanza Bilks Taxpayers / Beth Schulman
  4. The Drug War Spreads the Bloodbath South / John Lindsay-Poland
  5. It's Class Warfare, All Right / Donald Kaul
  6. The Corporate Takeover of the 2012 Presidential Election / Jim Hightower
  7. Big Agriculture's Latin American Exploits / William A. Collins
  8. Poverty News / Khalil Bendib

 

Poverty News, an OtherWords cartoon by Khalil Bendib

A Tax Plan to Rally Around: The Buffett Rule

September 20, 2011 ·

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.

Some rights reserved by Fibonacci Blue.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.

Get the facts –and counter the mythology offensive. Check out Citizens for Tax Justice, the Center for Budget on Policy Priorities and the Tax Policy Center.

Join groups like U.S. UNCUT and The Other 98 Percent and other social networking and direct action groups that will be keeping the pressure on.

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.

Obama Supported Financial Transactions Taxes - Before Summers Nixed It

September 20, 2011 ·

The hot new book in Washington, Ron Suskind’s Confidence Men, shines a bit of new light on the Obama administration’s lack of support for financial transactions taxes. 

Larry Summers wasn't asleep when financial transactions taxes came up.According to the book, based on 700 hours of interviews with high-level staff, President Obama supported the idea of placing a small tax on trades of stocks, derivatives, and other financial instruments. But, as with many other progressive policy proposals, it was blocked by Larry Summers, the former Treasury Secretary who was serving as Obama’s Director of the National Economic Council.

A major theme of the book is how Summers dominated daily morning economic policy meetings with Obama. Former Office of Management and Budget Director Peter Orszag reportedly told Suskind that Summers would often tell the President “I’ll make my argument first; you can go after me.” 

According to Pulitzer Prize-winner Suskind, Obama economic advisors said Summers hijacked a long list of their proposed policies. Here’s what he reports about FTT:  “A financial transactions tax on banks and financial institutions, to try to tame the trading emphasis that has swept those industries and along the way, raise money: Obama said, in one meeting, ‘we are going to do this!’  Summers disagreed; it never materialized.”  (page 365)

The story of Obama supporting the idea of taxing financial speculation is corroborated by off-the-record reports I’ve heard over the past couple of years from civil society leaders and foreign government officials. But it’s chilling to hear such strong confirmation that the idea was derailed by Summers, a man whose credibility should have been in the toilet long before Obama entered the White House. 

The Suskind book reminds us of Summers’s long trail of disasters, from his key role in pushing for reckless financial deregulation during the Clinton administration to his offensive remarks about women during his stormy tenure as president of Harvard University.  My first exposure to the guy was in 1991, when, as World Bank chief economist, he penned a scandalous memo suggesting that dumping toxic waste in developing countries made sense from an economic perspective. 

And yet Summers, renowned for his powers of intimidation, was apparently so forceful in his domination of economic policy matters in the Obama White House that, according to Suskind, it messed with Obama’s confidence. “Over time, some of Obama’s more admirable features, his joy of inquiry, his impulse to reach just a bit beyond his grasp, started to get planed down,” wrote the former Wall Street Journal reporter. “He was making fewer decisions, and almost none where he couldn’t manage to tease some supporting consensus from his senior staff.”

Summers left the administration late in 2010. According to Confidence Men, he was outraged over being passed over for the position as chair of the Federal Reserve. So much so that he submitted a list of demands for compensation, including a round of golf with Obama, to be able to walk with cabinet members into the State of the Union address, and a car and driver. 

However, even with Summers finally out of the picture, Treasury Secretary Geithner has worked to block financial transactions taxes. Recently, he even chastised Europeans for moving towards implementation of such taxes in their own territories, prompting angry words from the Austrian finance minister.

But let’s hope Obama’s recent tough talk on fair taxation signals a new chapter. It’s not too late for the president to revisit some of his earlier positions in support of progressive economic policies, including financial transactions taxes. 

Eric Cantor's Defense of Job Destroyers

September 19, 2011 ·

President Obama last week proposed a tax increase on America’s wealthy to finance the $447 billion jobs plan he advanced the week before. Representative Eric Cantor, the GOP House majority leader, responded almost immediately.

“I sure hope that the president is not suggesting,” Representative Cantor pronounced, “that we pay for his proposals with a massive tax increase at the end of 2012 on job creators.”

Interesting. Does this mean that Cantor now welcomes tax hikes for job “destroyers”? Like Richard Clark, the chair of drugmaker Merck. Clark took home $17.9 million last year. His company earlier this year announced plans to shed 13,000 workers. Or how about Bank of America CEO Brian Moynihan? He pulled in $10 million last year. B of A has just announced 30,000 new job cuts.

We suspect that majority leader Cantor misspoke. He really doesn’t support tax increases on rich people period, whatever their job record may be. Cantor’s perspective has, of course, dominated Congress for the last three decades.

Read more at Too Much Online.

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