This fall, Responsible Wealth & United for a Fair Economy made the strategic decision to focus our efforts on promoting a stronger estate tax as part of the fiscal slope negotiations. We’ve been heavily involved in rolling back the Bush tax cuts since 2001, but we knew there would be lots of other groups on that bandwagon. We figured Responsible Wealth’s greatest value added would be to get a bunch of really prominent individuals to say we should have a stronger estate tax. So we did.
Together with signers like Warren Buffett, George Soros, President Carter, Bill Gates, Sr., Abigail Disney, and Richard Rockefeller, Responsible Wealth put a stake in the ground saying we should have a $4 million per couple estate tax exemption and a 45% rate, rising on the largest fortunes. That was considerably to the left of Obama’s proposal ($7 million; 45%) and far stronger than 2012 law ($10 million; 35%). Unless you’ve been backwoods skiing and just made it back to your iPhone, you already know that both the Senate and House passed legislation that extends the $10 million per couple estate tax exemption and raises the rate to 40%.
Here’s the good news:
- We still have an estate tax.
- We got part of what we wanted in the negotiations: a 40% rate is better than 35%.
- This is the first time the estate tax has been strengthened in 28 years.
- With your help, Responsible Wealth made the estate tax part of the fiscal cliff debate. Prior to our December 11 teleconference, there was almost NO discussion of the estate tax. In the past two weeks, almost EVERY story about the fiscal cliff tax debate mentioned the estate tax.
- The GOP was forced to tip their hand and expose who they’re really concerned about. They made it clear in the 11th hour negotiations that keeping the estate tax as weak as possible for wealthy families was their top priority.
- The estate tax was finally indexed to inflation. Some Democrats don’t like this, because it means we’re stuck (for the foreseeable future) with an overly high exemption. But indexing in and of itself makes sense. If the original estate tax had been indexed for inflation, we likely would never have faced the past 12 years of challenges to the law.
Here’s the not-so-good news:
- The $10 million per couple exemption is still unnecessarily high, and the 40% rate is too low.
- The estate tax was once again used as a bargaining chip in the negotiation (as in 2010). While the GOP is unified in their staunch opposition to the estate tax, Democrats are mixed. If you look at the socioeconomic level of Members of Congress, and who they are married to, and who gives them 95% of their financial support, it’s no surprise that there are mixed feelings.
- The estate tax discriminates against gay and lesbian partners, since the spousal exemption only applies to married couples by the federal definition of marriage. So only the individual exemption ($5.12 million) applies.
- The federal estate tax remains “de-linked” from state-level estate tax laws, meaning states cannot automatically get a credit on federal estate tax payments.
What’s ahead on the estate tax:
- This is not the last word by any means. Opponents like Jon Kyl will still push to weaken or completely repeal the estate tax as they have done repeatedly since 2000. Wealthy people in particular will need to continue to speak up in favor of a strong estate tax.
- We are continuing to gather signatures on our Responsible Estate Tax proposal. To date, over 1,200 people have joined the initial 36 signers since December 11, including 130 wealthy signers.
- Most of the revenue from the estate tax comes from having a higher rate (think: really large estates). We will push for a higher base rate than 40% AND progressive rates up to 55% on the largest estates.
- The exemption level is about fairness. A couple with $10 million in assets (among the wealthiest .15% in the country) should not be able to pass on those assets tax-free to the next generation. Anyone with that amount of wealth has benefited greatly from what our country has to offer. We’ll continue to push—with your help—for a lower exemption.
If you haven’t yet signed our Responsible Estate Tax proposal, please take a moment to do so today.
Amid all the post-election excitement, we also want to celebrate the amazing work of some of UFE’s Tax Fairness Organizing Collaborative (TFOC) partners and other contributors in the state progressive tax movement.
In New Hampshire, our allies prevented a constitutional amendment to ban the state’s income tax. This is a huge win, and it’s one that can be looked to by other states facing regressive policy initiatives. Much hard work is still to be done in the Granite State, but we’re optimistic. That a broad and diverse coalition was able to come together to stop this measure bodes well for positive change in New Hampshire.
Oregon also enjoyed two exciting victories. TFOC partner organizations Tax Fairness Oregon and Our Oregon worked hard to save the Oregon estate tax from repeal. They won a resounding victory for fairness, and ensured that hundreds of millions of dollars would continue to flow to vital services in the Beaver State. As well, measure 85, which eliminated the Corporate Kicker Tax passed with ease, and will allow for much needed revenue for Oregon’s public education system.
Since 2004, conservative activists, led by the corporate-conservative American Legislative Exchange Council (ALEC), have tried with all their might to enact Taxpayer Bills of Rights (TABOR) measures in 30 states. Florida's TABOR, which would have limited public investment and revenue, while requiring a supermajority to override these limits, would have severely hamstrung the state's ability to fund vital services for Floridians. In state after state, voters have turned down this extreme measure, and this year, Floridians joined in that rejection! This was made possible by amazing organizing efforts, combined with voter education and mobilization to stop such a restrictive and economically harmful measure.
Here are a few things we can all take away from these inspiring election day triumphs:
- To achieve victory you have to educate, not just by telling the voters why they should be for or against a measure, but by also learning from them how these measure affect them and their communities.
- Organizing still works, even on the less-than-sexy matters of fiscal policy and ballot measures. Effective partnership-building contributed greatly to these successes. Don’t go it alone. We’re stronger and louder when we pool our resources and work together.
- There is still a tremendous amount of work required to establish fair, progressive tax structures in states across the country. While much of the focus over the next few months will be about federal taxes and budget issues, we can’t forget that the tax fairness movement has to continue at all levels of government.
These statewide election day victories can be models for what’s possible in your state and beyond. We congratulate all of those involved in those efforts and are excited to help keep building momentum for tax fairness and a more just and equitable economy.
In a CNN.com op-ed, Donna Brazile reminds us that race is still a factor in our country. A recent AP poll actually shows a rise in both anti-Black and anti-Latino attitudes. And indeed, the very same people who promote the idea of the United States as a post-racial society remain eager to exploit racial resentment for their own gain.
Brazile urges us to beware of snobbishly deceptive "dog-whistle" politics. With a little bit of active listening, you'll recognize "dog-whistling" as an underhanded compliment. Take former New Hampshire Governor John Sununu's recent comment about Gen. Colin Powell's support of a certain African American U.S. president.
"You have to wonder whether that's an endorsement based on issues or that he's got a slightly different reason for supporting President Obama...I think that when you have somebody of your own race that you're proud of being president of the United States, I applaud Colin for standing with him."
This crafty mash-up of words, to some, might sound innocuous, polite, even. But, the hidden signals — "You have to wonder..." or "somebody of your own race" — are merely the stubborn tars of racism, covered in the weightless feathers of empty accolade with, "I applaud Colin."
If you noticed the scum dripping from that statement, CONGRATS! You heard the dog whistle! Language, however, is but one of the ways racism manifests itself in our supposedly "post-racial" society.
Brazile looks to rapidly shifting U.S. demographics as one dimension of racial bias. She cites UFE's 2012 State of the Dream report (yay for us!), which explains that by 2030, the majority of those under 18 will be people of color. By 2042, non-Whites will comprise the majority of the U.S. population. Mix in the fact that 80% of retirees are White and own a significantly greater portion of the country's wealth than younger, minority communities, and you'll see what's essentially a racially-charged class war.
The more disturbing effects of modern-day racism are the social and economic deterioration. People of color are earning and building wealth reserves at alarmingly lower rates than their white counterparts. Predatory banking practices, cuts to public services, and voter disenfranchisement efforts are ravaging communities of color and further muffling their political voices. And, concentrated poverty turns poor communities into zones of social toxicity that are difficult to escape, especially for young people who know only that hopeless reality.
We can't expect to meaningfully address race and class inequities until we build a more cohesive national community. The sooner we accept not just our history of racial division but also the current racial divide, the sooner we can start working together to provide shared opportunity to all people.
Public policies are intended to be a reflection of a country’s values and priorities. In reality, tax and economic policy outcomes represent the wants of the financially enriched, not the needs of the bottom 99%.
The U.S. may be a melting pot of cultures and ethnicities, but wealthy, white males comprise the vast majority of our supposedly representative legislature. Nearly half of Congressional members are millionaires. In 2010, the median net worth of U.S. Senators and Representatives was $2.63 million and $756,765, respectively, compared to a median net worth of $66,740 for U.S. households.
On the other hand, two historically marginalized groups—women and people of color—are dramatically underrepresented at the policy tables. Women account for only 16.8% of Congress (27% of them are women of color). People of color represent only 15.1% of Congress, with only four seats in the Senate.
As such, the interests of the wealthy dominate public debates while policies of particular importance for women and communities of color struggle for acknowledgement, let alone forward movement. Deficit hysteria has prompted harmfully misguided cuts to the social safety net while maintaining unnecessary tax cuts for the wealthy, painting a frightening picture of who our elected officials actually serve.
Throughout the presidential campaign, many have the criticized candidates for being “out of touch” with the majority of Americans. It can be reasonably argued that, with a few exceptions, Congress is as well. A recent report by the Institute for Policy Studies (IPS) points out that some legislators have been loyal advocates for the 99%, while others have not.
The report, “A Congressional Report Card for the 99%,” grades Senators and Representatives based on their voting histories on inequality-related Congressional actions. While the report’s focus is mainly on policies addressing economic inequality, it leaves room for a deeper analysis of the impacts of policies on persistent racial and gender disparities.
Nearly all of the 40 congressional actions evaluated by IPS—including bills related to taxes and the federal budget, jobs and wages, education, housing, poverty, and healthcare—have disproportionately affected communities of color and women.
The Paycheck Fairness Act, for example, would have helped to ensure equal pay for equal work. This measure would have been a boon for women, who still make 77¢ to every dollar a man makes. The Senate failed to secure the 60 votes needed to advance the Act. The oppositions’ main argument—that the bill would burden small businesses—is unfounded and yet another strike in the conservative war on women.
Another bill, the Half in Ten Act, aims to cut poverty in half in the next ten years. The poorest among us, who are disproportionately people of color, were experiencing economic hardship long before the Great Recession began. Blacks and Latinos respectively make up 27.6% and 25.3% of those in poverty and would benefit greatly by this effort. The bill has 68 co-sponsors but has yet to reach a vote in the House or the Senate. Unfortunately, as politically polarized as Congress has become, even the most sensible policies, like Half in Ten, struggle to gain traction.
Moving forward, we should push lawmakers to more carefully examine the impacts of policies on those hardest hit by inequality, like women and people of color. As citizens, we must all fight to make ours a more truly representative democracy, where the voices of those with the biggest bank accounts carry no more volume than those with the smallest.
United for a Fair Economy is hiring! We are looking for two individuals to help us support the movement for economic justice.
TAX FAIRNESS ORGANIZING COLLABORATIVE
United for a Fair Economy is seeking a dynamic and detail-oriented program associate to assist in coordinating the Tax Fairness Organizing Collaborative, a nationwide network of state-level tax fairness groups that use community organizing as the primary vehicle for political influence. The TFOC Program Associate will work with the TFOC Program Director to connect and strengthen the capacity of TFOC members to advance progressive tax reform at the state and federal levels, while simultaneously identifying and pursuing opportunities to elevate the work of the TFOC nationally. As an ‘organizer of organizers,’ this is a unique opportunity for an individual with strong interpersonal skills, a hands-on leadership style, and a deep appreciation for policy and community organizing. LEARN MORE >>>
The development associate plays a central role in helping United for a Fair Economy (UFE) meet its annual fundraising goals, currently $1.3 million for FY 13. As a member of UFE’s development team, the development associate is responsible for coordinating small to mid-level donor campaigns including the production of direct mail and online fundraising and phone-a-thons; supporting general donor stewardship mailings, producing a quarterly newsletter (printed and electronic); coordinating donor events such as house parties and donor visits; assisting with the production of grant applications; maintaining the development database and assisting with gift processing and acknowledgement. S/he will work closely with the development director, development team, and communications team. LEARN MORE >>>
Our latest report, Born On Third Base, takes the Forbes 400 list to task for spinning a misleading tale about the self-made man and what it takes to become wealthy in America. The Forbes 400 and its extreme examples of economic mobility are the exceptions, not the rule.
In follow-up to the national political
sideshows conventions, MSNBC's Dr. Melissa Harris-Perry hosted a conversation about the Republicans' 2012 slogan, "We Built It." Small business owners discussed the role of government investments—funded by tax revenue—in bolstering entrepreneurialism and job creation by small businesses.
Click here to view because our website doesn't like MSNBC's embeddable code. :\
Virtually every speaker used the phrase, with sometimes misty-eyed stories of bootstrapping, "I did it alone" success (with no help from government). Signs featuring the phrase hung over the main stage and filled the convention center, boasting: We built it! We built it! We built it!
Meanwhile, fact checkers, writers, and progressive organizations fired back, both recounting the full quote from President Obama (his "You didn't build that" comment was referring to the roads and infrastructure, not the businesses themselves) and making the case for why businesses do, in fact, depend heavily on public investments.
This debate is only getting started. As NRP's Ron Elving wrote, "The central theme… in Tampa is about to become the party's mantra for the fall." So get used to a lot of talk about who actually built it, what they built, and why it matters. Looking beyond this one election, this is a critical debate about core values that shape our views on taxes and the role of government in our society.
In March, months before Obama's statement in Virginia, we published a book entitled The Self-Made Myth: And the Truth About How Government Helps Individuals and Businesses Succeed. In it, we contrast the "self-made myth" with the "built-together reality." Little did we know when we came up with the term "built-together," that this would become a defining theme of this election cycle.
The stories of business leaders tell a more honest and complete story of their success. Jerry Fiddler, founder of Wind River Systems (sold to Intel for $880M), talks about publicly-funded research and land-grand universities as key to his business success. Jim Sherblom, former CFO of the Genzyme, notes the importance of the SEC in providing a stable financial market. Kim Jordan, CEO of New Belgium Brewing, declares "beer is heavy" as she emphasized the importance of roads and transportation infrastructure in making her business possible.
We also investigated people like the Koch Brothers who graze their cattle on federal land and use eminent domain law for their pipelines. We examine Donald Trump, whose father constructed FHA-guaranteed homes for US naval personnel, leaving the junior Trump with a sizable inheritance. Similarly, Ross Perot's software business rode to success on the backs of the federal Medicare program.
Governmental supports and public infrastructure are an important part of any success story in America, along with a bit of luck, various head starts in life, privilege, and the contributions of others, including the many employees (The AFL-CIO responded to last weeks convention theme with an email titled, "No, WE built it"). Such an honest and more rounded assessment helps put the "self-made" narrative in perspective.
But that's not what we heard last week. We heard, "I built it," and from that bootstrapping narrative comes a host of policy implications.
If they can convince us that the successful business leaders achieve their wealth through gumption and hard work alone, then extreme inequality is simply the result from their exceptional intelligence and hard work of those at the top …and the sloth of others. Efforts to rein in that inequality are thus viewed as "punishing success." Efforts of workers to demand a fair wage are viewed as "thuggary." Taken to its logical conclusion, this frame helps to fuel an anti-tax, anti-government, and anti-worker agenda.
The business leaders we spoke with understand that their hard work was matched in many ways by the contributions of society, not to mention a good bit of luck. As such, they take a very different view on taxes and the role of government, actively speaking out for a strong estate tax and ending the Bush tax cuts for top income-earners. Many also insist on paying their workers fair wages, or even sharing ownership with their workers.
In the weeks ahead, we have an opportunity to open a more meaningful discussion about the origins of individual and business success, and in doing so, shifting the public policy debates in positive ways. We sincerely hope our book, The Self-Made Myth, is a valuable contribution to this discussion. But we also need writers, bloggers, and organizers across the nation to pick up on this message. If we're going to create a new narrative, we'll need to "build it" together.
Tax Fairness Oregon, a member of UFE's Tax Fairness Organizing Collaborative, needs your help today. They need 600+ signatures of Oregon voters to place a statement of opposition to Kevin Mannix’s effort to repeal the Oregon estate tax in the November voters' pamphlet.
Signatures from you and others in your community will help Tax Fairness Oregon get the following statement placed at no cost so they can use those resources for other important work:
Millionaires can pay taxes — Vote "NO" on Measure 84
- Only the 730 richest Oregon families would benefit from Measure 84.
- Vote "NO" on MEASURE 84
- Millionaires would pay as little as $0 tax if Measure 84 passes.
- Vote "NO" on MEASURE 84
Millionaires too can pay their fair share of taxes.
Vote "NO" on Measure 84.
(Signed by more than 600 friends of Tax Fairness Oregon)
Click here to download a petition form (pdf). Print the forms and carefully follow the enclosed instructions.
Please aim to fill two sheets with gathered signatures or just send in your very own signature. All gatherers and signers must be registered Oregon voters.
Don't forget to sign and date the bottom of the signature sheet before mailing the form to:
Tax Fairness Oregon
Petitions must be submitted in Salem by 5:00 p.m. next Tuesday, August 14. You are also welcome to personally deliver your signature sheets to the address above by noon on Tuesday.
Oregon's estate tax has been in place for 109 years without hurting Oregon businesses and family farms. It is a fair and sensible policy that provides the state with revenue for schools, infrastructure, and other shared priorities. And, it has the added benefit of helping to combat economic inequality. Learn more about Measure 84 >>
Oregon can't afford to give special tax breaks to those who don't need them, especially during this moment of economic hardship.
Please vote "NO" on Measure 84 on November 6.
What would your ideal distribution of wealth in the United States be? You may not realize it, but if this research by Dan Ariely is any indicator, you likely prefer wealth to be held much more evenly than is currently the case in our country.
The gap between people's perceptions versus the reality of wealth distribution was the topic of a WNHN "Political Chowder" interview with UFE’s Steve Schnapp. Ariely and Norton found that many in the US are not fully aware of how dramatically unequal our economy has become.
We may be unaware of wealth inequalities, but do we want a more equal society? Research suggests that the answer is an overwhelming 'YES!' The commanding majority of those polled expressed a strong preference for a society in which wealth was distributed far more equitably. Need more reason for optimism? Those responses transcend political boundaries, with Democrats, Republicans, and Independents represented among those who desire a more equal distribution of wealth.
In light of Ariely's findings, we have to begin asking why our public policies are reinforcing—and making worse—economic inequality. The basic values of fairness and hard work as a means to move up the economic ladder that we hold so dear appear absent as we continue to witness the accumulation of great fortunes among so few people, even as so many millions continue to struggle.
Steve takes aim at the dominant narrative of the wealthy achieved such financial enrichment simply by virtue and hard work, which is an incomplete and misleading picture of how wealth is created. (Learn more with UFE's book, The Self-Made Myth.)
Ariely's data presents a compelling case for a shift in public policy priorities, but he doesn't get into the how of moving from research to social change. Steve points to community education and organizing as necessary strategies to break that paradigm and to bring people together to fight for a people's economy.
The Occupy Movement also showed us that it is possible to unite around a common cause and to draw the world's attention to the root causes of inequality. Our economic system is tilted in favor of the wealthy and is dangerously unaccountable to the people. Wall Street and the big banks sent our country into the Great Recession. We the taxpayers bailed them out. Now they've more than bounced back, but too many of us in the real economy, not the casino economy, have not.
A powerful movement for social and economic justice has to start somewhere. Why not start by asking the people around us what they know. As with Ariely's study, Steve asks listeners to consider what kind of economy they want. He challenges them to think about whether their values are reflected in our current reality. If not, he urges them to join and support groups fighting to improve their communities, states, country, and, ultimately, their world.
Inequality is worse than you thought. What are you going to do about it?
Related post: Economic Inequality: What We Think vs. What's Real