In response to the push for spending cuts to limit growth in the federal deficit, MoveOn.org, United for a Fair Economy, and Rebuild the Dream are trying to build support for a different approach, with new revenue and more stimulus spending to create jobs. Interview on BNN News with the Senior Organizer on Federal Tax Policy from United for a Fair Economy, Lee Farris.
After Warren Buffett called for the federal government to raise taxes on the super wealthy this week, Republican presidential candidate Michele Bachmann had a suggestion for the billionaire: Send any unwanted money to the U.S. Treasury.
“Mr. Buffett, write a big check today,” Bachmann said. “There’s nothing you have to wait for.”
The Minnesota congresswoman is correct. The federal government has had a law on the books for 50 years that allows anyone to open up his checkbook, write out a donation payable to the Bureau of the Public Debt, and send it to a post office box in Parkersburg, W.Va. — or make an online payment at www.pay.gov.
Through the first three quarters of the current fiscal year, Americans had donated about $2 million to the fund — compared with $2.8 million in donations for all of fiscal 2010.
That amounts to roughly one ten-thousandth of a percent— that is, 0.0001% — of the federal debt.
The money is set aside and ultimately used to pay the principal on maturing Treasury bills that are issued as debt to finance government operations, according to McKayla Braden, spokeswoman for the debt bureau.
“We send everybody a thank you,” Braden said, noting that the agency gets more donations whenever there’s a public crisis like a natural disaster or the summer deadlock than over raising the debt ceiling.
But millionaires and billionaires who, like Buffett, support higher taxes on the super-rich, say voluntary donations won’t solve the country’s debt problems. Even Buffett’s fortune of approximately $50 billion amounts to less than half a percent of the total.
“It’s better to have a policy than to just bank on individual, idiosyncratic discretion,” said Judy Pigott, a Seattle heiress to a trucking fortune. She is also a member of Patriotic Millionaires for Fiscal Strength, which advocates for raising taxes on those who earn more than $1 million a year.
“We all benefit from being part of our country ... and those of us who have abundant financial resources also have abundant privileges,” Pigott said.
Relying on voluntary donations wouldn’t bring in a reliable amount of money that could match revenue from raising taxes across the board, said Lee Farris, a tax policy coordinator for United for a Fair Economy.
A subgroup of that organization, Responsible Wealth, focuses on raising taxes on the wealthy.
“I’m sure Rep. Bachmann would probably not agree that all people who owe money to the U.S. Treasury should make voluntary contributions,” said Responsible Wealth member John Russell, a real estate developer in Portland, Ore. “There’s a fundamental issue of fairness, and nobody wants to be treated in a manner that’s different than other people.”
Did you breathe a sigh of relief when President Barack Obama signed the debt deal into law earlier this month? If not, you weren't the only one.
Raising the national debt ceiling may have forestalled an immediate U.S. default and credit collapse, but the deal will do absolutely nothing to address the real problems of our time: stubbornly high unemployment and a suffocating economy. Recovering from this Great Recession and achieving longer-term stability will
require a broad, informed, and unified movement to battle the corporate-backed powers that are waging economic war on working Americans.
While blame for this sad state of affairs falls mainly on Republican free-marketeers and the tea partiers who have incessantly pushed a cuts-only economic agenda, those players only occupy one end of a money-poisoned political spectrum that also includes most members of the Democratic Party. Obama, for his susceptibility to corporate influence and unwillingness to lead, is also responsible for American's economic doldrums.
When progressive leaders approached President Franklin D. Roosevelt in 1933 about what would become the New Deal, his response was, "Make me do it." And so it goes for today's progressive movement, whether you bought into Obama's bold campaign promises or not.
Our job as concerned citizens is hard. These days, commonsense policies, rooted in sound economic analysis, are subject to ideological criticisms that often preempt their passage. We also know that popular opinion by itself won't necessarily affect our governing course.
Take tax policy, for example. A Washington Post-ABC News poll, taken before the debt deal passed, showed that 72 percent of voters support raising taxes on high-income households to reduce the deficit. The final package, the product of a political game dominated by radical conservatives, called for nearly $2.5 trillion in spending cuts and no tax measures that would raise new revenue. One Las Vegas Sun headline for a letter to the editor aptly summed up the outcome: "GOP controls half of government, but ignores the public."
Federal revenue is at its lowest level since the 1950s. The income share of the top-earning 1 percent of Americans has reached heights unseen since 1928, just before the Great Depression. Despite these phenomenal gains, this elite group continues to enjoy historically low federal taxes. Between rates, deductions, and loopholes, they often pay lower effective rates than many middle-class families. As such, it should come as no surprise that the richest 1 percent of Americans now controls nearly as much wealth as the bottom 95 percent of the country combined.
Our circumstances are the result of decades of reforms that shifted taxes off the wealthy onto the middle-class under the pretense of "trickle-down" economics. That strategy has proven ineffective and needs to be reversed. Yet, conservative officials gnash their teeth and threaten the global economy at the mere mention of correcting those policy mistakes.
We can no longer allow a hopelessly unreasonable minority in a severely corrupted system to dictate the terms of our economy. MSNBC's Dylan Ratigan has asserted that Obama should abandon our "bought Congress" and begin a dialogue with voters to restore democracy and repair the economy.
Clearly, we can't sit and wait for Obama to knock on our doors to chat. Our elected leadership will do what it will for as long as we allow it. Indeed, we can't "make them" fix the economy by asking them to do it. We can only get it to happen by organizing, educating, and mobilizing people from all walks of life to fight for justice in all places where it does not exist, from our nation's capital to our own neighborhoods.
This op-ed by UFE's Mazher Ali was originally published and distributed by OtherWords.org on August 22, 2011.
Matt Damon might be a super-rich movie stud, but it appears we've got plenty in common when it comes to taxes. This summer, Damon attended a "Save Our Schools" rally in D.C. to show solidarity with public school teachers and to demand an end to the conservative political crusade against them. To our delight, he also took a moment to share his views on taxes and the wealthy. Here are a few of his comments.
- On the debt ceiling debate: "I'm so disgusted."
(We were too. And, so was the majority of the country.)
- On the wealthy paying more taxes: "Yes...the wealthy are paying less than they paid...certainly in my lifetime. [...] It's criminal that so little is asked of people who are getting so much. [...] I really don't mind paying more taxes. [...] Is it that much worse if we pay 6 percent more in taxes? Give me a break. [...] Why don't you just tax the really rich, you know, guys like me?"
(Amen, brother. The alternative to new revenue is more bone-deep budget cuts. Among those who would "feel the pinch" of more budget cuts are students, seniors, the unemployed and even our service men and women. We're talking about drastic reductions to programs that, whether we realize it or not, we all benefit from in some way.)
- On education as a national priority: "I'd rather pay for taxes than cut Reading is Fundamental or Head Start or some of these programs that are really helping kids."
(Cuts to education budgets — an exercise in poor judgment and shoddy governance — have become an epidemic. No good can possibly come of them. Even Time magazine's "Curious Capitalist," Michael Sherman is calling for an alternative to the debt-driven growth model of recent decades. He calls for, among other things, "massive investments in education and job re-training to take advantage of the new world." Sherman explains, "More education will prepare more people to work in new industries, or to invent new industries of their own.")
Damon's comments on education and the economy have made him a lightning rod for media attention and, thus, an important awareness-raising figure. The work of the progressive movement isn't getting any easier, so we're thankful for all the help we can get. Like many others, we're glad to have his support.
As a phenomenally wealthy individual, Warren Buffett feels "coddled" by the U.S. government, which has for decades asked him to pay less and less into public coffers. His recent New York Times op-ed was a brazen call for Congress to raise taxes on richest people in the U.S.
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. [...]
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. [...]
Last year my federal tax bill...was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office.
Buffett's effective federal tax rate isn't just lower than the other 20 folks in his office, it's actually lower than many middle class families' tabs. He wants new revenues to come from the rich, not the poor and the middle class, who he feels "need every break they can get."
Buffett's not-so-wild sentiment received due support from members of UFE's Responsible Wealth project (RW). Former Wall Streeter and RW member, Edith Everett, echoed Buffett in a column on AMNY.com, recognizing that the wealthy, like herself, didn't become so by themselves.
People who are just scrimping and saving to pay their rent, they shouldn't pay one penny more. Rich people make their money on the backs of the workers.
RW director Mike Lapham and businessman/RW member Jim Mann were invited onto SoCal public radio to combat baseless arguments from the economics naysayers of Americans for Tax Reform (ATR). The pair added yet more legs to the Buffett argument, Mann noting that historically high economic inequality must be strongly considered as we move forward.
It's in my self interest — and that of just about everybody in America — not to live in a place where economic and wealth disparity continues to grow the way it has over the last twenty years. The idea of having a democratic system is pretty unsustainable where 1 percent of the population has that enormous 20 or 40 percent of the wealth. [...] That leads to political instability. I'm happy to pay higher taxes, because I know it's somehow morally the right thing to do, which it is. I also think that on a practical level it's the right thing to do, so that my kids and my grandkids continue to live in a country that has a stable political and economic system.
ATR representative Mattie Corrao made a particularly foolish and tissue-thin assertion that people like Buffett should simply volunteer to pay more taxes. Lapham made prompt waste of Corrao's flimsy talking point.
Corrao: Warren Buffett himself is welcome to pay more taxes if he feels that this is a tax issue...If he truly felt that that was the issue, he could certainly write the treasury a check.
Lapham: It's crazy that effective tax rates go down as income goes up. The wealthiest in this country are paying a far lower percentage than most everyone else [...] It's just sort of a juvenile response to say that we should just send in a check voluntarily. We can't voluntarily stop at stop signs or pave our own roads or test our own water.
I'll add that every dollar of additional revenue is a dollar less that would otherwise be slashed from Medicare, Social Security, education, research, infrastructure or any other of a host programs that this country so desperately needs. New revenue can also make possible a jobs program, which, for no good reason, continues to elude Congress and the Obama Administration. And, the only rational way to generate new revenue is to demand shared sacrifice from the wealthy and corporations.
The alternative is a pillow to the face of the economy — more budget cuts, more jobs lost and more devastation to struggling families. The result will be either another painful dip in the ongoing recession or a full-blown depression.
If you agree with Warren Buffett and Responsible Wealth, sign MoveOn's online petition — they're trying to gather at least 200,000 signatures. Then, call your legislators and tell them you want new revenue and you want it to come from raising taxes on the wealthy and corporations.
RW director Mike Lapham and businessman/RW member Jim Mann were invited onto SoCal public radio to combat baseless arguments from the economics naysayers of Americans for Tax Reform (ATR). The pair added yet more legs to the Buffett argument for higher taxes on the wealthy. Mann also noted that historically high economic inequality must be strongly considered as we move forward.
The following is a tax fact sheet, authored by United for a Fair Economy, for the Rebuild the Dream coalition, led by MoveOn.org in partnership with more than 80 organizations and over 160,000 individuals committed to advancing one simple ideal: liberty and justice for all. The coalition has worked together to develop the "Contract for the American Dream," which includes 10 critical steps for getting the economy back on track. This fact sheet details one of those steps.
Return to fairer tax rates
End, once and for all, the Bush-era tax giveaways for the rich, which will eventually have to be paid by the rest of us — or by our kids. Also, we must outlaw corporate tax havens and tax breaks for shipping jobs overseas. Lastly, with millionaires and billionaires taking a growing share of our country’s wealth, we should add new tax brackets for those making more than $1 million each year.
- We lack the revenue to pay for the vital public systems and structures that we all benefit from. The taxes we pay lay the foundation for a sound economy and wealth creation by funding roads and railways, well-educated workers, courts, clean food and water, scientific research, and much more. But federal revenue is at its lowest level since 1950, relative to the size of our economy. The Bush-era tax cuts have cost us $2.5 trillion in revenue since 2001, and have not created jobs. Our national debt grew as we borrowed money to launch two wars, while the worst recession in decades caused huge job losses that shrunk revenues.
- Tax changes over several decades have shifted taxes off the wealthy and onto the middle-class at the same time that the rich have gotten much, much richer. The amount of income going to the top 1% more than doubled from 10 percent in 1979 to 24 percent in 2007. Today, the wealthiest 1% controls 35% of all wealth, while the bottom 80% has only 13 percent. The richest 400 taxpayers paid just 18% of their income in taxes in 2008, down from 30% of their income in 1995. And, shockingly, over 1,400 millionaires paid zero income tax in 2008.
- Our tax system rewards wealth over work. Income from Wall Street — capital gains (selling stocks, real estate, and other investments) and dividends (earnings from stocks) is taxed at just 15%, while income from work is taxed at a top rate of 35%. That means a secretary pays a higher tax rate than her CEO boss does on most of his income.
- Our tax system worsens the racial wealth divide. Because of historical and ongoing discrimination and segregation, in 2009, the typical White household had 20 times more wealth than Blacks and 18 times more than Latinos. Tax breaks for wealth accumulation flow overwhelmingly to Whites. Whites are 11 times more likely than Blacks and Latinos to have a net worth of $5 million or more; cutting the estate tax overwhelmingly benefits White heirs.
- Tax changes, loopholes, and havens have shifted taxes off corporations and onto the middle-class and small businesses. The share of revenue from the corporate income tax has been slashed in half over the last 60 years. Today, billion-dollar corporations like Verizon, Bank of America, Exxon, and General Electric pay zero or shamefully low taxes. Tax haven abuse ships both American jobs and tax dollars overseas.
What We Can Do About It:
- End the Bush-era income tax cuts for the highest-income 2% who earn over $250,000. In 2012, allow the top tax rate to return from 35% to 39.6%. Extending those tax cuts would cost over $800 billion over the next decade. Raising taxes on wealthy households reduces the deficit with little impact on the economic recovery or job growth. Only 3% of small business owners have such high incomes, so few would be affected by these tax increases.
- Restore tax brackets for the super-rich. The Fairness in Taxation Act, H.R.1124, would raise $74 billion in 2011 by increasing tax rates on both work and capital gains to 45% for millionaires and to 49% for billionaires. Then hedge fund managers who earn millions will no longer pay a 15% rate.
- Establish a strong estate tax. Our nation’s only tax on wealth was sharply reduced in 2010. The Responsible Estate Tax Act, S.3533, would exempt $3.5 million from taxes and add rates of 45% to 65% for the ultra-wealthy, raising about $170 billion over ten years compared to the current low estate tax. A strong estate tax reduces inherited wealth and the disparities in wealth held by Blacks and Latinos.
- Crack down on offshore tax dodging that costs taxpayers $100 billion a year. The Stop Tax Haven Abuse Act, S.1346 and H.R.1265, would combat offshore secrecy and fictional foreign entities, close tax loopholes, and strengthen penalties on tax shelter promoters.
Visit www.RebuildtheDream.com for more information and to get involved.
UFE's Tim Sullivan joined Andrea Sears on WBAI Pacifica Radio New York to make it clear that the debt standoff in Washington, D.C. has become an exercise in political posturing and brinksmanship, rather than public service.
Sears refers to UFE's recent blog post, "7 Questions on the Debt that Politicians Don't Want Us to Ask," in which we compare various spending priorities to emphasize what Republicans' "no new taxes" approach could mean for ordinary families, and expresses confusion over the focus of the debate in Washington:
"These are things that are not being discussed in Washington. I'm just baffled by this. The country is in terrible shape right now, economically, and yet the debate in Washington is restricted to sloganeering: no new taxes, don't tax the job creators, who haven't created a job since Reagan."
Click here to listen to the interview. (Forward to 6:40 for the interview with Tim Sullivan.)
Tracy Lake can't believe that anyone would be willing to risk the U.S. credit rating.
TRACY LAKE: It's probably the most valued asset we have in a global economy, is the faith in credit of our ability to pay something back. And the fact that we've already purchased goods and services, and now we're deciding whether or not we're going to pay for them is just plain wrong.
KASTE: Lake is a real estate developer and she's worried that a downgrade would raise interest rates and make it harder to get the loans she needs to run her business. Like Carender, she's politically active but she's part of Responsible Wealth, an organization of well-to-do types that want to pay higher taxes.
LAKE: The only right and moral thing is to tax the wealthy, wealthier part of our population.
KASTE: Be completely honest. If you had to pay a higher tax rate, wouldn't that suppress you're productivity as a company, or your ability to employ people?
LAKE: Yes, it would. But I look at it this way: I am where I am because of opportunities afforded me because of our economic structure, because of our culture, because of the freedom and access to education. Wealthy Americans owe this due bill back to our country for the opportunity to earn great sums of money.
Listen to the story and read the full transcript on NPR.org
Now, Congressional "deficit hawks" are demanding major spending cuts to some of the most vital government programs like Medicare and Social Security. But, a closer look at the country’s balance sheet shows that it’s not spending that’s out of control, it’s revenue.
Federal income tax rates are at their lowest since the mid-1950s. Keeping taxes as low as they currently are doesn't make any sense (especially for the wealthiest taxpayers), but lowering them further is pure insanity. Be that as it may, that’s precisely what Republicans are proposing.
- …make $5.8 billion in spending cuts or implement a 2% increase in taxes for the top 5% of income earners?
- …save $41.6 billion per year by increasing the retirement age two years, or increase the corporate tax rate by 1.5%?
- …cut corporate tax rates by 10% as proposed by Senator Ryan in his budget proposal, or completely cover all of Medicare’s current costs?
- …cut Pell Grant funding for college students by $8 billion over 10 years or increase taxes on wealthiest 1% by a measly 0.05%?