Estate Tax Organizer Lee Farris on the Rick Smith Show

The Rick Smith Show

To listen to Lee's full interview on the Rick Smith Show, click here (MP3).

Highlights from the interview:

Farris: "[The estate tax could be called] the dynasty tax. It's the tax so that we don't have dynasties. It's the meritocracy tax, it's the tax that enforces having a meritocracy where you get ahead on your own merits rather than on your parents'.

Under [Presidents] Eisenhower and Kennedy, the very wealthy were paying more than half of their income in taxes. That's not true now. We did it before, there's nothing about now that's different than then.  It's just the whole political outlook about what taxes should be like. That's the difference."


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America Throws the Gauntlet Down on AZ

America's got a bone to pick with Arizona. The state's anti-immigrant legislation (SB 1070), signed into law by Gov. Jan Brewer in April, has caused a nationwide uproar of people who view it as a misguided political ploy. (It's no secret that this is an election year for Brewer, and it appears she may have some campaign funding problems, which may or may not have played a role in this bold move.)

Not only has the Arizona decision elicited the expected cacophony of advocacy groups challenging the law, but cities across the country, stretching from coast to coast with some in between (including our very own, Boston) have made Arizona's immigration policy their business, making moves to boycott the state and municipalities of Arizona until the decision is reversed.

President Obama has publicly denounced the law (watch it below), advocating for comprehensive immigration reform over punitive and divisive patchwork measures (e.g., fences, walls, community raids, round-ups, detentions and mass deportations).

Obama pow-wowed with Gov. Brewer earlier this month to find common ground on this issue. It was pretty much a waste of jet fuel and air time, because not much came of the meeting. Brewer is holding her ground, saying the completion of the Great Wall between the US and Mexico and increased militarization of the border are prerequisites to comprehensive reform.

Meanwhile, the Department of Justice is reviewing Arizona's immigration law in consideration of a potential suit against the state for violations of civil rights. To that end, Brewer had this to say--she won't go down easy, and is willing to go to some extreme legal lengths to prove her point.

Despite Brewer's incorrigibility on reversing SB 1070, and despite the generally favorable results of full-context-lacking polls about the law, we're able to find clarity in paradox. Most of those who support the Arizona law only do so because it was a form of action on a long-standing concern. At the same time, an overwhelming majority of voters, including those who support the Arizona law, would support comprehensive immigration reform by the federal government. That begs this question: What are our elected officials [still] waiting for?

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Unemployment Situation: A Longer Wait Time for People of Color?

Unemployment line

Photo credit: Pan-African News Wire

The Bureau of Labor Statistics released updated unemployment numbers for May 2010, and the story hasn’t yet changed…sort of. Nearly one in ten US workers continue to go without work, but the reality is still more unsettling for people of color.

Unemployment for white workers has fluctuated a few tenths of a point in recent months, and now sits at 8.8 percent. Workers of color, on the other hand, are still weathering unemployment storms of double-digit magnitudes. Latino unemployment fell 0.1% from the previous month to 12.4 percent. And, Black unemployment, despite a one-point drop, is still highest of all at 15.5 percent.

It's worth noting that last month's unemployment numbers are slightly distorted due to a rise in temporary government employment for Census 2010. That aside, we should continue bracing ourselves for a long and rough ride back to full employment.

Treasury Secretary Tim Geithner and others in the Obama administration have said we shouldn’t expect a return to a more stable employment situation for a few years, at best. According to Mr. Geithner:

“The worst is behind us...However, the country faces significant and ongoing challenges: high unemployment, the need to build a new and stable foundation for prosperity in the years and decades ahead, and a medium- and long-term fiscal situation that could ultimately undermine future job creation and economic growth.”

Challenges to come, absolutely. But the worst being behind us? That has yet to be seen.

Despite the historic legislative strides made or in process as of late, the voices of well-funded special interests continue to overwhelm those of average Americans, let alone people of color. Latino and Black workers are, respectively, 1.40 and 1.76 times more likely to be out of work than their white counterparts, highlighting that not enough is being done to address the roots of racial economic inequality.

So, when they say stability is still a few years away, what does that bode for communities of color? How long will they have to wait?

Until the administration and Congress get serious about enacting economic policies that will truly serve those in need, and not pandering to the desires of moneyed interests, that “foundation for prosperity” won’t be possible – especially for people of color. 

We need targeted job creation aimed at employing workers in economic deserts – those communities most devastated by this crisis. We need measures in place that will safeguard consumers from the traps set by financial predators who place families’ economic well being in jeopardy. We need progressive tax policies that will generate revenue for social programs that make recovery and broadly shared prosperity possible. And, we need these types of policies to start now.

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How Unfair Tax Breaks Benefit the Richest Americans

Work vs. Wealth

How Unfair Tax Breaks Benefit the Richest Americans

By Brian Miller
Originally published in the Fayetteville Daily News, June 1, 2010

Brian Miller

Now that the dust has settled from this year's tax-filing scramble, here are a few facts to keep in mind as Congress moves closer to debating the expiring Bush tax cuts. By the end of 2010, those cuts, which began to take effect in 2001, will have cost our nation $2.5 trillion dollars.

To put that enormous loss of revenue into perspective, consider this: It's twice as much as the combined cost of the wars in Iraq and Afghanistan. And it's two-and-a-half times the cost of the recently passed health-care plan.

Nearly half of those costly Bush tax cuts went to the top 5 percent of households. But instead of the promised trickle-down growth, we got stagnant wages for middle-class Americans while many wealthy households grew even wealthier. Over the last decade, a record federal budget surplus--before the Bush tax cuts--has turned into a massive federal deficit.

I recently spoke on a radio show about the work of Responsible Wealth, a network of American millionaires speaking out in favor of higher taxes on the wealthy. These millionaires want to dial back the portion of Bush tax cuts that benefited the top 5 percent, which includes people like themselves, while preserving the tax cuts for low and middle-income families. What's more ironic is that they're pledging to give away their savings under the Bush tax cuts to groups that are working to end those and other tax breaks for the wealthy.

I shared a story about one of those millionaires--he has an income of over half a million dollars per year, but pays less than 15 percent of those earnings to the IRS. The host and callers were all outraged, and rightfully so. But, their initial instinct--to direct their outrage at this millionaire for "gaming the system"--was misguided. He's not the one gaming the system. The Bush administration did it for him.

A lot of Americans look at the federal income tax, of which the top rate is 35 percent, and think that if someone like this millionaire is taxed at such a low rate, he must be cheating. Here's how it's possible: that 35 percent top rate only applies to earned income. While he's well paid as a professor, three-fourths of his total income is in the form of capital gains and dividends from a sizeable investment portfolio. (Some was inherited and some was built up during his days as an investment banker.) And the top rate for capital gains and dividends is only 15 percent.

In short, money earned through work is taxed at a higher rate than money made from, well, money.

The intense focus by the media and anti-tax groups on the federal income tax is preventing too many people from seeing the true size of the tax giveaways bestowed upon our nation's wealthiest households. It's like the ship's crew pointing at the tip of the iceberg, but ignoring the hulking mass beneath.

For most Americans, wages and salaries account for roughly 80 percent of their total income, but that ratio starts dropping sharply for those earning over $200,000 per year. For many with incomes of $1 million or more per year, about 25 percent is from wages and salaries; the rest is primarily passive income, like capital gains and dividends. By taxing investment income at a lower rate than earned income, we've tilted the system heavily in favor of the rich.

For a country that prides itself on the hard work of its citizenry, we seem to have lost our way. It's unacceptable that those who have gained the most from our society, and who have the most to give back, are actually paying taxes at a lower overall rate than most others. We need to start taxing money-from-money income at the same level as the earned income that most Americans depend on. Ending the Bush tax cuts for the wealthiest households, which includes restoring the top capital gains and dividends rates to their pre-Bush levels, is an essential first step.

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Quick Reactions: Senate Passes Financial Reform

After a whirlwind of amendments and parliamentary parrying, the Senate has passed it's version of reform of the regulations of the financial sector. Some early reactions:
  • Next step: conference committee to combine the Senate bill with the House version.
There's a lot to like in the Senate bill (including reasonable consumer financial protection and Say on Pay rules) and what emerges from the conference committee is likely to go a long way to reigning in some of the excesses of finance. However, there is a lot that both the House and Senate did not address.
The real next next step cut finance down to size.


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Raise My Taxes, Please! Logo

Eric Schoenberg"I am a wealthy American who supports higher taxes on wealthy people. I realize that agitating to pay more taxes is unusual. When I appeared on Fox News recently, the host, Neil Cavuto, opposed my position but also called me an altruist with a good heart, because I favored a policy against my own self-interest. I thank Neil for his kind words, but I disagree with him. I believe higher taxes on myself are in my own self-interest.

Although repealing the Bush tax cuts for the wealthy will cost me a lot, I think doing so is necessary to address a looming national debt crisis that could severely harm me and my family. In the face of this threat, I consider it perfectly self-interested to worry more about the state of the overall national economic pie than about my own particular slice. [...]"

Read the full op-ed by Responsible Wealth member Eric Schoenberg

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WA State: Can We Get an "Amen!" for Fair Taxes?

Yes On 1098 bannerThis summer, a Washington state coalition of businesses, labor and social justice organizations, and a few prominent civic leaders, including our friend, Bill Gates, Sr., is trying to make history. They’re putting boots on the streets to advance to the November ballot Washington’s first tax reform initiative in 40 years. The message of the initiative, I-1098, is simple: Washingtonians are suffering from the state’s budget crisis, and they are in desperate need of a fair tax code to fund core public services like education and healthcare.

One coalition member, Washington Community Action Network (also a member of UFE’s Tax Fairness Organizing Collaborative), will host a launching event for volunteers this Memorial Day weekend on Saturday, May 29th to start getting the word out and gathering signatures of Washington voters.

Forty thousand residents have lost basic health coverage as a result of the state’s fiscal woes. That includes thousands of seniors and disabled residents who have lost daily care, and children who may be susceptible to illness due to elimination of state-funded vaccinations. On education, a seventy percent reduction in funds to reduce class sizes is causing classrooms to bulge with more, and presumably less engaged, students. 

The passage of I-1098 would restore funding to those services while, at the same time, lowering taxes for the majority of Washington households. Sounds oxymoronic, right? That’s the beauty of a progressive tax structure – a fair share of the costs of public services are paid for by those who’ve benefitted the most from them, and who, in turn, have the most to give back to the common good. Here’s an overview of I-1098:

  • It reduces the state property tax by 20%.
  • It increases the small business tax credit from $420 to $4,800 annually, eliminating the state business and occupation tax for more than 80% of businesses, and reducing taxes for another 10%.
  • And, here’s where the added revenue comes from: The top 3% wealthiest households in Washington will pay a new income tax. Married couples will pay just 5% on incomes over $400,000 ($200,000 for singles), and 9% on incomes over $1 million ($500,000 for singles). The new tax would raise about $1 billion – with a “b” – annually, even with the small business and middle-class tax cuts.

For those who are still on the fence about whether this sounds fair, consider this: The wealthiest Washingtonians currently pay less in state and local taxes than their counterparts in 43 other states. Washington has the most regressive tax system in the country, with households in the top 1% paying a mere 3% of their income toward state and local taxes, while those in the bottom 20% pay 17 percent.

Asking for a little more from the top 3% (about 83,700 out of 2.27 million households) isn’t too much when we’re talking about the well being of over 6.6 million people.

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Moving from Debt to Assets: A Workshop Story

UFE - US Action Fair Taxes for All Training of  TrainersThese spring months have been particularly hectic for UFE's Education Team. So, with great pleasure, I get to write this.

For four years, UFE has partnered with the Greater Boston Interfaith Organization (GBIO) to present a bird's-eye view of the economy as part of their Moving from Debt to Assets financial literacy education and empowerment program.

The program assumes a multi-faceted approach to keeping low-income people, predominantly from communities of color, out of financial harm's way, using education, counseling, leadership-building, and ongoing peer support--sometimes continuing for years after graduation--to prepare these folks for financial stability and upward economic mobility.

Steve and Jeannette, UFE's Pop[ular Education] Stars, were working with a national crew of fair tax organizers in Baltimore, and needed a hand for this month's class. I stepped in with educator/historian, activist/motivator, Susan Hecht, to co-present UFE's custom workshop, "Getting Aboard the Asset Train: Race, Class & Wealth in the US," to a full room in Dorchester, MA.

Once Susan and I laid out the "doom and gloom" of what's transpired in the US economy over the past 6+ decades, the resounding message of the participants was: THIS ISN'T FAIR! and What can we do about it?

Glad they asked. Prior to the workshop, Joel Schwartz, manager of GBIO's Debt to Assets program, gave me fair warning that, in the past, one of the greatest challenges of this section of the class is to not weigh the scale too heavily on the side of the melancholy, but to balance it with an appealing call to action--one that's clearly worthwhile.

Susan and I came armed with an arsenal of resources and ideas, but more importantly, we came with a story to tell about how activism, even at the individual level, has led to change for the greater good of our society. 

Closing time came, class was adjourned, and spirited discussions of a better world spilled onto the sidewalk under a dim street lamp. It's an understatement to say that this class was galvanized, but this class was galvanized. Many of the highly motivated students expressed their readiness to leap into activism, and with the skills and knowledge imparted to them through this opportunity with GBIO, I'd say they're getting a pretty solid start.

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AFET Statement of Principles on Estate Tax Legislation

This year, members of Americans for a Fair Estate Tax (AFET), a coalition of progressive labor, faith-based, and social justice groups that has been fighting efforts to repeal or cut the estate tax for years, formally adopted a set of principles on the estate tax. Once you've reviewed the principles, please join our campaign by signing your organization's endorsement onto the document.


Statement of Principles on Estate Tax Legislation

Our nation desperately needs revenue to invest in education, health, nutrition, and other priorities to promote a competitive workforce and ensure opportunity for every American. Only one-third of working adults have a college degree. One out of three Americans lacked health insurance at least once over the last couple years. Poverty, joblessness, and home foreclosures are harsh realities for millions of Americans.  
We are told over and over again that increased investments in the American people are not affordable because the federal budget deficit is too great. And yet, Congress has gradually eliminated an important revenue source that can help fund these priorities and reduce the budget deficit.  
Through a period of war, natural disaster, and now the worst economic downturn since the Great Depression, the Bush Administration and Congress set in place the gradual elimination of the federal estate tax. Since 2001, the tax was cut to exempt more and more estates so that in 2009, only one-quarter of one percent of all estates in the U.S. were expected to pay the tax. In 2009, only individuals with estates worth more than $3.5 million ($7 million for married couples) were subject to the tax. In January 2010, the estate tax was completely eliminated for one year.   
The federal estate tax has been repealed for 2010 and under current law will reappear in 2011. Congress must permanently reinstate the estate tax for 2010 and subsequent years because it serves these crucial purposes:  

  • The estate tax raises revenue that we need to invest in the American people. When Congress enacted the gradual repeal of the estate tax in 2001, it did not want to own up to the enormous cost of full repeal, which would exceed $800 billion over ten years. Therefore, after a year of outright repeal in 2010, the legislation calls for the estate tax to return to its old levels starting in 2011. Supporters of the Bush estate tax repeal assumed in 2001 that Congress would not allow the tax to be reinstated. Now that repeal has taken effect, Congress must take a hard look at the damage it is inflicting. Continuing the repeal will deepen the budget deficit by about $800 billion between 2012 and 2021. Keeping the estate tax at its 2009 level will cost about $400 billion over ten years.   
  • The estate tax ensures that families who have benefited the most from public goods pay their fair share to maintain them. Families that have accumulated massive fortunes in America could not have done so without the infrastructure, educated workforce, stability and other public benefits that taxes make possible. Society only works when everyone contributes to the common good.
  • The federal estate tax provides a check on the concentration of power in the hands of those born into great wealth. Such a concentration of power is contrary to American values and democratic principles. This is a growing problem today, as hard-working Americans are finding fewer opportunities for success because education and other paths to advancement are increasingly out of reach. The United States now has the greatest concentration of wealth in the hands of the rich in nearly a century. As billionaire Warren Buffett reminds us, “Without the estate tax, you in effect will have an aristocracy of wealth, which means you pass down the ability to command the resources of the nation based on heredity rather than merit.”
  • The estate tax corrects a feature of our tax system that would otherwise allow certain income to escape taxation entirely. Over half the value of inherited estates is capital gains income that has never been taxed. Most large estates include assets such as real estate, stocks or bonds. Any increase in the value of these assets is capital gain income that would be subject to the income tax if they were sold during the owner’s lifetime. However, this income is not subject to the income tax if the owner dies and leaves it to an heir.
  • The estate tax encourages charitable giving. The estate tax is not imposed on assets bequeathed to charity. Many wealthy individuals take advantage of this unlimited deduction for charitable giving. In 2004, the Congressional Budget Office estimated that if the estate tax had not existed in 2000, charitable donations would have been $13-$25 billion lower that year.    

Despite claims to the contrary, the estate tax does NOT affect the vast majority of small businesses and family farms. The Brookings/Urban Institute Tax Policy Center estimates that in 2009, only eighty small business and small farm estates nationwide owed any estate tax, and these estates paid an average tax of only 14 percent. This has not stopped estate tax opponents from spending millions in lobbying and advertising claiming that the estate tax hurts small businesses and family farms.  This is simply a ruse to convince average Americans to support another massive tax cut for the wealthy that they would otherwise reject.  
We call on Congress and the President to take the following steps when addressing
the estate tax: 

  1. Exempt no more than the first $2 million ($4 million for married couples) of assets in an estate.

    A $2 million per-spouse exemption for the estate tax was in effect from 2006 through 2008. This shielded over 99 percent of the estates of people who died during those years from taxation. A $2 million per-spouse exemption is also twice as large as the exemption that takes effect in 2011 under current law.

  2. Set a tax rate of no less than 45 percent for the taxable portion of estates, with an additional 10 percent tax on the taxable portion exceeding $10 million.  
    The taxable portion of an estate includes assets in excess of the exemption, and it excludes any assets bequeathed to a spouse or charity. Therefore, even if the taxable portion of an estate is taxed at a statutory rate of 45 percent, the effective tax rate on the entire estate, i.e. how much is actually paid, is much lower.  
    A fundamental tenet of a fair tax system is that those who have the greatest ability to pay should pay a larger share. Great wealth is the best indicator of ability to pay. The estate tax should continue to target the very wealthy, and the largest estates should be taxed at a higher rate.  
  3. Restore a credit for state estate and inheritance taxes.  
    The credit for state estate and inheritance taxes was gradually repealed under the tax cut legislation enacted in 2001, but will reappear in 2011. This credit allows states to share in estate tax revenues without having to administer a separate state tax.  
    Before the 2001 estate tax cuts were enacted, all 50 states had a tax on estates or inheritances. Many of these taxes have since disappeared because they were tied to the credit in the federal estate tax. Currently, only 20 states have such taxes. This is particularly problematic now, as this loss of tax revenue contributes to the severe budget shortfalls that many states are facing.

  4. Simplify the estate tax.  
    The estate tax should be simplified in two ways. First, the gift tax, estate tax, and generation-skipping transfer taxes should be “reunified,” so that transfers made during the lifetime or at death are subject to the same rules, exemptions, and tax rates. This will ensure tax fairness and reduce the need, and incentive, for complicated tax planning.
    Second, the estate tax should allow for the “portability” of any unused estate tax exemption from one spouse to another. If one spouse dies without using his or her entire $2 million exemption, the unused portion should automatically transfer to the surviving spouse. This would greatly simplify estate tax planning for many Americans and avoid the need to split up and re-title assets or set up complicated trusts. It also would eliminate situations in which some families have to pay the estate tax just because they failed to plan for it.

Click here to sign your organization on to the AFET Principles or you can send an email to Gary Therkildsen at

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