How do we make the case for government, the economy, and federal aid? Today, during day two of the National Coordinating Conference for the Campaign for Federal Aid to Communities, we'll hear from Patrick Bresette from Demos about how to talk taxes to generate support.
&amp;lt;a href="http://www.coveritlive.com/mobile.php/option=com_mobile/task=viewaltcast/altcast_code=24c275e8f2" mce_href="http://www.coveritlive.com/mobile.php/option=com_mobile/task=viewaltcast/altcast_code=24c275e8f2" &amp;gt;Live Blogging: Talking Taxes&amp;lt;/a&amp;gt;
UFE's Shannon Moriarty is live-blogging from the National
Coordinating Conference for the Campaign for Federal Aid to Communities
on July 13th and 14th. Follow along as state organizers develop a
national strategy for demanding federal aid for jobs and essential
public goods and services.
What do people think about jobs, the recovery, and banks and how can organizers speak to populist concerns during the upcoming election? During session two of the National Coordinating Conference for the Campaign for Federal Aid to Communities, we'll hear from pollsters and union representatives about the public opinion landscape and how activists can shape their messaging this electoral season.
&lt;a href="http://www.coveritlive.com/mobile.php/option=com_mobile/task=viewaltcast/altcast_code=42d1b29600" mce_href="http://www.coveritlive.com/mobile.php/option=com_mobile/task=viewaltcast/altcast_code=42d1b29600" &gt;Live-Blogging: Understanding the Political Landscape&lt;/a&gt;
UFE's Shannon Moriarty is live-blogging from the National Coordinating Conference for the Campaign for Federal Aid to Communities on July 13th and 14th. Follow along as state organizers develop a national strategy for demanding federal aid for jobs and essential public goods and services.
UFE's Shannon Moriarty will be live-blogging from the National Coordinating Conference for the Campaign for Federal Aid to Communities on July 13th and 14th. Follow along as state organizers develop a national strategy for demanding federal aid for jobs and essential public goods and services.
Live-blog coverage starts on Tuesday, July 13th at 1:30pm. The first session kicks off with a discussion of key issues facing the federal campaign, including a recession retrospective, federal legislation, and the 2010 fall elections.
&amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;lt;a href="http://www.coveritlive.com/mobile.php/option=com_mobile/task=viewaltcast/altcast_code=e8458f4f1f" mce_href="http://www.coveritlive.com/mobile.php/option=com_mobile/task=viewaltcast/altcast_code=e8458f4f1f" &amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;gt;Key Issues in the Federal Aid to Communities Campaign&amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;lt;/a&amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;gt;
Imagine thousands of people meeting, mingling, and marching peacefully through your city streets for nearly a week. Last month, a racially, ethnically and geographically diverse crowd of more than 15,000 people vitalized the epic, but destitute, city of Detroit–the epicenter of the Great Recession in the US.
The second US Social Forum (USSF)—the first was in Atlanta in June 2007—was inspired by the 2001 World Social Forum in Brazil. The 2001 gathering was an international attempt to pose and discuss alternative economic models and rules to those discussed at the corporate-dominated World Economic Forum in Switzerland.
Four UFE staff members, as well as several board members, volunteers, and supporters, led popular economics education workshops, participated in planning meetings, marched in demonstration, attended plenaries, networked, and enjoyed cultural activities. Our message about the scope of economic inequality and our method of engaging people in dialogue about its consequences and what to do about it, were very well-received. New relationships were forged, old ones strengthened, and a great deal of enthusiasm for collaboration was generated.
But, the significance of the Forum goes way beyond these specific outcomes for UFE. What we witnessed (and participated in) was a key step forward in building a powerful social and economic justice movement that will realize the USSF theme: "Another World is Possible, Another US is Necessary."
Labor & racial justice activist Bill Fletcher provided his take, “...[the USSF] was the antithesis of the Tea Party movement. Instead of the fear, ignorance and hatred that emanates from the Tea Partiers, here there was a sense of optimism.” The provides a vibrant and safe space for exchanges of ideologies and strategies. While we still struggle to construct a common narrative that explains how we got here and a common vision of where we want to go, the willingness to engage open-mindedly in the hard work to build such consciousness, was on display throughout the Forum.
“For five days in Detroit, an incredibly diverse group of progressives became a community,” said Steve Schnapp, UFE's senior education coordinator. “We are making the road as we walk. But, more importantly, we do so in ways that draw upon our unique perspectives and celebrate our unique gifts. This feeling of solidarity inspires us to continue our important work. A world where power and wealth are not concentrated in the hands of a few is indeed possible!”
A year ago, UFE traversed the northern border of the US to Ottawa, Ontario for a visit with the largest public workers union in Canada, the Public Service Alliance of Canada (PSAC). We were invited by PSAC’s National Education Program Officer, Victoria Gibb-Carsley, who once participated in a UFE Training of Trainers Institute.
Victoria found UFE's use of popular education methodology to be highly effective, and decided it was just what PSAC needed in developing a new leadership training program. Today, PSAC's program is acclaimed as one of the most comprehensive and powerful in Canada's labor movement.
This week, Victoria shared with us the most recent outcome of our collaboration–a project that highlights the lasting impacts of UFE's work to raise awareness of economic inequality, and exemplifies the proliferative nature of a clear call for justice.
At our workshop in Ottawa last year, I shared a short video, produced by UFE volunteer, Matt Chana, called the "BBs of Wealth," which provides an illustration of wealth inequality in the US. The concept of our "BBs" video resonated strongly with the folks at PSAC, and inspired them to produce one of their own to share with their membership and use in their trainings.
PSAC's final product, “Pennies of Prosperity,” is a chilling representation of the vast Canadian wealth divide. Their video is another entry in the toolbox of educational materials that tells the story of inequality. And, it will undoubtedly galvanize many more people to become engaged in efforts for progressive social change.
Senators Sanders (I-VT), Harkin (D-IA), and Whitehouse (D-RI) got together to introduce a reasonably progressive estate tax proposal in the Senate. The Responsible Estate Tax Act (S.3533) is the first decent estate tax bill has seen the light of day in the upper chamber in quite a while. See our action alert in support here, and call your Senator to get them on board with this positive step for the estate tax.
On the major points, exemption and rates, the bill is mixed. The exemption would be set at $3.5 million ($7 million per couple), which is a bit higher than ideal but is the same as President Obama's proposal and the exemption in the bill passed by the House last year. S.3533 does quite a bit better than the Obama / House approved plan on the rates. The rates, in fact, are what makes the bill truly worthy of support. The bill includes a progressive rate structure from 45-55% percent and an additional surtax on estates valued over $500 million ($1 billion per couple). The progressive rates in this bill are genuinely praiseworthy.
Under the Responsible Estate Tax Act 99.7% of Americans would owe no estate tax at all.
Some more detail:
- Exempts the first $3.5 million of an estate from federal taxation ($7 million for couples), the same exemption that existed in 2009. Doing this would mean that 99.75 percent of all estates would be exempted from the federal estate tax in 2011 alone.
- Includes a progressive rate structure so that the super-wealthy pay more. The rate for the value of the estate above $3.5 million and below $10 million would be 45 percent, the same as the 2009 level. The rate on the value of estates above $10 million and below $50 million would be 50 percent, and the rate on the value of estates above $50 million would be 55 percent.
- Includes a billionaire's surtax of 10 percent. The bill also imposes a 10 percent surtax on the value of an estate above $500 million ($1 billion for couples). According to Forbes Magazine, there are only 403 billionaires in the United States with a collective net worth of $1.3 trillion. Clearly, the heirs to these multi-billion fortunes should be paying a higher estate tax rate than others.
- Closes all of the estate and gift tax loopholes requested in President Obama's Fiscal Year 2011 budget.These loophole closers include requiring consistent valuation for transfer and income tax purposes; a modification of rules on valuation discounts; and a required 10-year minimum term for Grantor Retained Annuity Trusts (GRATS). OMB has estimated that closing these loopholes that benefit the super-wealthy, would raise at least $23.7 billion in revenue over 10 years.
- Protects family farmers by allowing them to lower the value of their farmland by up to $3 million for estate tax purposes. Under current law, the value of farmland can be reduced up to $1 million for estate tax purposes under 2032(a) of the Internal Revenue Code (Special Use Valuation). The bill increases this level to $3 million and indexes it to inflation.
- Benefits farmers and other landowners by providing estate tax relief for conservation easements. The bill provides tax relief to farmers and other landowners by amending estate tax rules for conservation easements through an increase in the maximum exclusion amount to $2 million and increasing the base percentage to 60 percent.
Oh, thank goodness we, the taxpaying US citizenry, including the poor, helpless business-owning women, African Americans and "other minorities," have the courageous William Beach of the Heritage Foundation to speak on our behalf about matters of the economy. In an Illinois Business Journal op-ed debate this month, UFE's Lee Farris represented the pro-estate tax position and Beach spoke from the opposing camp.
Beach lists seven reasons to repeal the so-called "death tax," all of which are painfully unsubstantiated. Unfortunately, I only have a time to blast away at a few of his more startlingly ridiculous points.
- The estate tax discourages savings and investment. Okay, we're not talking about the low- and middle-income majority of Americans. Those affected by the estate tax are a very tiny and very wealthy sliver (less than a single percent) of the population, to whom savings and investment are not as much the practical concerns they might be for everyone else.
- The estate tax undermines job creation. Sadly, even in the absence of supporting evidence for this claim, Beach attempts to qualify it with this: "These numbers do not appear in employment statistics because the investments that would have created these jobs are never made." Umm...okay. But, I don't recall George W. Bush's $2.5 trillion tax break bonanza for the wealthiest 5% (of which repeated cuts to the estate tax were a part) doing much for job creation. Read the news much, Mr. Beach?
- The estate tax contradict the central promise of American life: wealth creation. Economic stability is important, but is wealth creation really "the central promise" of living in this country? All this time, I've completely missed that "Life, Liberty and the pursuit of Happiness" was just a long-winded way to say, "making money." I feel cheated for having thought the phrase referred to human rights and a deeper-than-monetary sense of enrichment. Silly me.
Is the Heritage Foundation even trying anymore? Or have enough of us just been politically brain-fried enough to buy into even the most pathetic of attempts to garner support for elitist causes?
As the debate rages in Congress between deficit hawks and legislators who want to invest money to create jobs, one important point of common ground is being overlooked. The two sides should be able to come together to responsibly downsize America’s bloated defense budget.
Conservative estimates of savings is $1 trillion between 2011-2020. Some of the savings could go to deficit reduction and some towards job creation. Best of all, it's a values-based reprioritization of America’s investments away from guns and back to butter.
Chart h/t Campaign for America's Future
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The US Senate is combing through the American Jobs and Closing Tax Loopholes Act of 2010 this week. Included in that bill is a provision to close the loophole on what's called "carried interest," which is where most of the income of hedge fund and private equity firm managers comes from.
About the loophole: mega-rich financiers' incomes are a percentage of their funds' annual profits. Our friends at Citizens for Tax Justice explain that managers of various investment partnerships are generally compensated with a "two and twenty" system–that is, they receive a 2% management fee and 20% of all profits of the investment, even if they didn't contribute any funds up front. They claim that income to be capital gains, distinct from earned income, which is therefore subject to the much lower capital gains tax rate of 15% (vs. the top income tax rate of 35 percent).
Ergo, billions of dollars are lost each year to insufficient and unfair taxation on the incomes of these investment banking leaders. Closing this loophole could generate an estimated $25 billion in federal revenue over 10 years.
Len Burman, fellow at the Brookings Institute, had this to say on NPR's Morning Edition:
"It's a huge windfall to some of the best-off people in society, [...] High-income people are supposed to be taxed at the highest rates, 35 percent, [...] But people who are lucky enough to be in the private equity or hedge fund business get their income taxed at a 15 percent rate."
Despite popular anti-Wall Street sentiments and broad, multi-class support for increased taxes on America's wealthy, closing the carried interest loophole is not guaranteed. Alan Sloan gives a personalized take in the Washington Post:
The legislation, introduced by Rep. Sander M. Levin (D-Mich.), calls for private-equity firms, venture-capital firms and real estate investment partnerships to have half their carried interest income treated as capital gains in 2011 and 2012, and 25 to 45 percent of it to be treated as capital gains from 2013 on. [...]
Next year, with tax rates on regular income and capital gains set to increase, the carried interest types' 50-50 split would give them an effective tax rate of 31 percent, rather than the 20 percent capital gains rate. Now, take me, someone who makes a (low-) six-digit income but is stuck in the phaseout bracket of the alternative minimum tax. If my income were split 50-50 next year, my rate would be 32 to 33 percent. I'm well-off, but far from rich by any definition except the Obama administration's. So my sympathy for private-equity types paying higher taxes on their carried interest income is, shall we say, extremely limited."
Some feel that this proposed tax change would stifle industries other than high finance. In the Morning Edition story we cited above, John DeBoer, president of the Real Estate Roundtable, argues that nearly half of US investment partnerships are in real estate, and that increased taxes on developers would prevent a rebuilding of the struggling sector. This and every other anti-tax argument in the context of the carried interest debate don't come as a surprise.
This particular move to even the tax playing field has and will continue to draw criticism from many different directions–including those dreaded and well-funded industry lobbyists. But, we can rest a little easier, as Linda Beale has provided a sensible analysis to help us through most of it. Here's a quick synopsis:
1) Any economic justification for privileged treatment of fund managers is absurd. (They'll still make boatloads of money, even if they have to pay taxes like average Americans.) And, this won't be catastrophic to investment partnerships. (Most of these folks aren't going to quit doing their jobs simply because they're taxed like ordinary people.)
2) Any provision that splits the rate structure (like Rep. Levin's) is arbitrary, creates undue complexity, seems to ask for folks to game the system, and would, according to Beale, only serve as a pacifier for certain high-wealth campaign contributors.
3) Any half-baked measure that continues to favor fund managers is only a sign that "the House and Senate are willing to sell out ordinary taxpayers and continue to favor the wealthy and that fairness loses when the House or Senate is thinking about campaign contributions."
4) Compromises on carried interest "makes a mockery of the basic fairness concept in taxation." Beale posits that both chambers of Congress understand that carried interest provides preferential treatment for a very small number of people, and that there is no way to justify such treatment. A failure to pass strong legislation to close the carried interest loophole is further evidence of shady dealings between special interests and our lawmakers.
The carried interest debate is but one of many, many tax debates in the pipe for the year. As with any rule or practice that's been deeply ingrained in our government or society, change becomes a battle of inches. Twenty-five billion dollars over 10 years may not be enough to leap all of our country's many economic hurdles, but it could certainly make life a little less of a struggle for millions of Americans, instead of more lavish for a few.