You may not have heard, but New Jersey Governor Chris Christie continues to prove that he’s a millionaire’s best friend– at least when it comes to taxes. Read UFE's newest article here.
An interesting report came across our desk today. Here are some key findings:
- The United States has the best infrastructure and transit in the world;
- We are protecting our environment and living in a completely sustainable way that ensures future generations can enjoy our planet;
- We’ve surpassed every other nation on earth in elementary reading and math scores;
- and perhaps most shocking, social mobility is higher than ever!
In short, this report found that public investment has allowed our nation to thrive and be an engine for social mobility. Anybody that works hard can share in this unprecedented prosperity!
Of course we all know none of this is true. We don’t have the best infrastructure or education the world. We don’t hold polluters accountable and social mobility is not possible for many. But we should never forget that it is possible.
Today is tax day, and hopefully you’ve already filed your taxes. Our taxes provide the money for public investments that pave the way for shared prosperity. The problem is that the wealthiest people in the nation–the very people that have prospered by public investment–pay less of their income on taxes than we do.
We believe that fair taxation, of both income and wealth, is a cornerstone in a prosperous and fair economy. We work with state-based groups that are fighting the culture of austerity, disinvestment, and privatization every day. That's why today UFE and our partners at Voices for Progress are sending a letter from families in the top 5% in wealth in the US, urging congress to raise their taxes. We know that the only way to shared prosperity is through fair policies.
You’re a critical part of this work. And together, we need to hold accountable those individuals and businesses that have benefited from the investments that all of us have made and not contributed back.
Today we’re asking for you to invest in this shared prosperity. Your donation helps us fight the culture of disinvestment and neglect that austerity and unfair tax policies promote.
In the State of the Union address, President Obama called for strengthening tax benefits for middle class and low-income working families, and for investing more in child care, early education, and higher education, including making the first two years of community college free. 99 percent of the impact of the President’s tax reform proposal would be on the top 1 percent, and more than 80 percent would come from the top 0.1 percent (those with incomes over $2 million). Responsible Wealth is gathering signatures in support of the President's plan.
What did April 15th mean to you? Well, it was Tax Day, for one thing—and though it may, for many, represent the very ordinary American ritual of (reluctantly) handing your hard-earned income over to the government, for us at United for a Fair Economy, it’s an opportunity. Very simply, it’s an opportunity to talk about why taxes (and the critical public sector for which they provide a foundation and ongoing sustenance) are important.
This year, as in many other years of UFE’s nearly 20-year history, we seized this opportunity! Across the country in 15 different locations (as recently as last Wednesday), hundreds of UFE friends and supporters gathered at private homes, community centers, churches, bookstores, and libraries to screen Robert Reich’s acclaimed film about rising inequality, Inequality For All, and have a conversation about fair taxation, rising inequality, and what we, together, can do about it.
The provocative (at times funny, at times sad) film explains the current state of economic inequality in the US and tells the story of how we got where we are today—and what will happen tomorrow if rising inequality is left unchecked. It’s a powerful 90 minutes of history and storytelling about the collapse of the American middle class and the rise of the super-rich.
After the screening, those in attendance shared what they found most striking about the film, and what they did—or didn’t—have in common with the people whose stories are featured in the film. And so dozens of people shared their unique experiences with the issue of rising inequality in America, and here’s what we discovered: we’re all effected by inequality—indeed, inequality hurts of all us, regardless of how much we make or how much we have in the bank.
This is the message at the core of United for a Fair Economy’s work. It’s the glue that makes the partnership of UFE and its supporters real and so critically important.
With the public sector under assault from well-funded, right-wing ideologues, unleashed by recent Supreme Court decisions (Citizens United and, most recently, McCutcheon), it’s the right time to be talking about why taxes are important. Even in the wake of January’s (quite uncommon) congressional compromise on the budget, House Republicans remain bent on gutting the public sector. They demonize Democrats for making future generations pay for “reckless” government spending today, but what kind of nation are we leaving our children when we decide, today, that we’re no longer going to invest in public education, scientific research and technological innovation, infrastructure and transportation for tomorrow?
With Tax Day 2014 behind us—and these coast-to-coast gatherings, too—we’d like to thank our gracious hosts for opening up their home and other spaces to host these important conversations in an important moment in our history. THANK YOU!
And if you yourself would like to host a screening and gathering at your home, community center, church, or place of business, let us know! We’d be happy to help you get some fellow UFE supporters together in your neighborhood, too!
Do you have New York City income of over $500,000? If so, we hope you will sign this letter to Gov. Cuomo and the legislature in support of Mayor DeBlasio's universal pre-K proposal. If you don't have that level of income, you can still sign below in support of the letter.
Dear Governor Cuomo and Legislative Leaders:
We are upper-income New York City residents who support Mayor Bill de Blasio’s plan to raise a small tax on the wealthiest among us to fund an expansion of early childhood education and after-school programs. We believe this plan is a sound investment in the long-term economic success of our city.
This tax is not only fair, but is necessary to create the level of dedicated funding required to make a real commitment to expanding high-quality Pre-K programs and reach more children. New York State first committed to the goal of universal pre-k in the late 1990s, but without adequate funding, there has not been enough progress on making programs truly universal, and pre-k funds have been subject to cutbacks in bad economic times.
The return on investment in high-quality pre-kindergarten and after-school programs is unparalleled; a 2010 report from the United States Chamber of Commerce’s Institute for a Competitive Workforce found a savings of up to $17 for every $1 invested in pre-k. Ensuring that children are prepared to start school and succeed once they get there not only improves their chances of attending college and earning higher wages, but reduces the need for future spending on special education, incarceration, and public benefits. This benefits us all.
Investing in pre-k and after-school programs is a benefit to all residents of New York City, and more than makes up for the costs. With a modest half-percent tax on those making more than $500,000 per year, we can make huge strides toward leveling the playing field for children by closing the achievement gap between low-income students and their higher-income peers.
We firmly believe Mayor de Blasio’s plan is the best way to ensure economic prosperity for our city, both now and in the future. We are willing to do our part, and hope you will do yours. We respectfully urge you to support this fiscally sound plan, to ensure that the investment we make in our children has a solid and long-term foundation.
There is little question that Republicans took a political hit for the senseless government shutdown. If there is a lesson to be learned for the GOP (and everyone else), it’s that government shutdowns and debt-ceiling standoffs are counterproductive and irresponsible bargaining chips in political debate (not to mention a cruel tactic for millions of Americans, not just federal employees and beneficiaries of public assistance programs, but everyone really). But whatever is learned, the larger fight over taxes and public investments is far from over.
As the new December budget and January debt ceiling deadlines approach, United for a Fair Economy and our allies will continue to push back with a clear anti-austerity message to Washington: “Damaging cuts are not necessary! America is not broke! Congress simply needs the political will to raise taxes on the wealthy.”
In addition to UFE's fights to strengthen the federal estate tax and tax wealth like work, UFE is one of 150 organizations supporting the "Robin Hood Tax," an exciting proposition that could raise hundreds of billions of dollars to invest in our communities (and raised from the reckless Wall Street speculators who wrecked the economy in the first place).
The Inclusive Prosperity Act (H.R. 1579) by Rep. Keith Ellison would create such a "Robin Hood Tax," or financial transactions tax (FTT), on the sale of stocks, bonds, derivatives, and other financial instruments. The FTT rate on stocks would be 0.5%, with lower rates applied to bonds and derivatives.
United for a Fair Economy wholly endorses the “Robin Hood Tax.” Why? Because this tax accomplishes two very important goals at the same time, not to mention it’s totally feasible:
1) It Reins in Casino Capitalism
Because the financial transactions tax is levied each time a stock is sold, its otherwise nominal rate is magnified many times over for those speculators who buy and sell stocks repeatedly in a single week or day.
If someone buys $100 in stock shares and holds it for 5 years, the tax expense, 50 cents, will be spread over 5 years (so you will owe effectively 10 cents a year in taxes on this transaction). But if you trade that same stock each week to gain some small advantage, you'll pay $26 a year instead. And if you trade hourly using automated computer software, well then the multiplier effect really kicks in. That's the whole point!
By taxing at the point of transaction, the Robin Hood Tax effectively separates the type of long-term investments that are good for the economy, from the type of high-frequency trading – or "casino capitalism" – that contributes nothing but volatility and instability to the economy.
If people want to gamble, they should go to Vegas. We cannot afford to let the reckless behavior of Wall Street gamblers take down the global economy again.
2) It Raises $350 Billion for Important Programs
Levied at the rates of the Inclusive Prosperity Act, the financial transactions tax would raise upwards of $350 billion. That is a tremendous amount of money that will be moved out of disruptive speculation and into the public sector, where it is truly needed.
Just for a sense of scale, $350 billion is more than the combined total of President Obama's proposed 2014 discretionary budgets for the Departments of Education, Housing and Urban Development, Veterans Affairs, and Transportation!
Applying this level of funding to the real needs of the nation – health care and health research, rebuilding and greening our transportation infrastructure, education, job creation, and more – would have a profound and positive impact on our nation's long-term well-being.
It's Totally Doable!
Already 40 nations across the world have some form of financial transactions tax, including the United Kingdom, Japan, China, and many others. At this point, the majority of the major financial centers around the globe are operating in nations with a financial transactions tax.
Additionally, the 0.5% rate on stocks being proposed in the Inclusive Prosperity Act is the same rate the United Kingdom already levies, and that has in no way endangered London’s status as powerhouse in global finance.
The US actually had a financial transactions tax from 1914 to 1966, levied initially at 0.2% and later raised to 0.4%. After the stock market crash in 1987, there was a serious effort, led in part by one of President George H.W. Bush's chief economists, to restore the financial transactions tax in order to bring stability to the markets.
With 11 nations across Europe now looking seriously at enacting a financial transactions tax, this has become a growing global movement to rein in the kind of casino capitalism that wreaked havoc on the global economy, while funding vital programs that foster true national wellbeing.
What can you do?
Visit the Robin Hood Tax web page to for news, research, talking points, and other helpful resources! Contact your member of Congress and ask them to support H.R.1579, the Inclusive Prosperity Act.
At the most basic level, taxes exist to fund the government. Decisions about how much revenue we should raise from federal taxes and from what sources we should raise it are incredibly important. The influence of federal tax policy ripples throughout the entire economy and affects funding at all levels of government.
United for a Fair Economy believes a sustainable and people-oriented tax system should be based on three key principles. And, we support several common-sense policies that are designed according to those principles.
Tax Reform - the current effort underway in Congress and any changes to federal tax law - should be guided by some basic principles of good tax policy. Taxes should:
Generate the appropriate amount of revenue to fund our national priorities. The current tax code does not raise enough revenue, which leads to cuts to programs and services.
Raise revenue from the sources that can most afford to pay for our collective enterprise of government. New revenue should come from the wealthy and from corporations whose taxes are lower now than they were a generation ago.
Make it easier to file and collect our taxes. Making it easier to file taxes will make the system fairer and make tax avoidance more difficult. It will also reduce the burden of compliance on families and small businesses.
These principles should guide all federal tax reform and policy change decisions. The main purpose of taxation is to generate revenue. We should generate enough revenue to pay for our national priorities and avoid unnecessary budget cuts. We should raise tax revenue from the sources that can most afford to pay. And we should make paying and collecting taxes simpler.
UFE and Responsible Wealth have held many press events featuring remarkable guest speakers from varying walks of life and work. Many of those speakers are wealthy individuals who have been, or will be, affected by the estate tax. But, they all have at least one thing in common – passionate support for the estate tax, because of what it represents: the common good and opportunity for all Americans.
"Consider a wealthy family with two children. Under the  law, each child could inherit $3.5 million, tax free. That means each child would receive more, tax free, than the average worker would earn in two lifetimes. And the worker would be paying taxes on their earnings. Each of these children would receive more, tax-free, than 240 minimum wage workers would receive in a year."
- Anna Burger, Secretary-Treasurer of SEIU
"[P]assing a stronger estate tax is a matter of ethics, of responsibility, of pride in citizenship, and it's the right fiscal choice for our country...I don't ever forget, as do some of my colleagues, that I benefited from a lot of business incentives and tax laws as I was building Vanguard Group to what it is today, and I owe some of that back."
- John C. Bogle, Founder and former CEO of The Vanguard Group
“My family achieved success not in spite of, but because of the American system of taxation. After all, without reliable and safe roads there’d have been no Disneyland; without high functioning legal systems and a well regulated business environment there would have been no copyright protection for Mickey Mouse.”
- Abigail Disney, Filmmaker, philanthropist & heiress to the Disney fortune
"People who accumulate substantial wealth have not done so alone. They have benefited from the labor of employees and have built their businesses using public infrastructure such as clean water, ports, roads, utilities, and the internet. In view of these considerations, an estate tax is a responsibility which should be inescapable, and which people should be proud to pay."
- Dave Eiffert, Co-founder and Co-owner of Snoqualmie Falls Brewery
"Wind River wouldn’t have existed without government-funded research that I did at Lawrence Berkeley Laboratories. I wouldn’t have gotten that job at the lab if I hadn’t had a master’s degree. I wouldn’t have had a master’s or a bachelor’s degree if there weren’t a public university that provided me with financial aid. And if I hadn’t gone to a good high school, also public, I probably wouldn’t have gotten into the university...Indeed, it will give me great pride to repay [society], hopefully many-fold, through the estate tax."
- Jerry Fiddler, Principal of Zygote Ventures & founder of Wind River Systems
"No one accumulates a fortune without the help of our society's investments. How much wealth would exist without America's unique property rights protections, public infrastructure, and academic institutions? We should celebrate the estate tax as an 'economic opportunity recycling' program, where previous generations made investments for us and now it's our turn to pass on the gift. Strengthening the estate tax is important to our democracy."
- Bill Gates, Sr., Co-chair of the Bill & Melinda Gates Foundation
"At Frostyaire, our decisions about hiring employees, purchasing equipment, and expanding the business are not based on tax policy...The best way to help small businesses like ours is to put more money in the hands of the middle class who will spend the money as customers of our businesses, rather than cutting the estate tax to ensure that very wealthy heirs can have a larger inheritance."
- Jean Gordon, Co-owner of Frostyaire of Arkansas
“It seems to me that the least deserving recipients of wealth are inheritors. Further, there are many indications that inheritors often have trouble adjusting to their unearned inheritance. An inheritance tax would de facto help remedy this.”
- Julian Robertson, Founder of Tiger Fund
"The Rockefeller fortune could never have been created without the foundation of public laws, public education and infrastructure which undergirded American industry in my great-grandfather’s time and continues to do so today. Therefore, far from resenting our tax system, which allows this infrastructure to remain strong, I believe that a strong estate tax makes perfect sense."
- Richard Rockefeller, MD, Family Physician & great-grandson of John D. Rockefeller
"Our country is on an unsustainable fiscal path. A progressive estate tax can...fund deficit reduction, additional public investment, or added assistance to those affected by the economic crisis...Our nation has always held itself out as a meritocracy and a land of opportunity, and an estate tax helps avoid accumulation of inherited economic and political power that is antithetical to this historical vision of our society.”
- Robert Rubin, Former U.S. Secretary of Treasury
"I’ve been reasonably successful...I own and manage six office buildings and have some 50 people working for me, directly or indirectly. Would I say that I did it without public support? No. When I reflect on what helped my business succeed and grow, I owe quite a bit to public investments, including tax policies that help make the real estate industry lucrative."
- John Russell, Owner of Russell Development Company
"Our economy remains on the edge of a double-dip recession, and we urgently need to create millions of jobs and invest in our future, not give more tax breaks to the wealthy. Anyone who pretends to care about cutting deficits while opposing the restoration of the estate tax is clearly residing on a different planet."
- Richard Trumka, President of the AFL-CIO
We thank all of our guest speakers for their commitment to tax fairness.
Tax Day 2013 is here!
Our coalition partner, American's for Tax Fairness, is getting the word out about tax day events and keeping the heat on corporate tax dodgers. (And some of our friends put together a nifty little game, Tax Evaders, that you ought to check out and share.)
Looking ahead, the House of Representatives, Senate and President have all put forward budgets for 2014 that represent three differing visions of how the federal government should raise revenue in the years ahead. All sides are doing their best to appear willing to compromise, but before a unified budget is passed, House Republicans, Senate Democrats and the Administration will all have to agree on the specifics. In other words, it’s unlikely that anything will happen soon.
Meanwhile, Senator Max Baucus (D, Montana) and Representative Dave Camp (R, Michigan) - the two top tax policy legislators in the Senate and House respectively - have also announced their earnest intention to address major tax reform. If they are successful, it will be the first comprehensive overhaul of the tax code since Ronald Reagan's effort with congressional Democrats in 1986.
The tax reform effort from Baucus and Camp (along with members of their committees - Senator Orin Hatch (R, Utah) in particular) is scheduled to be drafted over the next several months, before being released in August, just before Congress returns from its summer recess. Their tax overhaul is likely to come before the full Congress in September, just when budget negotiations might be truly heating up (fiscal year 2014 starts on October 1, so a budget or continuing resolution must be passed by the end of September to avoid a government shutdown). We're keeping our focus on the upcoming battle over tax reform, and on the estate tax.
The budget that the President put forward has appropriately received a lot of criticism both for not raising enough new tax revenue and for proposing cuts to Social Security and Medicare benefits. One positive aspect of the budget proposal from the Obama Administration is that it calls for an increase in the estate tax. Specifically, here's an excerpt from page 18 of the offical Administration budget (PDF):
Return Estate Tax to 2009 Parameters and Close Estate Tax Loopholes. The Budget returns the estate tax exemption and rates to 2009 levels beginning in 2018. Under 2009 law, only the wealthiest 3 in 1,000 people who die would owe any estate tax. As part of the end-of-year “fiscal cliff” agreement, congressional Republicans insisted on permanently cutting the estate tax below those levels, providing tax cuts averaging $1 million per estate to the very wealthiest Americans. [The Budget] would also eliminate a number of loopholes that currently allow wealthy individuals to use sophisticated tax planning to reduce their estate tax liability. These proposals would raise $79 billion over 10 years.
All other questions about the budget aside, it's good news that the President is proposing positive changes to the estate tax. There is more revenue to be had with a stronger proposal, and we'll be working with our partners and allies to get the strongest possible estate tax included in any federal budget or comprehensive tax reform package.
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.