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.

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.

 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 11^th 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.

Robin Hood and his ragtag crew who took from the rich to give to the poor were simply serving justice in an unfair medieval economy. Today, feudal lords protected by high castle walls do not rule our economy, but we are again living in an age of extreme income and wealth inequality.

The big banks and Wall Street speculators are now the ones reaping enormous rewards and ruling over the economy while programs that serve the poor and middle class are slashed, which only serves to further enrich the wealthy by keeping their taxes low.

The Robin Hood tax is an idea that’s been around for a while. In our current age of austerity and Wall Street gambling, it’s an idea whose time has come. It is a financial transaction tax, a few pennies on each bet that the big banks make in the financial casino at the heart of the modern economy. The big banks would pay the vast majority of the Robin Hood tax and it would have two extremely positive results:

1. It would raise billions of dollars that could be used to prevent cuts to vital social programs. The tax – even at pennies or even just fractions of pennies per transaction – would raise enormous sums from the immense volume of trades conducted on Wall Street.
2. It would slightly discourage banks and financial institutions from making so many risky bets. High volume and high frequency trading make Wall Street a little bit richer but provide no social benefit and make the entire financial system riskier and more prone to crashes. A small disincentive to making so many trades would be a positive for the entire economy, and the tax isn’t so large that it would discourage genuinely profitable trades.

UFE staff and interns joined the Massachusetts Nurses Association at the Robin Hood Tax Campaign launch in Boston.

Wall Street and the big banks are exploiting our system and people to generate never-before-seen profits. Meanwhile, the middle class is fading, poverty remains unshakable, people are losing their homes, health care costs are spiraling out of control, education is being pushed out of reach for millions, and there’s no meaningful job creation plan in sight.

A Robin Hood-like hero will not rescue us. Together, however, we can achieve truly heroic feats. We need revenue, and we need to raise it without further harming low- to middle-income families.

A global movement is working to develop support for the Robin Hood tax, and campaigns were recently launched in cities across the U.S. Your support can help to persuade world leaders to listen up and take action. Please join the Robin Hood Tax Campaign and help to build support in your own community.