President Obama has talked about our tax code through the prism of billionaire Warren Buffett and his secretary for years. Last summer, he started talking about a “Buffett Rule” that would keep millionaires from paying a lower tax rate than middle class families. He renewed that call in the State of the Union last week.
In two days, at long last, the Buffett Rule will get its first vote in the U.S. Senate.
Senator Sheldon Whitehouse (D-RI) has wasted no time in getting his “Pay A Fair Share Act” to the floor. As he told the Washington Post’s Greg Sargent, the bill won’t change existing tax rates. It just requires those making more than $1 million annually to recalculate their tax rate, “taking into account all their income and what they pay in taxes.” In other words, include dividends from stocks, which are currently taxed at a much lower rate. “If that amount adds up to less than 30 percent,” writes Sargent, “they would be required to make up the difference.”
Or as Senator Whitehouse put it: “If your income is over 1 million, multiply it by 0.3, and if that number is bigger than you’d otherwise be paying, pay that.”
The bill is currently being scored by the Congressional Joint Committee on Taxation, so we’ll soon find out how much revenue, officially, the bill would raise if passed. But Citizens for Tax Justice (CTJ) predicts the Pay A Fair Share Act would raise $50 billion every year while only affecting 0.08 percent of taxpayers.
(Next Sunday, about 63,000 people will fill Lucas Oil Stadium in Indianapolis to watch Super Bown XLVI. For context, if the CTJ is right, and those 63,000 were a representative sample of Americans, the Pay A Fair Share Act would affect a mere 50 of them.)
We’re all for this legislation, and we all know our country needs the revenue. There are two things not addressed by this bill, however. First, the bill does not address the many loopholes that make our tax code a playground for corporations seeking shelters and exemptions. Second, it does nothing about the Bush tax cuts, which might not even be addressed until after the election; without action from Congress, they will expire on January 1, 2013.
Still, who could have imagined a high-profile vote in the U.S. Senate addressing income inequality even just six months ago? Like with the minimum wage increase in New York, we can certainly give partial credit the Occupy movement for bringing tax fairness and economic inequality to Washington’s front burner.
Tags: income inequality, Rhode Island, taxes
Senator Sheldon Whitehouse (D-RI) is planning to introduce a bill which he calls the “Paying A Fair Share Act.” It would bring the effective tax rate for millionaires up to 30 percent on all their income, whether it’s dividends on investments or their salary. The legislation is based on the “Buffett Rule,” the idea that folks as rich as Warren Buffett shouldn’t get to pay a lower effective tax rate than most middle class Americans.
We welcome this legislation. It’s a long time coming.
Five years ago, I watched then-candidate Barack Obama tell a packed New Hampshire high school auditorium that a famous supporter of his, the super-wealthy Buffett, had made a bet with some of his similarly well-monied friends that none of them paid higher tax rates than their secretaries. As Obama told it, none of them took the bet, because they all knew they wouldn’t win.
Here’s why. People who work for a living, like Buffett’s secretary, pay most of their taxes as income tax. But as you enter the stratosphere of multi-millionaires, you’ll find mostly people who make their money on investments, and therefore pay most of their taxes on capital gains.
However, the way most American workers (dare I say, 99 percent of them) experience this is watching as the government takes about a third of the income they work for, while millionaires can pay half that rate by not working at all. Under our current system, if you have enough money and the right investing knowledge, you can sit back and watch your pile grow. And as we all know, the current tax on capital gains hasn’t stopped the “1 percent’s” share of the American economy from growing from 10 percent in 1979 to 23.5 percent in 2008 – and that inequality has led to big problems for the whole economy.
The public desire to change this system has been stoked by the continuation of the jobs crisis, growing income inequality, and decreasing social mobility. Awareness of the situation was made especially acute when GOP Presidential candidate Mitt Romney reluctantly released tax returns showing that he paid a mere 13.9 percent on $21.6 million of income. And President Obama, aware of Romney as a potential rival later this year, highlighted the “Buffett Rule” in his State of the Union speech, even inviting Buffett’s actual secretary Debbie Bosanek, to sit with the First Lady.
But without legislation, that’s all just politics and perception. Senator Whitehouse is in talks with his Democratic colleagues about bringing the issue to a vote while the State of the Union is still fresh in the public’s mind.
One such colleague, New York’s Chuck Schumer, told the Hill that some Republicans might get on board as well. “Don’t underestimate the chances of Congress to enact parts of the president’s blueprint,” he said Wednesday, “Republicans will not go along out of a desire to cooperate, but they may find they have to out of political necessity.”
Most working class Americans, including Working America members, don’t really care about anyone’s political necessity. Regardless of party or motivation, we strongly urge the passage of this legislation.
Tags: income inequality, taxes
Our members are asking us how they can get involved in the movement to demand accountability from Wall Street for the 99 Percent and get our economy working again. Here’s part 1 of 3:
It’s called a financial speculation tax.
You may have already heard of it. It’s also called the financial transaction tax (FTT), a Robin Hood Tax, or a Tobin tax, after the Nobel Prize-winning economist who suggested it.
The proposal goes like this: for every transaction of stocks, bonds, foreign currency bets, or the famed Wall Street “derivatives,” the trader pays 0.25 percent of the amount in question in tax. Sort of like a sales tax for Wall Street, a quarter of a penny on every dollar. While this will translate as a small ripple to the market, the fee would generate billions of dollars needed for infrastructure, education, health care, and our social safety net.
How much, you may ask? With the zillions of financial transactions zipping around every day, the fee could take $150 billion off of the deficit every year. Given that Democrats – Democrats, not Republicans – just put $400 billion in Medicare on the chopping block, it’s far past time for a speculation tax to get some serious attention.
In addition to the revenue, the financial speculation tax provides a disincentive to the very activities that lead to the current economic mess – the short term, high yield, risky investments. If Wall Street recognizes gets more value out of longer-term financial products, they’ll get back to their intended function – serving the rest of the economy instead of pilfering it. Paul Krugman describes the thinking of fellow economist James Tobin, the brains behind the idea:
Tobin argued that currency speculation — money moving internationally to bet on fluctuations in exchange rates — was having a disruptive effect on the world economy. To reduce these disruptions, he called for a small tax on every exchange of currencies.
Such a tax would be a trivial expense for people engaged in foreign trade or long-term investment; but it would be a major disincentive for people trying to make a fast buck (or euro, or yen) by outguessing the markets over the course of a few days or weeks. It would, as Tobin said, “throw some sand in the well-greased wheels” of speculation.
Opponents of the FTT, including our current Secretary of the Treasury Tim Geithner, argue that it would have an adverse effect on the economy. A letter from a group of business organizations including the U.S. Chamber of Commerce and the NFIB stated that an FTT would “impede the efficiency of markets” and “distort capital flow.” Many of these groups are also working against clean energy reform, earned paid sick days, worker protections, and, conveniently, Wall Street reform, so we take their warning cries with a grain of salt. Besides, letting Wall Street run wild and sell lies to Americans tax free did much more to “distort capital flow” than a quarter of a penny fee ever could.
Not convinced? Here is an absurdly long list (PDF) of economists, businessmen and women, world leaders, and other luminaries who support a financial speculation tax, from German Chancellor Angela Merkel to super wealthy Dallas Mavericks owner Mark Cuban.
On November 3, 2011, the AFL-CIO will join National Nurses United and Occupy Wall Street participants in a nationwide day of action calling for a financial speculation tax.
Sign our petition calling for Congress to take up the FTT, and use the hashtag #TaxWallStreet to follow @WorkingAmerica as we participate in the call to lay the foundation for a better economy.
Tags: Corporate Accountability, taxes
Eric, Eric, Eric.
Remember the “speech on inequality” Rep. Eric Cantor promised earlier this week that he’d deliver today in Philadelphia? He cancelled it at the last minute when it turned out the University of Pennsylvania would allow the general public to show up.
Cantor’s office provided to the university’s newspaper, the Daily Pennsylvanian, the text of the speech he would have delivered. And while it’s stuffed full of pretty-sounding rhetoric, it’s also by turns evasive, hypocritical and misleading. It’s remarkably slight on actual policy, and no wonder: other than pretty rhetoric, Cantor – the second-highest-ranking House Republican – can only talk around the problem.
Where it turns from eye-rolling banality to jaw-dropping hypocrisy is in a few key lines. With a straight face, Cantor was prepared to say sentences like “we must ensure fairness at every level. We must ensure that those who abuse the rules are punished,” while his caucus in Washington is busily dismantling the rules that protect fairness. Cantor was prepared to talk about giving people “a hand up to help…climb the ladder of success in our country” and “some guarantees” while his allies are undermining the public education, infrastructure and support to those in poverty that actually contribute to those goals.
Cantor’s political agenda consists of reducing the services government provides to its citizens, eliminating the guidelines and rules protecting workers and consumers, undermining Social Security and Medicare and making the tax code more favorable to corporations and the very wealthiest. If we give more and more to the wealthiest, he contends, they’ll magnanimously help the rest of us out. Maybe in his heart of hearts he truly believes that this is how you build an economy that works for everyone else, or maybe he just doesn’t care—but the effect is the same either way. In Cantor’s world, you’d be on your own and without a safety net.
We watched for the past decade as light taxation, light regulation and light enforcement were the rule at the national level, and for most of us, Cantor’s economic fairy tale stayed fictional—jobs went overseas, wages stagnated and working people went further and further into debt. All the pretty rhetoric Cantor can spin out can’t make the real world fit the fable.
No wonder, when he’s forced to present this story to the general public, he turns tail and runs.
Tags: Corporate Accountability, Eric Cantor, Jobs, OWS, taxes
As the old saying goes, to a man with a hammer, everything looks like a nail. And to Eric Cantor, everything looks like an opportunity to shovel more money to the very wealthiest.
After referring to the Occupy Wall Street protestors as “mobs,” Rep. Cantor, a Virginia Republican, is trying to shake off his well-deserved reputation as the smug, shameless defender of the corporate-money agenda by giving a talk on economic inequality this Friday. The second-highest-ranking House Republican must be feeling some heat, because saying we need to “take care of the income disparity in this country” is not exactly in Cantor’s standard talking-point arsenal.
Cantor’s showy display of concern is a sign that the Occupy Wall Street protests are changing our national political conversation for the better. The message is getting out there even as the typical array of right-wing political strategists, well-connected business reporters and corporate-funded think tanks are desperately trying to dismiss, demonize or neutralize the protests.
So what does Cantor have to offer as a solution to the very real problem of economic inequality? Surprise! It’s exactly what Eric Cantor was offering last week, the week before and the week before that. It’s more tax cuts to corporations and the very wealthy, more rollbacks of regulations that protect workers and consumers, and more slashing of services and support systems that people hit by the recession really need. In particular, Cantor and his allies are looking to eliminate even the modest, insufficient regulations we currently have on Wall Street and the big banks who caused the financial crisis. If Cantor were capable of embarrassment, he might be hesitant to advance a “jobs plan” that doesn’t create jobs.
Cantor claims that his agenda is going to promote economic growth because it “gives private enterprise a chance to grow.” But the problem facing our economy isn’t that businesses are insufficiently profitable or insufficiently flush with cash to create jobs. It’s that high unemployment, lost wealthy and stagnant incomes are holding back demand. There is zero wrong with our economy that can be fixed by directing more money towards the companies who are failing to create jobs despite sitting on trillions in cash. Cantor’s economic prescription is based on wishful thinking.
In addition to being wrong, Cantor’s argument here is just plain lazy. Low taxes on the very wealthiest, light or nonexistent regulation of big businesses and reduced services are what politicians like Cantor always offer, regardless of the circumstances. And they’re what we’ve tried already—after all, the grim job and income record of the Bush administration came at a time when Cantor and his party controlled the levers of policy. It only “worked” to create economic growth for a tiny sliver of the very wealthiest, which may be the only kind of economic growth that actually matters to Cantor.
You can thank the Occupy Wall Street protestors for changing our national conversation so much that even Eric Cantor feels he has to show he cares about inequality. But he’ll have to try a lot harder to actually propose solutions that are anything more than reheated leftovers of the failed policies of the past decade.
Tags: Corporate Accountability, Eric Cantor, taxes, Wall Street
From their windows, people in the financial sector have looked down on the protests below with glasses of champagne and signs taunting “we are the 1 percent.” What are they thinking?
It’s hard to overstate how the financial elites of the country—after years of growing inequality and a preventable, devastating financial collapse caused by corporate misbehavior—see themselves as the real victims. And the depressing thing is that the executives most likely to whine about our country’s supposed unfairness to the very wealthy are the same ones whose words are most closely attended to by politicians and the leading lights of the mainstream press.
There are plenty of politicians, think tanks and media outlets explicitly dedicated to comforting the comfortable, but the idea that the wealthiest few are the put-upon victims of class warfare is weirdly prevalent in our political conversation. Just look at the fact that President Obama’s jobs plan is greeted with skepticism and disdain by Congress and the pundit class even as it’s pretty broadly popular among voters.
At a conference featuring an audience of CEOs and executives, reporter Ezra Klein couldn’t help but notice how much they’re feeling sorry for themselves:
Business types really hate Barack Obama…these folks really, really feel persecuted and unappreciated. The common response to this, of course, is that corporate profits have hit record levels in recent years and the top 1 percent has never been richer. But if you need more evidence that money doesn’t buy happiness, you should sit with some CEOs for an hour.
Home Depot founder and former New York Stock Exchange head Ken Langone is just such a sensitive soul. The multi-millionaire with the ear of high government officials thinks he isn’t getting a fair shake, because President Obama is insufficiently respectful in his words and policies.
He is behaving in a way designed in my opinion to divide us, to make us look at each other with skepticism, with suspicion.
Salon’s Alex Pareene aptly calls Langone’s words here “thin-skinned paranoia.”
Asked about rumors of Wall Street’s falling-out with the administration, Treasury Secretary Tim Geithner offered this explanation:
I think people resent the anger directed toward the people who caused the crisis. They sometimes claim it was created by us, that anger, which I think is a deeply unfair judgment. They react to what are pretty common sense observations about the system as if deep affronts to the dignity of their profession. I don’t see why they’re so sensitive. But they’re very wounded.
If they feel wounded, they should imagine what a laid-off school teacher, an idle construction worker or a working mom with an underwater mortgage and a sick kid feels like.
You don’t need me to run through all the statistics about how a tiny number of people at the top have been the only winners in our economy for decades and the only people seeing a recovery after the recession they helped create. That’s well-traveled territory. What is noteworthy is that, even as the top sliver of our country see vaulting incomes and an outsized voice in politics, they still insist that the biggest problem we face is insufficient deference to their needs.
The talking heads and politicians who are quick to dismiss the Wall Street protestors as smug, clueless, or hung up on fuzzy and factually-shaky grievances need to take a look at CEOs for a real demonstration.
Tags: Corporate Accountability, Jobs, OWS, taxes
This tax day, one of the big Republican talking points is that cutting taxes raises revenue. The theory is that if businesses and the wealthy pay less in taxes, they have more to spend on creating jobs.
The trouble with this is that it’s not true.
But even conservative economists have cast doubt on this claim.
“Federal revenue is lower today than it would have been without the tax cuts. There’s really no dispute among economists about that,” said Alan D. Viard, a former White House economist under George W. Bush, in a 2006 Washington Post article.
Robert Carroll, deputy assistant Treasury secretary for tax analysis, also said that no one in the administration believes tax cuts created a surge in revenue. “As a matter of principle, we do not think tax cuts pay for themselves,” Carroll said.
Bruce Bartlett, a Reagan economist who became a strong critic of the Bush administration’s policies, used data from the Office of Management and Budget in a blog post last year to illustrate how “the Bush tax cuts reduced revenue rather significantly.”
Ronald Reagan, in fact, demonstrated how untrue it is that cutting taxes raises revenue:
Reagan enacted a major tax cut his first year in office and government revenue dropped off precipitously. Despite the conservative myth that tax cuts somehow increase revenue, the government went deeper into debt and Reagan had to raise taxes just a year after he enacted his tax cut. Despite ten more tax hikes on everything from gasoline to corporate income, Reagan was never able to get the deficit under control.
(See also here and here.)
Reagan—Ronald Reagan, the icon of today’s Republican party!—realized that cutting taxes decreased revenues and increased the debt. And he responded by raising taxes. He raised them in regressive ways that didn’t fix the mess he had made, but in comparison to politicians like Paul Ryan and John Boehner, whose response to creating a mess is to see if they can’t turn it into a disaster, he was practically a moderate.
Tags: budget, economy, taxes
In last night’s State of the Union, President Obama briefly mentioned the problems with America’s current corporate tax code. Most notably, the code is packed with so many loopholes and tax breaks for specific industries like the Oil Industry and Big Banks, that a large chunk of the tax code burden falls to small businesses. Misguidedly, businesses are given incentives to ship jobs overseas, instead of hiring struggling Americans.
It is time for a change. The National Journal reports:
The issue could offer a rare opportunity for collaboration with Republicans in Congress. But while there is considerable consensus about the appeal of reform, the administration doesn’t want the effort to widen the deficit. Some officials said they are worried that bringing any tax reform proposal would end up more as tax cuts than tax reform.
“That was a big point of debate and pushback,” explains a source familiar with a meeting between Geithner and a number of corporate CFOs on January 14. “A number of the CFOs said, ‘If you want to achieve objective No. 1, which is developing a competitive system, there shouldn’t be a heavy emphasis on doing so in a deficit neutral and deficit reducing fashion.’”
White House officials say the annual cost of “tax expenditures” — special tax breaks — is already $1.1 trillion. That’s more than the government actually collects in personal and business taxes under the current code. “It’s more holes than cheese,” one White House official said last week. Given the challenge of taming the government’s trillion-dollar budget deficit, Obama’s team isn’t willing to make the problem even worse while Republicans clamor for deep spending cuts.
Rather, the administration seems to prefer a strategy akin to its approach to health care reform: By convincing concerned private interests to buy into the White House approach, or at least not oppose it publicly, officials hope the political lift will be easier. During the health care fight, insurers gained millions of new customers while agreeing to restrictions on their behavior. Now, the administration is offering support for a variety of corporate tax reforms in exchange for backing on fiscal responsibility.
America needs a corporate tax structure without loopholes for irresponsible businesses like the Big Banks, which caused the current economic meltdown, or the Oil Industry, who was responsible for the BP spill last April. We need a tax structure that provides incentives for hiring Americans, not for shipping jobs overseas. Hopefully, President Obama and the current Congress will work to make this a reality.
Tags: taxes
Yesterday, President Obama and Senate Democrats seemed to do the impossible: they gathered enough votes to advance their tax-deal in the Senate. Senators voted overwhelmingly to end the filibuster and allow the bill to be brought up for a final vote. After serious complaints coming from liberals and conservatives alike, the bill reached cloture with a huge margin.
From The Hill:
On an 83-15 vote, the Senate quashed a filibuster by Sen. Bernie Sanders (I-Vt.).
Fifteen lawmakers voted against it, including five Republicans: Sens. Tom Coburn (Okla.), Jim DeMint (S.C.), Jeff Sessions (Ala.), John Ensign (Nev.) and George Voinovich (Ohio).
Nine Democrats and one Independent voted against the bill: Sens. Jeff Bingaman (N.M.), Sherrod Brown (Ohio), Russ Feingold (Wis.), Kirsten Gillibrand (N.Y.), Kay Hagan (N.C.), Frank Lautenberg (N.J.), Patrick Leahy (Vt.), Carl Levin (Mich.), Mark Udall (Colo.) and Sanders.
In a nod to a era long past when Senators had to stand up and debate a bill, make grandiose speeches, or at least read from the phone book in order to filibuster a bill, Sen. Sanders spoke for 8 ½ hours on Friday railing against aspects of the tax deal.
From the Washington Post:
“You can call what I am doing today whatever you want, you it [sic] call it a filibuster, you can call it a very long speech,” said Sanders, an independent who caucuses with Democrats. “I’m not here to set any great records or to make a spectacle. I am simply here today to take as long as I can to explain to the American people the fact that we have got to do a lot better than this agreement provides.”
Liberals aren’t the only ones complaining about this bill.
From Politico:
Radio hosts Rush Limbaugh and Hugh Hewitt accused Congress of defying the will of voters. Sarah Palin and Mitt Romney weighed in against the deal, too. And Tea Party Patriots launched a petition Monday blasting the bill as a secret pact that violates the House Republicans’ “Pledge to America,” while other tea party groups have declined to endorse it.
Now that the deal will advance in the Senate, the White House is gearing up for a fight in the House of Representatives.
Tags: taxes
There was definitely a lot to dislike about the compromise President Obama struck with Republican leadership on tax cuts (big ones for rich people, smaller ones for middle class people) and unemployment insurance (an extension for ½ as long as the tax cuts last). But some very smart, knowledgeable people thought it was the best deal possible.
Apparently the House Democrats and Speaker Nancy Pelosi disagree. According to a statement from Pelosi:
House Democrats share the President’s commitment to providing the middle class with a tax cut to grow the economy and create jobs. The House passed a bill last week to provide tax cuts for all Americans but not a bonus tax cut to millionaires and billionaires. The extra tax cut for the top 3 percent does not create jobs and increases the deficit. Unfortunately, Senate Republicans blocked the bill from being approved by the Senate.
In the Caucus today, House Democrats supported a resolution to reject the Senate Republican tax provisions as currently written. We will continue discussions with the President and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote.
Democratic priorities remain clear: to provide a tax cut for working families, to create jobs and economic growth, to assist millions of our fellow Americans who have lost their jobs through no fault of their own, and to do this in a fiscally sound way.”
It sounds like the estate tax is a key concern among House Democrats, who feel that a 35% estate tax that applies only to estates larger than $5 million is yet another excessive giveaway to the wealthiest people.
In 2009, estates over $3.5 million were taxed—affecting just one in 400 households. So when Republicans start squealing about applying the tax to estates under $5 million, remember that. The richest one in 400 is who this fight is all about.
Tags: taxes
