If you care about the future of the republic, the health of our communities, and the prospects for a transition to a new green economy -- the fight over taxation and concentrated wealth is your fight.
If you care about children -- and the kind of society we are going to leave for the next generation -- in terms of ecological health, infrastructure, functioning government -- the fight to tax the wealthy and close corporate tax abuses is your fight.
President Obama has put forward a revenue proposal worthy of vocal support and organizing. Progressives need to engage the media and our neighbors -- and dramatize the reality that a majority of people support increasing taxes on millionaires and corporate tax dodgers.
Why We Should Increase Taxes on the Wealthy
There will be a vigorous debate over this proposal that will flow all the way into the 2012 election. There are four reasons for taxing the wealthy that we should repeat in any conversation we have:
1. Taxes on the Wealthy Have Declined Steadily for Decades. Over the last decade -- and really over the last fifty years -- the portion of income paid in taxes by our wealthiest citizens has steadily declined. In 1961, when Barack Obama was born, the effective rate paid by households with income over $1 million was 43 percent. Today it is 23 percent. The richer you are, as Warren Buffett has illustrated, the smaller the percentage of your income you pay.
2. The Wealthy Benefit Enormously from U.S. Society. The U.S. wealthy have disproportionately benefited from the public investments we have all made together over the last several generations in technology, scientific research, infrastructure and the system of property rights protections, education and stable market regulations that enable wealth creation to happen. If they have any doubts about the centrality of the U.S. system to their good fortunes, they should try somewhere else.
3. We All Have A Moral Obligation to Future Generations. Those with significant wealth at this time have a moral obligation to pay back the society that made their wealth possible. Progressive taxation is an "economic opportunity recycling" program, enabling present generations to ensure that future generations have the same opportunities they had. We all have a responsibility to future generations -- and the wealthy have an obligation to pay their fair share of taxes as their parents and grandparents did.
4. Progressive Taxation will Reduce Extreme Inequalities of Wealth and Power. Over the last thirty years, we've seen a dramatic increase in inequalities of income, wealth and opportunity. The wealthiest one percent of households own 35.6 percent of all private wealth, more than the bottom 95 percent of households combined. These extreme inequalities have undermined all that we care about -- our democracy, education, mobility, economic stability. This concentrated wealth and power is threatening the fundamental tenets of our democracy -- and progressive taxation is one of the few ways to reduce inequality.
President Obama's Tax Plan
The President's Tax Reform Plan has many components and covers eight pages of provisions in the summary released, "Living within Our Means and Investing in the Future." But they fall into three areas:
1. Allowing Bush Tax Cuts Expire and Reform the Estate Tax. President Obama has renewed his campaign pledge to allow the 2001 and 2003 Bush tax cuts for the wealthy expire on households with incomes over $250,000. Since 2001, we've effectively borrowed almost $1 trillion to give the highest income households in our nation these tax breaks. Reversing them is part of how we'll get our fiscal house in order.
The President also proposes restoring the estate tax to 2009 levels when the tax applied to individuals with wealth over $3.5 million and couples with wealth over $7 million. The estate tax is our nation's only levy on substantial inherited wealth. The combined revenue of these provisions would generate over $866 billion over 10 years, according to the Office of Budget and Management.
2. Millionaire Tax Rates and the Buffett Rule. The Obama proposal includes the "Buffett Rule" that no millionaire should pay an effective rate lower than a middle class taxpayer. It was inspired by the billionaire investor's disclosure of the ways our tax code gives preferential treatment to higher income taxpayers. Buffett revealed that in 2010 that he paid an effective tax rate of 17.4 percent while many middle class and higher income taxpayers pay over 25 percent of their income.
High wage earners pay at 35 percent rate while income from wealth -- capital gains and dividend tax rates -- are 15 percent. This preference creates all kinds of distortions, including hedge fund managers who claim their income should be taxed at the lower 15 rate. The President's tax proposal would eliminate this so-called "Carried Interest" loophole and require hedge fund managers to pay at higher rates.
3. Corporate Tax Reform. The Obama proposal includes a number of important tax reforms, including elimination of subsidies for the oil and gas industry and reform of huge loopholes the insurance industry uses. It closes down some of the accounting games that corporations play that contribute little to jobs or economic health.
A Few Missing Pieces
There are few major missing pieces in the President's revenue plan. There is no proposal for a financial transition tax, a modest levy on transfers of stocks, bonds and other financial instruments. European countries have been pressing the U.S. to join a global move to institute such taxes to slow unproductive currency and financial speculation. A penny tax on every four dollars of transactions could generate over $150 billion a year in revenue.
The president's proposal unfortunately does not fully address the huge corporate loopholes that encourage offshore tax havens and aggressive corporate tax avoidance by U.S. companies. He should fully embrace Sen. Carl Levin and Rep. Lloyd Doggett's "Stop Tax Haven Abuse Act," which would raise an estimated $100 billion a year.
The president's proposal still gives preferential tax treatment to income from capital over income from work. The tax rate gap between earned wage income and investment income is a glaring problem that creates huge abuses and distortions. We should tax all income under the same rate structure system, whether it comes from dividends or paychecks.
Organizing Time: Celebrate and Get to Work
The principles and policies behind President Obama's revenue proposals are worth lifting up and defending. They would restore progressivity and fairness to the tax code. They would raise $1.5 trillion over the next decade from those with the greatest capacity to pay.
The push back will be enormous. Hedge fund managers, corporate CEOs, the offshore tax dodgers -- together will spend hundreds of millions if not billions to attack these proposals. They believe income from their investments is more virtuous that income from wages. They believe they should get special treatment for everything they do. They would be comfortable living in an American with great disparities of income, wealth and opportunity.
They'll accuse Obama of class warfare. But as Warren Buffett himself observed, "There is a class war in a America, and my class is winning." Obama noted that his proposal is not based on class war, but math.
We must talk to our friends, families and neighbors -post articles on social media and send around information. Tell people you know why the fight for fair taxes matters to everything they care about.
Get the facts -and counter the mythology offensive. Check out Citizens for Tax Justice, the Center for Budget on Policy Priorities and the Tax Policy Center.
Join groups like U.S. UNCUT and The Other 98 Percent and other social networking and direct action groups that will be keeping the pressure on.
If you know a wealthy person who believes their taxes should be raised, tell them to join Wealth for the Common Good and speak out for the tax fairness. It does no good if they keep their position private. Warren Buffett made a difference by telling his story and exposing that there is one tax system for the wealthy and one for the other 98 percent.
If you are a small business owner, don't let the right wing perpetuate the myth that tax increases on the wealthy and closing corporate tax loopholes are bad for small business and destroy jobs. You have a unique voice in this debate. Join Business for Shared Prosperity along with thousands of other small business people who believe that taxes are the price we pay for an unparalleled business environment and infrastructure.
We should remember to celebrate. The fact that these tax proposals are on the agenda is testament to a decade of work by organizers, netroots activists, workers, researchers, and policy advocates who have made the case for progressive taxation.
It is the result of groups like Patriotic Millionaires and Wealth for the Common Good -that lift up the Warren Buffetts of the world, the thousands of other business leaders and wealthy individuals who believe they should pay more and are willing to face the cameras and say so.
It is a celebration of legislative champions like Sen. Bernie Sanders, Rep. Jan Schakowsky, Rep. Barbara Lee, Sen. Carl Levin, and Rep. Lloyd Doggett who introduced and incubated many of the policies that are in the President's proposal when they were considered "off the table."
This fall will be decisive -and the debate over taxes will go to heart of what kind of country we become. All hands on deck!
This article was initially published at www.Commondreams.org
Follow Chuck Collins on Twitter: www.twitter.com/wealthforgood
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I explain more fully at http://www.ragingwisdom.com/?p=79
To the crazy rich I suggest we use your increased taxes to invest heavily in nanotechnology so I can create the world's tiniest violin to play as I listen to you whine and cry about your tax rate as you drive your Mercedes around INSIDE one of your six mansions.
Ya, I know. The man really really really wants to pay higher taxes.
Maybe the President should have told Mr. Buffet that there is already a bureaucracy set up to take voluntary contributions from anyone who wants to pay their "fair share'.... And they take credit card payments too just to make it easy for ya!
They moved their jobs to everywhere on earth except the US, and now they're whining that their country is broke. Here's a tip: I know who broke us and it wasn't the middle class... it wasn't the poor... it was the people who moved the jobs to other countries. And now they want US to pay for the results of their deserting our country.
Well, they can just pay for it themselves because Americans are tapped out from bailouts.
As my Momma always said, "You started this mess, now you can finish it."
"if only we'd give more money to the rich"..... WHAT the heck are you talking about? You never GAVE the rich anything!
Taxes were lowered because they were TOO high to begin with. Since when is permitting people to keep the money they EARN, a "gift"??????
The liberal mind set that all money belongs to government FIRST and if they permit us to keep some of the money we work to EARN, they are "giving" us something - is a freakishly twisted way of looking at the world.
The surest way to discourage job creation is to tell employers that they will be taxed at a higher rate, and will have less income to use for hiring. Don't get me wrong, I like employees, but who would hire an employee if it means that you earn less for yourself and your family???
That's just the way it is. You can take the Libs' approach and hug a tree to prove it ain't so, but you'd still be unemployed.
So since we know that the plan to increase taxes will hurt employment, we are left to assume that it is the President's intent to do so in order to further his Cloward Priven agenda....
And the left have their blinders on and are lapping it up because they get to stick it to the rich! To HECK with the consequences!
First, even if a new tax rate is put in place and the wealthy do nothing to shield their income, this tax won't generate much new revenue. (It's all about public support, not about revenue.)
Second, any wealthy person worth their salt has hundreds of options for shielding income. A new tax rate would do nothing but encourage the wealthy to take advantage of our aenemic tax code and the myriad of loopholes.
Third, and probably most importantly, those wealthy individuals that own a company will simply move their incorporation to another country and keep the profits there. There are many welcoming countries. And it is remarkably easy.
The best way to raise taxes on the wealthy is to have a comprehensive rewrite of the entire tax code. And it need not be a burdensome process. Eliminate all exemptions except the mortgage deduction. And limit that one to mortgages of, say, $300,000 or less. And phase out the mortgage deduction over the next thirty years.
First, it is not that easy to shield income.
Second, wrong-see first point.
Third, they have already moved their company to maximize lower US taxes. You do not understand taxes at all.
To your last point, hitting the middle class is NOT the answer. Learn taxes or talk to someone who knows taxes before your write this rubbish.
It is time to put politics aside. You promised a new tone in Washington; instead, you have embraced the status quo by empowering government, growing debt, increasing spending and advocating massive tax hikes.
DO NOT RAISE MY TAXES! Raising taxes will not create jobs or solve our debt crisis; it will only exacerbate America’s current malaise.