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The Tax Clock Is Ticking
The clock is ticking. And not just for last-minute
tax filers. The Bush tax cuts are set to expire at the end of the fiscal
year.
And you know what that means. As Congress takes up the FY2011
budget this summer, tea-sipping fiscal hawks will be circling Capitol
Hill squawking about the deficit amid a chorus of angry voices screaming
for an extension of Bush-era tax cuts that disproportionately benefited
that minority of Americans with incomes over $250,000.
What remains to be seen is whether the voices of those who have
signed Responsible Wealth's Tax Fairness Pledge will be heard. United
for Fair Economy's Responsible Wealth network is a group of 700 millionaires calling on their
economic peers (top 5 percent of wealth-earners) to join them in their
efforts to put an end to the Bush tax cuts once and for all.
In taking the Pledge, each signer agrees to donate some or all of
their tax savings from the Bush tax cuts to support tax fairness
organizing and/or other economic justice efforts. An online Tax Break
Calculator allows anyone to punch their 2009 income and get an
estimate of their individual share of the Bush tax cuts.
Mike Lapham, director of the Responsible Wealth project and one of
the millionaire Pledge signers, summarizes the rationale behind the
initiative.
"These tax cuts were irresponsible when they were passed in 2001 and 2003. In the midst of a deep recession, they are downright inexcusable," says the paper mill heir.
"Low- and middle-income households only received a small portion of the Bush tax cuts. The overwhelming share of the income, capital gains and dividend cuts went to wealthy taxpayers."
Lapham points to a report by Citizens for Tax Justice that shows
half of the Bush tax cuts went to the top 5% of income-earners, while
the bottom 60% got less than 15% of the Bush tax cuts. That little gift
to the rich translates into an estimated $2.5 trillion.
Looking to reverse course, Responsible Wealth members "recognize that their own
prosperity and success would not be possible without the foundation of a
strong public education system, an effective transportation network, a
strong legal system and more," Lapham notes.
"Those are the kinds of foundational building blocks that we get
through our tax system. Responsible Wealth members are more than happy
to pay their share to support those public investments that they have
benefited so greatly from."
Of course, whenever the case for raising taxes on the wealthy is
made, the response -- even from the "liberal" media -- is predictably
derisive.
After a telephone press conference last week, Dana Milbank, writing for The Washington Post, offered this
straw-man sarcasm:
"Of course, if millionaires really want to pay higher taxes, there's nothing stopping them. The Treasury Department Web site even accepts contributions by credit card to pay the public debt. There's also nothing to stop the millionaires from paying the tax obligations of, say, Washington Post columnists. But then they wouldn't have the satisfaction of giving their tax-cut proceeds to the pro-tax movement."
Thankfully, The Economist rhetorically slapped Milbank upside his head for making
such an embarrasing nonsensical argument.
"Taxes are not charity. It would be a bad idea for wealthy people (to) contribute large amounts of money voluntarily to reduce the national debt. The first, less important reason for this is that any individual's contributions would be meaninglessly small;" to say nothing about the "invitation to free-riding" it would create.
"Government spending is collective spending, and the taxes we pay for it are collective taxes. Like it or not, this is collective action, and the arguments we have about it have to be collective as well. It is perfectly legitimate to argue that we should be spending less on various things, or that the kind of taxes being proposed to pay for our spending are unfair or more economically damaging than some other kind of tax. But you have to make that argument at the level of what we should do as a country."
I called Tax Pledge organizer and United for Fair Economy executive
director Brian Miller a few days ago to ask him about the prospects for
success, given Obama's pledge to let the Bush tax cuts expire.
"Just because Obama says we should do this doesn't mean its going
to happen," he told me. "There's going to be a lot of push and pull on
this issue in the coming months. We have to figure out a way to,
frankly, make the voices of the majority heard over the shrillness of
talk radio and the far right."
Majority? Yes, a majority. A new Quinnipiac University poll found that 60 percent of Americans in both major political
parties favor raising income taxes on households making over $250,000,
calling into question the notion that the tea party crowd speaks for
"the people."
The poll results were released in conjunction with a Wealth for the
Common Good study that details how tax breaks over the past 50 years
have gone mostly to the affluent. The study also notes that by simply
allowing the Bush tax cuts to expire it would generate about $450
billion in revenue.
Some will call this class warfare. And they're right, just like
Warren Buffet said. "There's class warfare, all right," the celebrated
billionaire noted, "but it's my class, the rich class, that's making
war, and we're winning."
- Posted in
19 Comments so far
Show AllI'll be watching and waiting...
"Yes, a majority. A new Quinnipiac University poll found that 60 percent of Americans in both major political parties favor raising income taxes on households making over $250,000"
well I'm not too impressed, given that 50% of Americans don't pay federal taxes at all so they don't really care.
"In taking the Pledge, each signer agrees to donate some or all of their tax savings from the Bush tax cuts to support tax fairness organizing and/or other economic justice efforts"
Huh? Do I under stand correctly the money will go to some organization for lobbying congress to increase taxes? Good PR move tho...
"Just because Obama says we should do this doesn't mean its going to happen,"
If Obu$ha said he is going to let the tax cuts expire, one can just about be certain he will do exactly the opposite and extend them until at least 2012. Of course it will be labeled as being done in the spirit of "bipartisanship."
Yes, Initiate...I'll believe it when I see it.
When I was a young, idealistic know-nothing, I would hear comments at the local Libertarian Party meetings I attended, like, "Why should rich people pay more taxes? That's like buying a loaf of bread--and being told that the price depends on how much money you have."
It sounded logical at the time--until I realized, years later, that it's not the exact same loaf of bread. Compared to my tiny, one-bedroom townhouse, it takes more police, fire, snowplows, street lamps, etc. to cover a rich person's mansion, apartment buildings, businesses and so forth. The rich person's delivery trucks beat up the roads more, and it takes more military resources to defend their property. And so forth.
What I don't know is whether those millionaires in the Responsible Wealth Network are really civic-minded, or are they up to something.
The rate of taxation should increase in direct proportion to income.
Whatever the tax rate is on the first million or billion, it should always be increased on the second.
For example, we could logarithmically incrementalize a 90% rate on one million to 99% on a billion, and (theoretically) 99.9% on a trillion.
Bush gave millionaires a rate break on their excessive income.
We need to correct this unfairness.
Re: chameleon, "well I'm not too impressed, given that 50% of Americans don't pay federal taxes at all so they don't really care."
First of all, it's not that 50% (actually, it was 47%) that don't pay federal taxes. What that particular stat pertains to is income taxes (but one of many revenue streams). And, whether or what they're paying is irrelevant. The point is, every single American (yes, EVERY SINGLE AMERICAN) depends on services provided by the government, so it's important to leap that ridiculous ideological hurdle to recognize that, if those services are to continue, someone's got to pay for it.
The $ is obviously not going to come from low-income folks, because, well, THEY DON'T HAVE IT. Without digging too much into the nitty gritty, we must also recognize that there are systemic reasons for poverty. That is to say that the right wing's "pull yourself up by your bootstraps" sentiment is not, in the grand scheme of things, a reasonable expectation.
In order to get people to work, to make us all productive members of society, we have to have avenues for them to actually do it. Those avenues don't currently exist to a sufficient extent to make that "bootstraps" argument a valid one.
Re: "Do I under stand correctly the money will go to some organization for lobbying congress to increase taxes?"
NO. It's not that these people are giving $ to groups that are lobbying for tax increases. It's that they're giving to groups who are working toward a more fair and equitable tax system. One that recognizes the systemic barriers and creates the avenues I mentioned earlier. With a tax system that enables the unabated accumulation of wealth BY the wealthiest, how can one expect that money to flow through the economy? We've witnessed the failure of a trickle-down system over the past several decades. The rich didn't/still don't run around with all that wealth, starting companies, creating jobs & making everyone's lives better. They save it, they buy property, they shelter & grow it offshore or on the Wall Street casino floor. And, what people are working, esp. low-skilled laborers, are being squeezed for more & being paid much less.
It truly is time to do something vastly different. And, anyone who argues in favor of the teabaggers or any other voice of the far right wing, is, in effect, defending the status quo, defending aristocracy, defending the concentration of money and power in the hands of so few. And, correct me if I'm wrong, but isn't the fight AGAINST just that the whole reason this country was founded?
Oh, and that Quinnipiac poll (if you read it) also found that a majority (64%) of upper-income Americans (≥$250K per year), believe they, themselves, should be taxed at a higher rate in order to reduce the federal deficit.
"The $ is obviously not going to come from low-income folks, because, well, THEY DON'T HAVE IT."
They're a bunch of freeloaders. I used to live in Canada and I personally know a single mother of two with a disabled child making $39k and paying fed, provincial and 13% sales tax. Until Americans figure out that you don't get something for nothing the deficit is gonna keep growing. You point exactly: "so it's important to leap that ridiculous ideological hurdle to recognize that, if those services are to continue, someone's got to pay for it"
"groups who are working toward a more fair and equitable tax system"
I call major BS on that. Just follow the money and see that probably their relatives or some shadow company of theirs runs those groups. I can't belive progressives fall for that kind of scam. If you're filthy rich and really wanna help, pay extra local texes. They go towards schools and roads in your town. Give some money to a local hospital so all the freeloaders with no insurance can go have their cholesterol checked that way I don't have to pay for them.
"It truly is time to do something vastly different"
I agree. It's time the other half of the country start pulling their own weight. Think about it. 53% of people are paying for the other 47%. How "fair" is that?
Personally I don't mind paying taxes. I just mind when the gov is screwing me for political gain. And when some rich bastard tries to tell me how to spend my own cash.
All Americans pay Social Security taxes which is supposed to pay their Medicare and their Old age Security. In Canada those both fall under income taxes.
Thus to suggest Canadians at 39k income all pay taxes while Americans do not is inaccurate.
As to Sales tax, it depends where one lives. Each province has a different rate and poorer Canadians are reimbursed at varying levels of income for the Sales Tax they pay. They just fill out a form.
CPP and OAS in Canada also work differently then Social Security in the USA where CPP a seperate Government defined pension plan where they money raised is kept seperate of general tax revenues.
Your mother of two would also get a monthly Child benefit per child and extra for a disabled Child. This comes to about 100 for the child not disabled and a little over 200 for the other. Thats more then 3600$ that is income and not taxed.
With basic personal exemptions of 10K for herself and 200 per child, 14 K off the 39k would not be taxed. (you pay 0 taxes of any type on the first 10k plus another 2k+ per child thus the first 15k has no tax at all)
Her taxable income with NO other deductions (and there are others) will then drop to around 25k. Tax rate for that combined is a mean of 22 percent (lower in some provinces higher in the others) meaning 5500 in taxes. From that you subtract the credits for children (3600) leaving about 1900 net taxes paid. While this very rough estimate 1900 our of 39k is about 4.8 percent total taxes.
Thats pretty close to the FICA paid by Americans poorest.
Added to that, that woman in Canada paying taxes on 39000 had health insurance coverage for her and her family. Would a person making 39k in the USA have the same or would they have to buy it?
An outstanding analysis and response.
You seem to know what you're talking about so you're probably right. The 4.8% is still not 0% which is the amount 47% of Americans pay (or don't pay).
Yes she and her family had "free" healthcare but also paid fed and provincial taxes which funded that healthcare. The mindset here in the US seems to be "i want my free healthcare and i want some imaginary rich guy to pay for it". which was the point of my post.
chameleon
"The 4.8% is still not 0% which is the amount 47% of Americans pay (or don't pay)"
While true for income taxes, it doesn't account for employment taxes which fall heavily on this per centage of tax payers as does the sales tax. Consider that after around $100,000 there is no more payment of social security taxes while 100% is taxed of those making less.
Its not quite the free ride supposed, though of course there are freeloaders, they are in every society, but most of the 47% you speak of are hard working, unless they are part of the20 some odd per cent who have had their jobs lost or stolen.
You missed the point. All Americans pay FICA. Canadians FICA type taxes are included in income taxes.
This woman you gave as example likely pays LESS then those 47 percent of Americans in taxes overall and still gets medical coverage.
Ah, ah, ah, not so fast, Mr. chameleon. You keep jumping back to this 47% don't pay taxes argument, which is disgustingly misguided, and which I thought I already addressed. You're talking about INCOME taxes -- one of several revenue streams. Just b/c a low-wage worker might not pay federal income taxes doesn't mean he/she isn't paying taxes. The fact is that even our lowest paid workers are, in fact, paying a substantial portion of their income in sales taxes, often for basic necessities, with not much left to save afterward. So...enough already with the pathetic half of the country don't pay taxes argument.
Re: "Just follow the money and see that probably their relatives or some shadow company of theirs runs those groups."
Trust me, I know exactly where the donations of this campaign are going. And, it's to much more honorable causes than that of the rich little men, cronies of big business, behind the tea party.
Re: "They're a bunch of freeloaders."
Come on, Mr. chameleon. Who are you pretending to be here? God? Who are you to judge anyone, especially with such a trite generalization that's only been implanted in your mind by the very leaders of "gov...screwing [you] for political gain" over the the course of decades. I challenge you to explain why you believe that to be the truth, when substantial research on the contrary exists. I posit that it was the neocon movement's free market, fend-for-your-own indoctrination that has led you, not only to your stubborn disdain for people of less fortunate existences, but also the dried up pond that is our economy.
I'm sure you know and respect plenty of people who you're arguing against in this comments stream and elsewhere. Take a breather and think about it before you decide to let loose here or anywhere else. Maybe try their skin on for size some time, Mr. chameleon. You just might see things much differently.
Believe it or not my "fend-for-your-own indoctrination" comes from being born in eastern Europe under the communist regime. Makes it a lot easier to live in a capitalist society.
My statement was 50% (ok 47%) don't pay fed income taxes. Which is true. They do pay sales tax and probably state tax if they have the misfortune of living in one of the states that do have an income tax. And yes, they probably pay property tax as well.
And finally, the politicians and government are not to be trusted. Whether they are in the US, Canada or anywhere in the world. There's a certain type of people that gravitate towards that kind of job and they are not the ones I would pick to do business with.
MSA-TX said: "the right wing's "pull yourself up by your bootstraps" sentiment is not, in the grand scheme of things, a reasonable expectation."
Actually, it is, its just that the last people to actually practice it are right-wingers themselves. The wealth of many right-wingers is more a function of properly positioning themselves in front of the gov't welfare spigot than from hard work. 1) Our military is overwhelmingly right-wingers, spending a trillion tax dollars a year to save us from Al-Qaeda, who last attacked us with box-cutters. Lets face facts: the military, and its industries, are welfare-queens who live high on the publics teet. (OK, the fighting military are excepted). But the military easily wastes HALF of what the taxpayer gives it. 2)The Red-States almost NEVER factor out as net assets to our country, when it comes to taxes, but as net liabilities. Check out taxfoundation.org, where each states ratio of federal spending over federal taxes is calculated, and you'll find that Red-state conservatives don't today and for at least 100 years have NEVER gotten off the Federal welfare rolls, when it comes to spending versus taxes. 3)Right-wingers are primarily corporatists, big on the corporate family (small on the actual family). Who has benefitted, since Reagan, from crony-capitalism? Corporations, thats who! There's little question, today, that corporations are the primary beneficiaries of whatever welfare Congress wants to throw out there. Take a look at the finance sector bailout (even as 8 million Americans got thrown out of work), or at the Obama healthcare bill, if you wonder who is actually positioned at the government welfare spigot these days.
I welcome the 'pull yourself up by your bootstraps' mentality, and welcome the day when the rightwingers shouting it, actually measure up to it.
Excellent comment!
"But the military easily wastes HALF of what the taxpayer gives it"
Yep!
To be fair I'd point out that some progressive states that whine about the military have been and are first at the trough.
Does anyone remember that the tax rate on the rich before Reagan was 70%, and that under Eisenhower it was 90%? THAT'S how you wipe out the deficit, AND put people back to work.
Yeah, and what the IRS and Congress apparently don't realize is that the more unfairness and inequity there is in the system, the more lower and middle income people are motivated to cheat. If the system isn't fair in the first place, who cares about being honest? If the government isn't going to behave responsibly with collecting and spending OUR money, why give it to them in the first place? People will say screw it, I won't be a dupe! Open up that off shore account now!
I think Gonsalves might want to work on his article titles. I've noticed a pattern of misrepresentation when it comes to the content of his pieces.
A more apropos title might be: Tax Rules Ensure Rich Keep Getting Richer.
I think it's swell that some of these wealthy criminals want to pay their fair share. Since they've already taken so much money out of the country and hidden it in offshore accounts, perhaps it is their guilt that is getting the better of them. Unlikely though. They would actually need a conscience for that, and all indications are that great wealth and sociopathy are strongly correlated with one another.
Or maybe it's the realization - quite accurate in my view - that if the inequality grows much more from its current levels, direct and indirect attacks on the wealthy are not only likely, they are virtually inevitable.
It won't matter if they live in a gated community with security guards. In fact, those very things will only attract the crowds. Places like, oh... I don't know... Cape Cod?
Oh sure, many people are asleep and the MSM tries to paint a pretty picture about jobless recoveries and other idiotic oxymorons, but if the moneyed-class lets these tax cuts expire, it will be for one reason and one reason only: they don't want to lose their heads.
With millions and millions of people with absolutely positively nothing left to lose, it is only a matter of time before heads start rolling.
So go ahead Congress and Obama. Extend those tax cuts for the wealthy. I dare ya.