Tax The Rich: A Deficit Plan That Doesn’t Hit We, The People

Here is MY deficit-reduction plan. This plan does not reflect the views of anyone but myself — and maybe half the population. Unlike deficit plans from the “serious people” in DC, this one doesn’t annihilate the poor and gut Social Security and the middle class while passing even more of the benefits of our society up to a few at the top.
1) Restore pre-Reagan top tax rates. We didn’t have massive deficits until we reduced the top tax rates.
2) Income is income. No more reduced capital gains tax rate. The incentive to invest should be to make a bunch of money from a good investment. The reason there is a low capital gains tax rate is that the wealthy get most of their income from capital gains. And the reason they get most of their income from capital gains is there is a low capital gains rate. The resulting income shifting schemes are a drag on the rest of us. (Also applies to dividends.)
3) Income is income. Inheritance income should be taxed as income, except there should be a “democracy cap” on how much someone can inherit. We decided not to have an aristocracy when we founded this country so we shouldn’t have one.
4) Businesses should be taxed or not taxed, but not taxed AND not taxed. They shouldn’t be able to use “double Irish” or “Dutch sandwich” or operate out of PO boxes in Bermuda or the Cayman Islands. (Bonus, this also helps reduce incentives to send our jobs and factories out of the country.)
5) If you don’t pay your taxes We, the People won’t pay to provide you with services. We can start by not allowing you to have a driveway that connects to public streets, or water/sewer hookups or mail. Also we won’t enforce any contracts for you, including the one that says you “own” your house(s). And no government-developed Internet for you.
If companies like Google want to “double Irish” and “Dutch Sandwich” us or operate out of PO boxes in tax havens, we shouldn’t let them use government services like courts, or the government-developed Internet. See how well they operate without access to roads (that includes for employees to get to go to work.) How about withdrawing the limited liability protection that investors in corporations receive? And of course no protection for “intellectual property” or trademarks. Oh, yeah, no access to anyone who went to a school that used tax dollars. And no government services means no sea-lane protection for your products shipping from Chinese factories, by the way.
6) Speaking of sea-lane protection, why do we have a military budget comparable to when we faced nuclear annihilation by the Soviet empire? Bases in Germany and Japan? And why can I go to this website, pick a DC-area zip code, say 22314, and learn that “Dollar Amount of Defense Contracts Awarded to Contractors in this Zip Code from 2000 to 2009: $7,086,397,848.” Seriously, scroll down the page and look at some of the contracts and amounts awarded. I suspect there’s some serious deficit reduction to be found in the military budget. A comprehensive and very public audit of where all that money has been going since, say, 1981 might take a chunk out of the debt problem all by itself
7) I could start listing all the corporate subsidies, tax breaks, monopoly grants, schemes, contracts, etc. that we pay for, but I think you get the idea. How about calling bribery by its name: bribery, and doing something about it?
8) To the extent that implementing this plan does not clear up the deficit and start paying off the debt, how about a yearly national property tax on all individual holdings above, say, $5 million, with the tax rate progressively increasing as total wealth increases, and keep doing this each year until the debt is paid off. Perhaps start at 1% on $5 million, 2.5% at $10 million, 5% at $50 million, etc. (Hedge fund managers and investment bankers start at 50% and go up, just for the heck of it. We can call this the “get the money from where the money went tax.”)
So there is MY deficit-reduction plan. Or, instead, we could do what the “serious people” deficit-reduction plans do: cut services for We, the People, cut Social Security, cut health care, cut education, cut infrastructure, cut the things that make life better for people, and give all the money to a few at the top. Take your pick.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am also a Fellow with CAF.

Tax Cuts Are Theft

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

Conservatives like to say that taxes are theft. In fact it is tax cuts that are theft because they break a long-standing contract.

The American Social Contract: We, the People built our democracy and the empowerment and protections it bestows. We built the infrastructure, schools and all of the public structures, laws, courts, monetary system, etc. that enable enterprise to prosper. That prosperity is the bounty of our democracy and by contract it is supposed to be shared and reinvested. That is the contract. Our system enables some people to become wealthy but all of us are supposed to benefit from this system. Why else would We, the People have set up this system, if not for the benefit of We, the People?

The American Social Contract is supposed to work like this:

virtual_cycle

A beneficial cycle: We invest in infrastructure and public structures that create the conditions for enterprise to form and prosper. We prepare the ground for business to thrive. When enterprise prospers we share the bounty, with good wages and benefits for the people who work in the businesses and taxes that provide for the general welfare and for reinvestment in the infrastructure and public structures that keep the system going.

We fought hard to develop this system and it worked for us. We, the People fought and built our government to empower and protect us providing social services for the general welfare. We, through our government built up infrastructure and public structures like courts, laws, schools, roads, bridges. That investment creates the conditions that enable commerce to prosper – the bounty of democracy. In return we ask those who benefit most from the enterprise we enabled to share the return on our investment with all of us – through good wages, benefits and taxes.

But the “Reagan Revolution” broke the contract. Since Reagan the system is working like this:

virtual_cycle_diverted

Since the Reagan Revolution with its tax cuts for the rich, its anti-government policies, and its deregulation of the big corporations ourdemocracy is increasingly defunded (and that was the plan), infrastructure is crumbling, our schools are falling behind, factories and supply chains are being dismantled, those still at work are working longer hours for fewer benefits and falling wages, our pensions are gone, wealth and income are increasing concentrating at the very top, our country is declining.

This is the Reagan Revolution home to roost: the social contract is broken. Instead of providing good wages and benefits and paying taxes to provide for the general welfare and reinvestment in infrastructure and public structures, the bounty of our democracy is being diverted to a wealthy few.

We, the People built this country’s prosperity and this built wealth. We reinvested that wealth, building the world’s most competitive economy. Now a few people are gaming the system and breaking the formula, taking for themselves vast riches, leaving the rest of us to clean up the mess.

We must recognize and understand these tax cuts for what they are. They are a broken contract. These tax cuts for the wealthy are theft. And we must recognize the Reagan Revolution for what it has cost us. Our democracy has been corrupted and our political system has been captured. A wealthy few are taking all of the benefits of our efforts for themselves. The lack of investment in infrastructure, courts, schools and other public structures is making our country less competitive in the world. The Reagan Revolution is stealing our future.

Other posts in the Reagan Revolution Home To Roost series:

Reagan Revolution Home To Roost — In Charts
Reagan Revolution Home To Roost: Ameri
ca Drowning In Debt

Reagan Revolution Home To Roost: America Is Crumbling
Finance, Mine, Oil & Debt Disasters: THIS Is Deregulation

14 Ways A 90 Percent Top Tax Rate Fixes Our Economy And Our Country

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

A return to Eisenhower-era 90% top tax rates helps fix our economy in several ways:

1) It makes it take longer to end up with a fortune. In fact it makes peoplebuild and earn a fortune, instead of shooting for quick windfalls. This forces long-term thinking and planning instead of short-term scheming and scamming. If grabbing everything in sight and running doesn’t pay off anymore, you have to change your strategy.

2) It gets rid of the quick-buck-scheme business model. Making people take a longer-term approach to building rather than grabbing a fortune will help reattach businesses to communities by reinforcing interdependence between businesses and their surrounding communities. When it takes owners and executives years to build up a fortune they need solid companies that are around for a long time. This requires the surrounding public infrastructure of roads, schools, police, fire, courts, etc., to be in good shape to provide long-term support for the enterprise. You also want your company to build a solid reputation for serving its customers rather than cheapening the product, pursuing quick-buck scams, cutting customer service, etc. The current Wall Street/private equity business model oflooting companies, leaving behind an empty shell, unemployed workers anda surrounding community in devastation will no longer be a viable business strategy.

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Tax Tricks

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

How many ways can people be tricked about taxes? Here are a few tricks I have come across.

* The rich already pay most of the taxes. You hear variations of this, most recently the news that 47% of Americans don’t owe any federal income tax. But the fact is that the rich take in most of the income and literallyown almost everything. You probably heard about 25 hedge fund managers getting $25 billion income last year? They get a special deal and don’t pay income tax rates on that money. But regular people still pay Social Security, state and local and sales taxes on their income. In fact working people pay a higher overall tax rate than the super-rich, even if federal income taxes are not part of that.

One more thing – really, don’t get me started – most income at the top comes from “capital gains” from things like stocks and property, but capital gains are taxed at a much lower rate than income that comes from from actually working.

* The new Tea Party Contract From America has as item 4: “enact fundamental tax reform; Adopt a simple and fair single-rate tax system by scrapping the internal revenue code and replacing it with one that is no longer than 4,543 words — the length of the original Constitution. (64.90 percent).”

Think about this. Since the rich pay most of the taxes, guess what happens to their taxes – and yours – if we move to a single tax rate for everyone. Clue: their taxes go way down and everyone else’s go way up.

Raising taxes on rich unlikely to cut deficit. You often hear stories like this — that there just isn’t enough money at the top to pay off the debt, so why bother? First, even if it doesn’t completely close the budget gap, it sure would make a dent. Next, think about those 25 hedge fund managers who brought in $25 billion last year but don’t even pay income taxes. That’s a please to start right there, and it’s just 25 people. Then think about the$140 billion Wall Street bonus pool that was paid out last year – a recession and bailout year. That all went to just a few more people. There’s lots of money at the top.

* Taxes “take money out of the economy,” or otherwise hurt economic growth. Where do they think the money goes? Taxing the rich might take money out of the economy of the Cayman Islands, but when used to fund investment in our economic future (roads, schools, R&D, etc.), it actually grows the economy.

Please let us know about some tax tricks you have heard, in the comments.

And finally — Take a look at CAF’s Taxes: Myths And Realities

Once Again Voters Overwhelmingly Approve Tax Increases

You hear a lot about “anti-tax sentiment” but when voters are given the choice of raising taxes or cutting services, they usually want the taxes.  

St. Louis voters overwhelmingly — 63% to 37% — voted to increase taxes to support mass transit programs.  Voters also approved a number of property tax increases to help schools.

In other local elections yesterday, Kennett Missouri voters passed a tax increase 66% to 34% and Provincetown, Mass voters approved new taxes.
In January Oregon voters approved income tax increases on the wealthy and corporations “to prevent further erosion of public schools and other state services.”
If the honest case is made and the public is allowed to see that we have a revenue problem in California, not a spending problem, the public will be more willing to open its pocketbooks to fund the services they want and expect.
California should just let the tax question go to the voters without such restrictions on democracy as a 2/3 requirement.  As these election results show, for most people obviously “taxes” isn’t a dirty word.  If conservatives want to say it is why won’t they just allow an “up or down” vote?

Cost Of Tax Cuts Catching Up To Us

The following letter appeared in the San Jose Mercury News:

State not geared up for high-speed rail
Is high-speed rail really the answer in California? I think not. I originally thought, great, let’s match Europe’s and Japan’s advanced transportation with our own high-speed trains.
However, California is not Europe or Japan. We do not have convenient trains and buses running everywhere you could possibly want to go in every city.
Consider that if you traveled from San Francisco to Los Angeles by high-speed train in 2½ hours, what do you do when you arrive? Catch a bus or light rail to your destination? Sorry, too inconvenient and time-consuming. Rent a car? Sorry, now you have lost the economy of train travel as well as the time savings.
Either alternative adds at least two hours to your trip making the time equivalent to driving.
I say, “no on high-speed rail.” Let’s save the money and reduce our debt in California!

Let it sink in what the writer is saying here: We should not even try to catch up to the rest of the world, because we have already fallen so far behind that it will cost too much. Instead let’s just try to pay off some of the accumulated debt.
The writer is bearing witness to the results of many years of tax cutting and cutbacks in our government. After the tax cutting started in the 70s and 80s we stopped maintaining the infrastructure, so now we do not have convenient trains or buses or mass transit to use after the high-speed rail reaches your destination. We instead accumulated debt.
So here we are. The consequences of decades of cutbacks are arriving. The rest of the world leaps ahead of us. China has nearly completed a network of 42 high-speed rail lines connecting the major cities, and we can’t even get one project off the ground.
It’s certainly not going to get any better until we start asking corporations and the wealthy to pitch in and pay back some of what they gained from the infrastructure that we built in California, back in the decades before they got tax cuts.

CA Taxes Poll — Ask A Stupid Question…

Here’s a surprise, in a recent poll of Californians The Field Poll asked if Californians want to balance the state’s budget by having their taxes raised, and a lot of people said they would prefer not to have their taxes raised.

The poll mysteriously did not ask if people would prefer that large corporations, who got their taxes cut in the most recent budget negotiations, should pay for their use of the state’s infrastructure.  It did not ask if oil companies should pay a bit for the oil they take out of the ground here to sell back to us.  It did not ask of the wealthiest Californians — some of whom pay no taxes at all — should be asked to pay a fair share to support the infrastructure that enabled them to become wealthy.
The poll only asked people what they think of raising taxes.  Only 9% think California’s budget should be balanced using only tax increases.
The poll asked if the budget should be balanced using spending cuts only.  31% said yes. The poll did not ask what specific spending to cut.  I suspect people would have answered that the state should cut only that spending that is wasted, but certainly not any of the spending that is used for services they find necessary, like schools or roads or police.  Cut that other stuff.  It did not explain what spending cuts mean to the respondents, that class sizes have grown enormous, that college tuition has increased beyond what people can afford, or that elderly ill people cannot get basic services.  They would answer, cut that other stuff but not stuff that affects any of us.
The poll asked if people feel the state should balance the budget using an equal mix of spending cuts and tax increases.  29% said yes.   It did not point out that people have always answered polls this way but the state has been only cutting and cutting for years and years.
The poll also asked if people feel the state is responding to their needs.  That would be the same state that has been cutting services for years and years, while giving big tax breaks to corporations.  Surprisingly a lot of people feel that the state is not responding to their needs.
The poll did not ask if people wanted a pony.

$108 Million Income = NO State Taxes

Michael Hiltzik in the LA Times today,

To everyone who claims that our wealthiest citizens pay more than their fair share of income taxes and we should cut them a break because they’re the ones who, you know, create jobs in our economy, I have four words for you:

Frank and Jamie McCourt.

The McCourts, who own the Los Angeles Dodgers (so she says; he says he’s the owner and she’s not), jointly pocketed income totaling $108 million from 2004 through 2009, according to documents Jamie McCourt recently filed in the couple’s divorce case in Los Angeles County Superior Court.

On that sum, they paid zero federal and state income tax. Jamie suggests that some tax breaks will apply this year too.

The McCourts have eight houses.  Eight.  Houses.
California is laying off teachers, closing parks, etc. — killing the state — just to protect the wealthiest and biggest corporations from paying their fair share of taxes.  Millions of dollars in corporate contributions pay for the nasty smear campaigns — and all the lies about how the wealthy are “hurt” by taxes and will “leave the state” — all to protect THIS!
California needs to take a cold, hard look at the game-playing and the holes in our tax system that allow the rich to get away with paying less taxes than “the help” while at the same time we’re telling teachers we can’t afford to keep them teaching our kids.
And please, let’s stop all this nonsense about “they’ll just leave the state” if we try to make the wealthy and big corporations pay their fair share.

Low Taxes Destroy Our Small Businesses

Remember last year when the Republicans laid out the price of a budget deal and it was a giant tax cut for the biggest corporations?  So in the middle of a revenue crisis they forced … less revenue.  Well, imagine that you are a struggling small or medium business in California, and the Republicans gave your nemesis even more power to crush you.

Corporate taxes are on profits. So a tax cut means that the more profitable companies pay back less to the government for their use of the roads, schools, police and fire protection.  The very infrastructure that supports new businesses is weakened.

Meanwhile, smaller businesses that are struggling don’t pay corporate taxes, so tax cuts do nothing for them. And small businesses that make modest profits only pay modest taxes, and don’t care.

On the other hand, the giant monopolistic corporations that are chewing up small businesses, destroying local and regional retailers, take those tax cuts and use them to turn themselves into even better small-business-destroying machines.

For example, the giant Wal-Marts are destroying local and regional retailers.  But it is the Wal-Marts, not the local and regional retailers that are the beneficiaries of tax cuts.  This is why the “usual suspects” who get their campaign funds from the giant companies, and work with lobbyists for the largest corporations are the same ones who always advocate corporate tax cuts.

Businesses Need Customers Not Tax Cuts.

Oregon Voters Raise Taxes On Wealthy and Corporations

Voters in Oregon passed tax increases on corporations and the wealthy.  This was in spite of well-funded corporate campaigns against the measures.
Measure 66 raises tax rates on individuals who earn more than $125,000 and couples with incomes greater than $250,000. Measure 67 increases business taxes. Fifty-four percent of voters had approved both measures with more than 80 percent of the vote counted late Tuesday.
At Calitics Robert Cruichshank writes, Oregon Voters Deliver Game-Changing Victory,
The opposition ran a well-funded campaign, led by Nike, Columbia Sportswear, and other big businesses. They were joined by Ari Fleischer’s FreedomWorks and the libertarian publisher of the Oregonian, who used to be at the Orange County Register before it went belly-up. Together they ran a campaign arguing that the tax increases would worsen unemployment. But 55% of voters have rejected that, and instead showed that when a truly progressive campaign is waged, the right-wingers can be beaten. Even on taxes.
… Their message was deeply progressive:

These reforms protect nearly $1 billion in vital services like education, health care and public safety. These funds preserve class sizes, save jobs for teachers, provide seniors with in-home care, and provide health care for thousands of Oregonians through the Oregon Health Plan. In this time of economic crisis, we must protect those who have been hit the hardest – seniors, children and the unemployed – without putting more of a burden on the middle class.

It’s a message that works nationally. And it’s a message that’ll work here in California. Voters don’t like seeing their neighborhood schools close, or mass layoffs of teachers, or ending care for the disabled, or kicking kids off of health care. They don’t want it, and are willing to raise taxes to prevent it.

The important lesson to learn is that the public wants government: good schools and roads and courts and police and fire protection.  And the public understands that building solid public structures is the key investment in future prosperity.
California leaders can now feel free to lead and understand that the public is behind them if they raise taxes on the wealthy and corporations in order to find needed state government programs.