BILL BERKOWITZ FOR BUZZFLASH
"Wealth for the Common Good," an organization of business leaders and wealthy individuals are advocating dumping the Bush tax cuts that have mostly benefited the wealthy and skewed the economic landscape
While it’s not as provocative as the latest activities of armed militias, not as buzz-worthy as Sarah Palin’s latest speechifying, nor as engaging as an episode of “Damages,” it nevertheless gets the blood boiling.
It’s Tax Day in America and we’re talking about taxes; why taxes, who pays, how much they pay, and whether America’s tax policy is fair.
With few exceptions, people kvetch about their tax burden. And, as Katrina vanden Heuvel pointed out recently in The Nation, “the truth is that the middle-class has largely been shafted by both Republicans and Democrats, whose campaign coffers are equally greased by wealthy donors. And the shift in the tax burden has fueled a rising inequality and concentration of wealth that weakens our democracy.”
Clark Taylor, a retired professor at the College of Public and Community Service, UMass Boston, soberly discussed the issue of taxes in a recent op-ed for Waltham, Massachusetts’ The Daily News Tribune. According to Taylor, and contrary to commonly held wisdom, taxes have not always been viewed as a bitter pill to swallow: “People in the United States haven't always railed at the taste of taxes,” Taylor wrote. “Public investment was huge, of course, during World War II. Then after the war tax revenues brought us interstate highways, space exploration, the GI Bill, veterans' housing, greatly expanded education frontiers and much more.”
In the 1970s however, things began to shift and “we gave in to the oft-repeated mantra that taxes are, at best, bitter medicine. Tax cuts became our favorite junk food.” And our politicians obliged.
“Think of taxes in taste terms,” Taylor wrote. “We've been conditioned to think of taxes in disgusting, bitter terms something like bad-tasting medicine to be avoided whenever possible. But consider another possibility: taxes are the delightful taste of a healthy democratic economy that works well for all of us.”
While Taylor’s metaphor may be a bit of a stretch, he does help to identify the often un-acknowledged benefits of taxation: “Start with life-protecting things we don't see, like potable water and sewage pipes that keep us physically healthy. Go above ground to roads and bridges. Then think public schools and public universities that compete comfortably with private institutions and make education available for a wide segment the residents in this country. Shift then to the invisible, like the basic research provided by government grants and the military that have made the medical and computer revolutions possible. Add your own ideas and your list will fill pages.”
Although Taylor’s examples make sense – taxes can often provide for the common good – other issues lurk: With tax loop holes, tax scams and high-priced lawyers involved in the mix, it is clear that over the past five decades, the super wealthy are the big winners in U.S. tax policy.
Recently, Wealth for the Common Good produced a report titled “Shifting Responsibility: How 50 Years of Tax Cuts Have Benefited America’s Wealthiest Taxpayers.” This well-documented report “details how, over the last half-century, America’s highest earners have seen their tax outlays drop by as much as two-thirds.”
"Wealth for the Common Good" is not comprised of the usual “liberal” suspects; it is a “network of business leaders, wealthy individuals and partners supporting public policies that promote shared prosperity and fair taxation".
Coming as it does on the heels of a Quinnipiac University poll finding that 60 percent of Americans in both major political parties are in favor of raising income taxes on households making more than $250,000, the report “exposes how increases in tax breaks over the past 50 years have favored the most affluent,” reads an early-April Wealth for the Common Good Press Release. “The report also details an Economic Tax Recovery Plan that would raise $450 billion in revenue by ending unfair tax benefits to the wealthiest Americans.”
“After 50 years of tax cuts by Kennedy, Reagan and Bush II, the middle class is paying the same share of income as they did in 1960. The richest 3 percent have gotten the gargantuan share of tax cuts,” said Chuck Collins, an heir to the Oscar Mayer meat fortune, and co-founder (along with Alison Goldberg) of WFCG.
According to Forbes magazine, “In 2003 he co-authored a book with William Gates Sr., the father of Microsoft cofounder Bill Gates, arguing for retention of the federal estate tax. The WCG Web site calls for ‘shared prosperity and fair taxation’ and declares: ‘Economic policies in America have slowly but surely shifted to disproportionately benefit the nation’s top earners.’”
The report’s key findings include:
“Over the last half-century, America’s wealthiest taxpayers have seen their tax outlays, as a share of income, drop by as much as two-thirds for the highest-income grouping the IRS tracks. During the same period, the tax outlay for middle-class Americans has not decreased.”
“America’s highest earners — the top 400 — have seen their share of income paid in federal income tax plummet from 51.2 percent in 1955 to 16.6 percent in 2007, the most recent year with top 400 statistics available.”
“Tax cuts for the wealthy between 2001-2008 cost the U.S. Treasury $700 billion and were added directly to the national debt. Retaining these tax cuts for another decade will cost an additional $826 billion.”
The report proposes various tax increases, including the following:
– Creation of a new 50% tax bracket on income of $2 million and above that would raise at least $60 billion a year.
– Endorsement of President Obama’s proposal to allow the Bush tax cuts to expire at the end of 2010 for those earning $250,000 plus, thus pushing the top rate on salary and interest from 35% to 39.6% and the top rate on capital gains from 15% to 20%. (In 2013, including a 3.8% Medicare investment surtax that was part of the recently passed health reform, the top rate on interest would climb to 43.4% and the top rate on capital gains to 23.8 %.)
– Imposition of a “modest federal tax on every transaction that involves the buying and selling of stock and other financial products.” WCG says this would raise $100 billion a year and “dampen the rapid speculative turnover of stocks.” No details were given.”
– Reinstatement of a stiff estate tax on estates of $2 million or more, which WCG said would still tax only one out of every 200 estates. (Under current law the estate tax has lapsed for 2010 and will return in 2011 with a $1 million exemption.)”
At its Web site, WFCG says it’s calling for the Bush tax cuts to expire because “we feel it’s time to rebalance the economy so that it works for everyone, not just the wealthy.”
“Our country is facing unprecedented economic challenges right now: We all need to pay our fair share to resolve these issues and make our long overdue investments in education, health, energy and infrastructure.”
Wealth for the Common Good supporters appear to understand that current tax policy is really in no one’s long-term best interest -- not even the best interests of the wealthy. Ultimately, a nation that fails to support its physical and human capital, is a nation that ultimately can’t sustain itself or successfully compete with others. This is a reality that neither the anti-tax “tea partiers” nor the wealthy beneficiaries of current tax policy don’t seem to understand. But as April 15th is upon us, the Quinnipiac poll provides a reason for optimism: as a solid majority of people now support tax increases for people with incomes over $250,000.
(This story is dedicated to Michael Oiknine and his wife in celebration of the birth of their daughter)
BILL BERKOWITZ FOR BUZZFLASH