Rebuilding the Dream with Fair Taxes

August 10, 2011

The following is a tax fact sheet, authored by United for a Fair Economy, for the Rebuild the Dream coalition, led by MoveOn.org in partnership with more than 80 organizations and over 160,000 individuals committed to advancing one simple ideal: liberty and justice for all. The coalition has worked together to develop the "Contract for the American Dream," which includes 10 critical steps for getting the economy back on track. This fact sheet details one of those steps. 

Return to fairer tax rates

End, once and for all, the Bush-era tax giveaways for the rich, which will eventually have to be paid by the rest of us — or by our kids. Also, we must outlaw corporate tax havens and tax breaks for shipping jobs overseas. Lastly, with millionaires and billionaires taking a growing share of our country’s wealth, we should add new tax brackets for those making more than $1 million each year.

The Problem:

  • We lack the revenue to pay for the vital public systems and structures that we all benefit from. The taxes we pay lay the foundation for a sound economy and wealth creation by funding roads and railways, well-educated workers, courts, clean food and water, scientific research, and much more. But federal revenue is at its lowest level since 1950, relative to the size of our economy. The Bush-era tax cuts have cost us $2.5 trillion in revenue since 2001, and have not created jobs. Our national debt grew as we borrowed money to launch two wars, while the worst recession in decades caused huge job losses that shrunk revenues. 
  • Our tax system rewards wealth over work. Income from Wall Street — capital gains (selling stocks, real estate, and other investments) and dividends (earnings from stocks) is taxed at just 15%, while income from work is taxed at a top rate of 35%. That means a secretary pays a higher tax rate than her CEO boss does on most of his income.

What We Can Do About It:

  • Restore tax brackets for the super-rich. The Fairness in Taxation Act, H.R.1124, would raise $74 billion in 2011 by increasing tax rates on both work and capital gains to 45% for millionaires and to 49% for billionaires. Then hedge fund managers who earn millions will no longer pay a 15% rate. 
  • Establish a strong estate tax. Our nation’s only tax on wealth was sharply reduced in 2010. The Responsible Estate Tax Act, S.3533, would exempt $3.5 million from taxes and add rates of 45% to 65% for the ultra-wealthy, raising about $170 billion over ten years compared to the current low estate tax. A strong estate tax reduces inherited wealth and the disparities in wealth held by Blacks and Latinos. 
  • Crack down on offshore tax dodging that costs taxpayers $100 billion a year. The Stop Tax Haven Abuse Act, S.1346 and H.R.1265, would combat offshore secrecy and fictional foreign entities, close tax loopholes, and strengthen penalties on tax shelter promoters. 

Visit www.RebuildtheDream.com for more information and to get involved.

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Tax Policy

The Chicago Political Economic Group presented a paper on tax policy, see http://www.cpegonline.org/workingpapers/CPEGWP2011-2.pdf

You might take a look. The 1973 tax rates are suggested. The top ten percent used to earn only 35% of the nation's personal income between 1942 and 1982 and the top tax rate was 91% during 1940 to 1962, and lowered 1962 to 1982, roughly speaking, and the effective tax rate dropped from 55% to about today's 32% on top earners (see ctj.org "Is tax day so burdensome for the rich?")  

When distribution was more equal, the economy did better. Now that the top 10% take in close to half of all income, their tax bite is less. Guess who pays the difference? National disposable income separated into quintiles over the years, there should be a graph according to income quintile. The CPEG says: 

the point of this paper is not to promote such a a deficit reduction policy but rather to show that revenue raised by restoring the 1973 income distribution and taxes to the top 10% of filers would be sufficient to erase the FY 2012 budget deficit, if immediately paying off the federal deficit was good policy (which it is not). Though CPEG would wholeheartedly support a steeply progressive income tax increase, the revenue raised would be better used to support a federal jobs program. 

  

My point is, maybe your tax rates are too low? How should we spend the new revenue? Public job creation should be in your answer. Rep. Jan Schakowsky is promoting now a $200 billion proposal. Take a look, support it. See National Jobs for All Coalition also for more support. 

I post at http://benL8.blogspot.com with my proposals. Keep up your good work.   

 

  

  

The tax rates mentioned are

The tax rates mentioned are from the Contract for the American Dream, not from United for a Fair Economy alone, and they were agreed on by a process that involved 160,000 people.  Yes, it'd be good to have even higher tax rates, but these proposals are the ones people chose.  They are based on legislation already proposed, so I think the idea is that these rates could actually be enacted if people work hard for them.

Thanks for the links to the report and your blog.

Taxes

The tax rates in this country are at the lowest in decades. Paying our fair share is only part of the issue. The vanishing middle-class can no longer carry the burden of America's bills. We have the RIGHT blaming the left for entitlement spending and it being unsustainable. This ridiculous position has tricked people into believing(tea-partiers) that they aren't to blame. When the largest portion of your tax-base has lost their jobs to NAFTA and other "free-trade" are working in RETAIL paying lower wages this adds to the revenue issue. The Bush tax cuts and the extension of, are the final nails closing the lid on the coffin of our way of life. The coffin was NAFTA. www.defenderofthemiddleclass.com

Taxes not enough

It isn't enough to change our tax policy in the myriad ways enumerated by this coalition. Until we have a sound ethical/ideological basis for change, we will, as the French say, be 'pedalling in sauerkraut'.  Stand-alone capitalism has to make way for a mixed economy, otherwise known as social democracy, and that requires more than changes to the tax code.

I agree that changing our tax

I agree that changing our tax system to be fairer is not enough.  The Contract for the American Dream http://contract.rebuildthedream.com/ also calls for:

I. Invest in America's InfrastructureII. Create 21st Century Energy JobsIII. Invest in Public EducationIV. Offer Medicare for AllV. Make Work PayVI. Secure Social SecurityVII. Return to Fairer Tax RatesVIII. End the Wars and Invest at HomeIX. Tax Wall Street SpeculationX. Strengthen Democracy

These 10 proposals are not all we need to do, but they are a great place to start. Number 10 includes getting money out of politics, which is really important to be able to accomplish the other goals.  

Check out the fact sheet for each of the 10 goals.