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America’s Tax Code Is Broken, But The Rubio-Lee Plan Won’t Fix It

“We believe that America’s best days are still ahead. But we also recognize that restoring the shared prosperity that comes from a strong economy requires reforming the most antiquated and dysfunctional government policies, beginning with the federal tax system.”

—Senators Marco Rubio and Mike Lee 

Finally, something we can all agree on.

In their joint op-ed in Tuesday’s Wall Street Journal, the two Republican senators proposed a new tax plan and argued that our current federal tax structure is broken, its problems “rooted in the same fundamental unfairness and inequity of a government that picks winners and losers.”

Again, we here at the Roosevelt Institute welcome this realization. For too long, our tax code has helped the few at the expense of the many. Unfortunately, an analysis of their proposed solutions shows that the senators have come out on the wrong side of this argument.

First, they propose lowering the top corporate tax rate to 25 percent. This would be a step worth discussing if not for the fact that, with offshore tax havens and a wealth of other tax benefits, America’s largest corporations currently pay an effective rate of just 12.6 percent. In the words of Roosevelt Institute Chief Economist Joseph Stiglitz, it would seem that the problem is not double taxation, but no taxation.

The senators then argue that, in order to incentivize investment, they would make all capital expenditures 100 percent tax deductible, suggesting that taxes have squeezed corporations out of the investment business. But if this is the case, then how do we explain the $2 trillion currently being held abroad by America’s largest corporations? And what about the enormous sums that companies like Apple and Home Depot are spending on buybacks to enrich investors?

In fact, new research from Roosevelt Institute Fellow J.W. Mason shows us that the link between corporate cash flow and productive investment has been all but severed since the shareholder revolution of the 1980s. Shareholders now pocket an increasingly large portion of corporate earnings and borrowing that would have once gone to capital investments, job creation, or raising workers’ pay. Given these facts, as well as the current level of historically high profits, it is clear that corporate investment is not suffering from lack of funding, and that more spending on corporate welfare is the wrong way to go.

Lee and Rubio suggest that corporate taxes drive American industries abroad. This is absolutely true: Corporations want to benefit from American security, infrastructure, and human capital, but they don’t want to pay their share to maintain those invaluable assets, so they shelter themselves in tax havens like Ireland. The problem, from our point of view, is not, as Rubio and Lee suggest, that the tax code taxes corporations (indeed, that is what a tax code exists to do); the problem is that it allows wealthy corporations to avoid those taxes.

We need policies that will ensure corporations contribute like the rest of us, not ones that will commit more public money to private enterprise.

The senators state that their plan is guided by the principles of fairness, freedom, and growth. This raises the question: In whose mind is it fair to spend hundreds of billions of dollars on wealthy corporations, while Americans drive on pothole-pocked roads and send their children to overcrowded schools to learn from underpaid teachers?

For the individual income tax, Rubio and Lee propose reducing the number of brackets to two — one at 15 percent and one at 35 percent. Even though they have been greatly reduced since the 1980s, lowering rates for middle-income earners is worth discussing. The far more significant part of this proposal, however, is the 11 percent tax break for top income earners, which would further reduce the amount of public funds available for things like roads and schools, and which would further tip our economic balance toward the wealthy.

The senators would likely argue that this tax break will stimulate productive spending, but trickle-down economics did not work under Reagan and will not work now.

Toward the end of their op-ed, the authors posit a series of pro-family tax reforms, like tax credits for children and tax breaks for couples filing jointly. These policies are rooted in a belief that families with married parents are more economically stable and productive than single-parent families. Again, this may be a point worth debating, but these minuscule incentives are scarcely more than lip service to the American middle class, which this plan largely forsakes in favor of more tax cuts for large corporations and the wealthy.

More generally, Rubio and Lee frame their entire plan as a benefit to average Americans, but do this while glossing over policies that will only continue our current trend of supporting the wealthy at the expense of the country as a whole. The Stiglitz tax reform plan, on the other hand, offers a blueprint for a tax code that would bolster the middle class while driving growth and opportunity.

Now that we’ve all agreed on the problem, we should look to solutions that economists tell us actually work.

Eric Harris Bernstein is a Program Associate at the Roosevelt Institute.

Cross-posted from the Roosevelt Institute’s Next New Deal blog.

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

Photo: U.S. Senator Mike Lee of Utah speaking at the 2015 Conservative Political Action Conference (CPAC) in National Harbor, MD. (Gage Skidmore/Flickr)

Guns On Campus: Not An Agenda For Women’s Safety

Allowing guns on campus won’t reduce sexual assault on campus — instead, it will increase the risk of homicide.

Two years ago, Republican leaders released a post-mortem analysis of the 2012 election in an effort to better understand how they lost the single women’s vote by 36 percent. The 100-page report recommended that GOP lawmakers do a better job listening to female voters, remind them of the party’s “historical role in advancing the women’s rights movement,” and fight against the “so-called War on Women.” Look no further than recent GOP-led efforts to expand gun rights on college campuses under the guise of preventing campus sexual assault for evidence that conservative lawmakers have failed to take their own advice.

Today, lawmakers in at least 14 states are pushing forward measures that would loosen gun regulations on college campuses. In the last few days, a number of them have seized upon the growing public outcry over campus sexual assault to argue that carrying a gun would prevent women from being raped. (So far they’ve been silent on how we might prevent young men – who, of course, would also be allowed to carry a gun – from attempting to rape women in the first place.)

Republican assemblywoman Michele Fiore of Nevada recently told The New York Times: “If these young, hot little girls on campus have a firearm, I wonder how many men will want to assault them? The sexual assaults that are occurring would go down once these sexual predators get a bullet in their head.” (Really? Hot little girls?) And as the Times highlighted, Florida representative Dennis Baxley jumped on the “stop campus rape” bandwagon recently when he successfully lobbied for a bill that would allow students to carry loaded, concealed weapons. “If you’ve got a person that’s raped because you wouldn’t let them carry a firearm to defend themselves, I think you’re responsible,” he said.

Let’s be clear. People aren’t raped because they aren’t carrying firearms. They are raped because someone rapes them. What a sinister new twist on victim blaming. As if anything positive could come from adding loaded weapons to the already toxic mix of drugs, alcohol, masculine groupthink, and the rape culture endemic in college sports and Greek life on campuses around the country.

These lawmakers have appropriated the battle cry of students who are demanding more accountability from academic institutions to prevent and respond to campus sexual assault. It’s a vain attempt to advance their own conservative agenda of liberalizing gun laws. This is an NRA agenda, not a women’s rights agenda. According to Everytown for Gun Safety, each of the lawmakers who have supported such legislation has received an “A” rating from the National Rifle Association (NRA). They have enjoyed endorsements from the NRA during election years and some – including Fiore and Baxley – received campaign contributions from the organization.

These lawmakers are pointing to the demands of a handful of women who have survived sexual assault and are advocating for liberalized campus gun laws. The experiences of these students are real and deserve to be heard and considered as we debate how to make campuses safer. We must also recognize that these students are outliers. Surveys have shown that nearly 80 percent of college students say they would not feel safe if guns were allowed on campus, and according to the Times, 86 percent of women said they were opposed to having weapons on campus. And for good reason.

Research shows that guns do not make women safer. In fact, just the opposite is true. Over the past 25 years, guns have accounted for more intimate partner homicides than all other weapons combined. In states that that require a background check for every handgun sale, 38 percent fewer women are shot to death by intimate partners. The presence of a gun in a domestic violence situation increases the risk of homicide for women by 500 percent. And women in the United States are 11 times more likely than women from other high-income countries to be murdered with a gun. Guns on college campuses would only make these statistics worse.

If the GOP wants to show they care about women – or at the very least care about their votes – this is just one of the realities they need to acknowledge. And they need to listen to the experiences of all women who have experienced sexual assault – like those who have created the powerful Know Your IX campaign – not just those who will help advance their NRA-sponsored agenda.

Andrea Flynn is a Fellow at the Roosevelt Institute. Follow her on Twitter @dreaflynn.

Cross-posted from the Roosevelt Institute’s Next New Deal blog.

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

Photo: Keary O. via Flickr

 

 

After Four Decades With Roe, U.S. Women Still Need Abortion Access, And So Much More

As economic inequality takes center stage in politics, it’s important to remember that reproductive justice and bodily autonomy are just as essential for secure lives.

Thursday’s 42nd anniversary of the Supreme Court’s Roe v. Wade decision prompted a week of stark contradictions. Thousands of anti-choice protesters descended on Washington yesterday while the House of Representatives passed HR7, a bill limiting insurance coverage for abortions (after a broader abortion ban was – for the time – abandoned). Yesterday, congressional Democrats re-introduced the Women’s Health Protection Act, a bill meant to protect abortion access from the medically unnecessary restrictions that have already made the landmark decision meaningless in many parts of the country. And in his State of the Union address on Tuesday night, President Obama professed his support for abortion rights, along with equal pay, paid sick and family leave, a minimum-wage hike, and expanded health coverage. It’s all been a reminder of what has been won and just how much there is left to fight for – from abortion rights to economic security.

Over the past four years we’ve seen an unprecedented number of attacks on reproductive health – more than 200 between 2011 and 2013 – leaving many states with a scant number of abortion providers. Scores of women are now required to travel long distances, at great cost, to access not just abortion, but a wide range of comprehensive health services.

While reproductive health has certainly been the obsession of choice of conservative lawmakers in recent years, it hasn’t been the only issue in their cross-hairs. In many ways, the increasing hostility to abortion and family planning is reflective of a broader war against the poor that is sure to persist under the new Congress. It turns out the same lawmakers who have championed abortion restrictions in the name of protecting women’s health have done very little to actually help women and families. Indeed, a recent report from the Center for Reproductive Rights and Ibis Reproductive Health shows that states with the most abortion restrictions also have some of the worst indicators for women’s health and well-being. So lawmakers are restricting access to health services at the same time they are dismantling the social safety net on which so many women and families rely. The overall impact has been devastating.

In states across the country, women are struggling under the burden of intersecting health and economic injustices. Let’s look, for example, at Kansas, where conservative governor Brownback slashed business regulations, cut taxes for the wealthy, nearly eliminated income taxes, and privatized Medicaid delivery, all with the goal of making the state a conservative utopia. In the meantime, Kansas women continue to struggle with high rates of poverty, a lack of health insurance, un- and underemployment, and a persistent wage gap. Kansas is one of the 16 states that refuse to participate in Medicaid expansion under the Affordable Care Act, leaving nearly 80,000 adults (half of whom are women) uninsured. It is the only state in the country that actually experienced an increase in its uninsured rate last year.

To make matters worse for women in Kansas, lawmakers eliminated abortion access from 98 percent of the state’s counties – in which 74 percent of the state’s women live – and passed House Bill 2253, a 47-page law comprised of countless and senseless abortion restrictions. It included a 24-hour waiting period; medically inaccurate pre-abortion counseling; prohibiting abortion providers from working or volunteering in public schools; banning University of Kansas Medical School faculty members from teaching students and residents how to perform abortions; and eliminating public health insurance coverage of all abortion services. And the list goes on. Sadly these laws are not unique to Kansas and they have significantly diluted the initial promise Roe held four decades ago.

The economic injustices described above, and those being felt by low-income families throughout the country, are starting to get the attention they deserve, and the policy solutions to address them are gaining traction (see the recent support for raising the minimum wage and instituting paid sick and family leave). But while economists and policymakers are increasingly focused on the pernicious impacts of inequality and economic insecurity, they rarely acknowledge how these issues intersect with reproductive health and rights.

Let us use the anniversary of Roe to remember there can be no economic justice without reproductive justice. We can’t win on one front while losing on the other. Reproductive health – a cornerstone of which is family planning and abortion – is not a frill. It is a core component of comprehensive health care, which is a basic pillar of every individual’s personal, social, and economic well-being.

What good is better and more equal pay if we can’t plan the timing and size of our families? What good is paid sick and family leave if there are no quality, affordable, and accessible providers to give us the care we need when we need it? We need all of it. Now. That’s just demanding a basic – very basic – floor of well-being. And that shouldn’t be too much to ask. Roe has served as part of that foundation for the last 42 years. But conservatives have successfully chipped away at it and will continue to do so until there’s nothing left to stand on. Perhaps we can seize upon the new energy around closing the inequality gap to remind our leaders that without bodily autonomy, we will never be secure.

Andrea Flynn is a Fellow at the Roosevelt Institute. Follow her on Twitter @dreaflynn.

Shulie Eisen is an independent reproductive health care consultant. Follow her on Twitter @shulieeisen.

Cross-posted from the Roosevelt Institute’s Next New Deal blog.

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

Photo: Alisa Ryan via Flickr

Obama’s ‘Middle-Class Economics’ Has To Be About Fairness And Prosperity

The fairer “middle-class economics” policies described in the State of the Union are also the right ones to help the economy grow.

In coining the new term “middle-class economics” and linking it to raising wages and taxing the rich and Wall Street to put money in the pockets of working families, President Obama used his State of the Union address to ask the public that most potent of political questions: “Which side are you on?” And as Republicans say no to improving wages and making college more affordable in order to defend the super rich, Americans will get a clear answer. That’s a sure win for Democrats.

But the president’s explanation of middle-class economics downplayed an important part of the story: it’s not just about fairness, it’s about how we create prosperity.

With the term “middle-class economics,” the president is creating a contrast between economic programs aimed at boosting the middle class and the Republican agenda of shrinking government and lowering taxes for corporations. But Obama’s use of the term missed an opportunity to drive home to the American public that middle-class economics is not just about fairness, but also about moving the economy forward.

Obama defined middle-class economics as “the idea that this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules.” That is one of the president’s favorite phrases. But for all its appeal, it does not explain how middle-class economics drives economic progress and increases wealth. He fails to replace the Republican story that cutting government, taxes, and regulation are the keys to economic growth.

The president actually included such an explanation of what drives the economy in his 2013 State of the Union address, when he said: “It is our generation’s task, then, to reignite the true engine of America’s economic growth: a rising, thriving middle class.”

Democrats need to firmly claim both the grounds of fairness and prosperity. As I recently wrote, “The policies that do the most to bolster fairness are in fact the most powerful policies to move the economy forward and create broadly shared prosperity.”

This is an easy case to make, as it’s true for most of the policies in the president’s middle-class economic agenda.

To take just one example, raising the minimum wage is not just about basic fairness for low-wage workers. Raising wages is about creating economy-boosting jobs instead of economy-busting jobs. When wages are raised, workers have more money to spend—essential when 70 percent of the economy is made up of consumer spending.

The president’s tax proposals are also about more than just the unfairness of a tax code riddled, as he said, “with giveaways the super rich don’t need, denying a break to middle-class families who do.” His proposed taxes on risky bank speculation move that money to invest in vital infrastructure. When he proposes raising taxes on the rich, who already have more money than they can spend, and using those funds to make community colleges more affordable, he’s putting that money into the economy and investing in people’s skills to contribute to economic progress.

Fairness is a very powerful American value. That’s why the most successful Democratic candidates in 2014 made it clear that they were on the side of working families against Wall Street.

But the reason that fairness is so powerful is because of the contrast between the few with vast wealth and what Americans most want, to be able to care for and support their families. We value prosperity and security. That is why it is essential that Democrats can tell a clear story about how we move the economy forward. Middle-class economics is about more than fairness – it’s about how working families and the middle class drive the economy.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Advisor to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

Cross-posted from the Roosevelt Institute’s Next New Deal blog.

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

Photo: President Barack Obama delivers the State of The Union address on Tuesday, Jan. 20, 2015, in the House Chamber of the U.S. Capitol in Washington, D.C. (Olivier Douliery/Abaca Press/TNS)