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How And Why We Should ‘Re-Fund’ America

The powerhouses of Wall Street have tunneled directly into the cloistered backrooms of Washington deal making, extracting trillions of dollars worth of government bailouts, special tax breaks and regulatory favors every year. Yet, in a stupefying act of hypocrisy, they have also been the major force pushing policymakers to embrace extreme laissez-faire bunkum and to inflict the most austere budgetary minginess on the American people.

Through their lobbyists, front groups, economic shills, media hacks and the politicians they’ve purchased, these pampered princes of high finance have gained a stranglehold on policy, choking off the public investment that our country desperately needs. In a nonstop drone, their operatives chant: “America is broke. Fiscal doom looms. Government spending is the cause. Austerity policies are our only hope.”

And Washington is buying this snake oil. In a Fox News appearance, George Will, the GOP’s high priest of the plutocratic order, declared victory for the laissez-fairyites, noting that they have taken control of Washington’s conversation on public spending: “We are now talking entirely on Republican terms, in Republican vocabulary. No taxes, how much is the spending going to be cut? The federal workforce is being cut.”

No doubt the debate in Will’s tiny circle is focused entirely on shrinking America into its dark vision of parsimonious plutocracy. But I find that most people, living way outside George’s bubble of elites, have a far bigger vision of what America can be, and they’re engaged in a less constipated conversation about ways to meet our country’s budgetary needs.

If you review opinion polls, hear the results of door-to-door outreach campaigns, or just have a few real conversations at various chat-and-chew cafes, you’ll tap into ordinary people’s simmering anger at the Wall Street/Washington axis that’s dictating a harsh normal of economic inequality, declining opportunity and diminished democratic control. The elites are constantly monkey-wrenching the public’s ability to act together, thus limiting our nation’s possibilities and causing America’s present drift from world leader to mediocrity.

This undermining of the workaday Americans goes against the very essence of America, from our egalitarian ideals to our can-do spirit. We must create a politics that directly confronts the narcissistic nabobs who’re knocking down our people and our country — and rally an increasingly restive workaday majority to come together in an expansive, aggressive effort to re-fund America. For example:

— As the richest country in the history of the world, the USA ought to have the top public education system, not one of the worst among wealthy nations.

— Improve Obamacare to Medicare for All.

— Let’s re-establish our technological supremacy, from building the green economy of the future to reaching boldly again into outer space.

— Our priceless system of public parks should be flourishing and expanding, not firing park rangers and locking entry gates.

— Rather than succumbing to a bleak future of low-wage, part-time, temporary, no-security jobs, let’s publicly invest in full employment, world-class skills and technology that works for workers.

— Restore democratic power with public financing of all election campaigns, enact labor law reforms so workers themselves can democratize the workplace and encourage the development of co-ops as an alternative to corporate control of the economy.

That’s an America that is worthy of ALL of us — a society of historic democratic vision, genuine opportunity for all and a shared prosperity. Most people would feel good about bringing children into that world. That’s the America we should strive to be.

To find out more about Jim Hightower, and read features by other Creators Syndicate writers and cartoonists, visit the Creators webpage at www.creators.com.

IMAGE: At the Ivanpah Solar Electric Generating System in California’s Mojave Desert, some of the plant’s 347,000 garage-door-sized mirrors used to generate power can be seen. (Mark Boster/Los Angeles Times/TNS)

Danziger: Bread And Circus, 2018

Jeff Danziger lives in New York City. He is represented by CWS Syndicate and the Washington Post Writers Group. He is the recipient of the Herblock Prize and the Thomas Nast (Landau) Prize. He served in the US Army in Vietnam and was awarded the Bronze Star and the Air Medal. He has published eleven books of cartoons and one novel. Visit him at DanzigerCartoons.com.

The GOP Tax Plan’s Mega Gift To Some of Trump’s Richest Appointees

Reprinted with permission from ProPublica.

There are times that you run across something that’s so preposterous that it’s hard to believe it’s true. But in this case, it is.

I’m talking about the multiple — and permanent — set of tax breaks that some of the Trump administration’s mega-wealthy appointees and their heirs stand to get if the estate tax repeal in the House Republicans’ tax bill becomes law.

The appointees I’m talking about are those with a net worth above $11 million (which is a lot of them) who sold assets that the Office of Government Ethics said would pose conflict-of-interest problems in their new gigs.

Combine the rules that cover such sales with terms of the proposed estate tax repeal, and these people get a multilevel, multigenerational bonanza. A gift that would keep on giving (and giving and giving).

I couldn’t believe what I was reading, and figured that I might be overly eager to uncover gifts to the ultra-rich in the House tax cut bill, which is by no means tax reform because it hurts millions of taxpayers in my home state of New Jersey and other places that aren’t reliably Republican, but bestows plenty of breaks on big businesses and the rich. So I asked tax expert Bob Willens of Robert Willens LLC, whom I’ve consulted for decades, to show me where I was making a mistake.

It turned out that Willens couldn’t believe what he was reading, either, when he parsed the proposed estate tax repeal provisions. “I had to read that about eight times,” Willens told me. “It defies description. It’s unheard of. It’s unbelievable.”

Now, let me show you why. And why mega-wealthy Trump appointees and their heirs would get level after level after level of tax goodies, even more than regular rich people would get.

Under Section 1043 of the tax code, enacted in 1989, eligible federal appointees (such as an energy secretary who owns oil stocks) who sell conflict-posing assets and reinvest the proceeds in something permissible, such as an index mutual fund, don’t owe any tax until the replacement asset is sold. At that point, they pay taxes on the total gain in, to use our example, the mutual fund they bought with the proceeds of the assets they had to sell. In other words, the only benefit they get under current law is a deferral in their capital gains taxes. They don’t get to permanently escape taxes.

I have no problem with this tax deferral, by the way. I don’t think people should have to shell out serious money in order to work for the government. If they happen to benefit by being able to diversify their portfolios on a tax-deferred basis, the way former ExxonMobil chief executive Rex Tillerson could diversify out of his Exxon stock and long-time Goldman Sachs executive Gary Cohn could diversify out of his Goldman holdings, that doesn’t bother me, either.

Besides, until now people who have gotten very large Section 1043 tax deferrals have been almost certain to be wealthy enough to trigger estate tax — no, it’s not a “death tax,” it applies to only about 1 in 500 estates — when they die. Some 99.8 percent of estates don’t pay tax because about $5.5 million of assets are exempt from estate tax for a single person, and about $11 million for a married couple.

Now, watch where the outrageous part comes in. Under current law, heirs have to pay estate tax based only on the value of the inherited assets on the day the person who bequeathed them died. They don’t have to pay a penny on the assets’ gains while the dearly departed owned them. (The adjustment is known as a “basis step-up” in tax jargon.) But of course, the estate has to pay estate tax of 40 percent of the amount by which the inherited assets exceed the $5.5 million/$11 million threshold. The tax-free basis step-up allows heirs to avoid having to pay both capital gains tax and estate tax on the assets they inherit, which strikes me as a reasonable thing.

However, under the Republican plan’s estate tax repeal, not only would heirs collect everything tax-free, but they would also get a tax-free basis step-up in the assets they inherit. By contrast, when the estate tax was repealed for a year in 2010 as part of the George Bush tax cut bill, the step-up in basis was largely negated, which stopped heirs from getting a mega-windfall.

I assumed that would be the case in whatever plan the Republicans proposed this time. In fact, I predicted that in a January article that I wrote with Cezary Podkul, then a ProPublica colleague, currently a Wall Street Journal reporter.

We felt that even if the estate tax were repealed, the heirs of Donald Trump’s appointees would be subject to capital gains tax when they sold the assets their benefactors had acquired to solve conflict-of-interest problems.

Besides, even Trump, who campaigned on eliminating the estate tax, wasn’t proposing that heirs get a totally free ride. He was proposing something — details of which were never made clear — that seemed to involve estates paying capital gains tax on unrealized gains above $10 million.

That idea of taxing estates in any way seems to have disappeared entirely from Trump’s public statements these days. And I realize now that I was naïve to think that Trump might ever promote anything that might cost him or his family any money.

To return to where I started, I’m just astounded by the multiple tax breaks Trump appointees and their heirs stand to get if the House version of estate tax repeal becomes law. So is Bob Willens, the tax expert.

“You get to diversify tax-free,” he said, a tone of wonder in his voice. “Then you get to bequeath your portfolio tax-free. And the most amazing part is that your heirs get to step up their basis in the inherited assets tax-free.”

A great deal for these people. A terrible deal for the rest of us, who would have to pick up the tab for it.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

Met Ball Raises Profile Of Arts Benefits — At What Cost?

By Chris Jones, Chicago Tribune (TNS)

Along with an increased pollen count, May is high season for the spring ritual known as annual benefits. For those rare creatures who relish plated chicken breast and bottomless decaf, these are the halcyon days, with many events shoehorned into the prime real estate between the beginning of May and Memorial Day weekend, after which any self-respecting benefit needs to welcome swimsuits and be held beside a lake or a pool.

With some worthy exceptions, benefits are not wildly popular events. Those who go to them well know they’ll be expected to open their wallets to bid on a wealthier, tax-savvier someone’s gorgeous condo in Aspen or Captiva Island (nonpeak weeks only, please) and, unless the bartender proves corrupt, further know that organizations have figured out that to get people to sit at their tables and listen to the pitches, they have to close the cocktail hour hard and fast, offering no exceptions.

Along with the provision of the most eloquent, often fictional, notes of regret, the art of the discreet early exit is practiced at a high level at these events; sometimes tablemates just disappear, not even leaving a puff of smoke, cheesecakes wilting at their plates.

Mayors, politicians, and other professionals work at an even higher level of subterfuge, carefully leaving the sense that they are present all night long — just at a different table or shaking a different set of hands — when, in fact, they ducked out right after their welcome. Meanwhile, anyone hosting a table for their favorite arts organization has the pressure of filling their seats, lest they look like they have no friends. Last-minute cancels are hellish.

Meanwhile, the harried nonprofit staffers who work on these ravenous events invariably find that they are hard work, indeed, replete with myriad little traps, details, and last-minute changes of plan, not to mention an entitled, hierarchy-conscious customer base that is dropping a great deal of money and expects to be treated accordingly. Rare is the development office that does not find the events exhausting. Frequent are the postmortems wondering whether they are worth the bother.

Yet all sides likely are stuck with these spring fundraising rituals. For some organizations, they pull in a hefty portion of the annual budget. In an era of state budget cuts, individual philanthropy is increasing in importance. Benefits offer an organization their attendees’ full and relaxed focus for a night, and that is hard to grab any other way. Without the lubrication of a glass of wine or two, and the opportunity to raise a paddle and make a very visible, public gift, many arts organizations would have big holes in their finances.

But this spring, the classic May benefit has enjoyed a serious rise in profile. It’s not just about the amount of money raised — some eye-popping takes notwithstanding — but the actual cultural profile of the event itself. In some cases, the benefit for the arts institution now threatens to eclipse the quotidian profile of the year-round offerings at the institution itself.

Take, for example, all of the breathless coverage of the Metropolitan Museum of Art’s Costume Institute Benefit Gala, aka the Met Ball, held May fifth. Hosted by Anna Wintour, the famously terrifying editor of Vogue and no slouch at publicity, this event reportedly featured a guest list of hundreds of A-list Hollywood figures, media moguls, and other one-percenters with current cultural currency but, in most cases, not a record of frequent visits to the Met. The level of wealth at the event was just as well, perhaps, for the Costume Institute relies on the benefit for almost all of its annual funding.

But you have to hand it to Wintour. Most attendees at most benefits have been strong-armed by someone to show up. This one was a genuine hot ticket.

The Met had certain advantages, even aside from its long association with, and proximity to, great wealth and prestige. When your business is fashion, a cultural field within which it is easy, if you have plenty of money, to participate or at least to think you participate, it’s easier to meld a red-carpet celebration at a benefit event to the core creative act of the institution. Those fashionable attendees could acquire some of the Met’s gravitas just by being photographed. That’s harder to do when the benefit is for a different kind of cause; theaters often offer the lure of performance to their supporters, but it’s hard for artistic professionals to fully hide their contempt for the work of amateurs. Moreover, fashion is a business that generates a see-and-be-seen factor not afforded to, say, your average inner-city arts institution.

Still, you can’t be a hot ticket unless you limit the availability of tickets. Period. Incredibly, Wintour managed to do precisely that at the Met Ball, turning away some names never seen in bold and eschewing the monikers of the crass, even those who could afford the tickets. That’s a rare feat at a benefit, because these events typically don’t turn anyone wealthy away, lest a chance missed. Perhaps the lesson here is that they should.

Wintour also has mastered the art of affording, and carefully curating, formidable networking opportunities, which is a prime reason people attend benefits in the first place. In other words, she long ago figured out that the way to raise the most money is not by appealing to the attendee’s generosity but to their self-interest, which includes the attendant interest in publicity, the blood supply of the fashionable.

As other arts groups watched as the Met Ball sucked up oxygen, you could imagine the envy. Especially as the take for the night hit a reported $12 million, with the hits on social media amounting to yet more millions. That brought a priceless amount of publicity to the Costume Institute itself, which has 12 million good reasons to feel grateful to Wintour.

But some savvier folks no doubt also saw some of the perils.

There is the danger of a high-profile fundraiser, and the professional interests thereof, eclipsing the institution itself. Benefits are, after all, part of the culture of an institution, and to external constituencies they are seen as reflective of its internal values, even if the institution often sees them as deviations from its norms. If the benefit is not open to all, it can make subsequent appeals to the less affluent appear hollow, even though most arts nonprofits rely greatly on the generosity of a multitude of small donors, giving at the level they can manage.

So there is a case for that chicken, the modest glass of wine, the video of the year’s great achievements, the silent auction of homemade items, the early exit. As hard as it can be in the real world, it’s always best when an organization plays itself.

Photo: Met Gala via Facebook