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Tag: wealth tax

Proposed Tax On ‘Ultra-Millonaires’ Could Raise Trillions In Revenue

Reprinted with permission from American Independent

Three congressional Democrats unveiled a plan Monday to raise $3 trillion in new revenue over the next decade. By taxing only those worth more than $50 million, the proposal would not raise taxes on 99.95 percent of Americans.

Sen. Elizabeth Warren of Massachusetts, Rep. Pramila Jayapal of Washington, and Rep. Brendan Boyle of Pennsylvania introduced the Ultra-Millionaire Tax Act of 2021, which would establish a two percent annual tax on the net worth of those taxable assets of $50 million to $1 billion. Those worth more than $1 billion would pay a three percent annual tax.

"The hyper concentration of wealth among a tiny number of multimillionaires and billionaires is a crisis for American capitalism and the American Dream," Boyle said in a press release. "Wealth inequality is at its highest level since the Gilded Age. The wealth share of the richest 0.1 percent has nearly tripled since the late 1970s. It is time for the ultra-millionaires to pay their fair share so that critical government programs can be bolstered to help the everyday American."

The sponsors circulated an analysis by University of California, Berkeley, economics professors Emmanuel Saez and Gabriel Zucman that predicted the wealth tax would affect only 100,000 families and would raise $3 trillion in new federal revenue between 2023 and 2032.

The proposal comes as Republicans in Congress are making a big deal about the growing national debt they helped rack up and using the budget deficit as an excuse to oppose President Joe Biden's priorities, such as COVID-19 relief.

"For too long, Congress has maxed out America's credit card with no plan to pay off our debts. The disastrous impacts of this reckless spending and growing debt, like high inflation, will hurt low and fixed income families the most. We must do better," tweeted Florida Sen. Rick Scott on February 16.

"Eventually USA $28 Trillion debt bill becomes due," warned Rep. Mo Brooks of Alabama on Thursday. "Friday #Socialist #Democrat debt junkies to borrow & spend ANOTHER $2 Trillion."

This wealth tax could either offset some of those previous expenses or enable new spending without increasing the debt.

According to the Saez-Zucman analysis, the richest Americans would be asked to pay about 4.3 percent of their wealth each year on average, compared to an estimated 3.2 percemt in 2019.

A Data for Progress poll, taken in 11 states between July and September 2020, found widespread public support for the idea of a two percent wealth tax on those with a $50 million-plus net worth.

Among all voters surveyed, 62 percent preferred adopting the idea, compared to 26 percent who preferred the current system. Even in the deep-red state of Mississippi, voters preferred the wealth tax 55 percent to 30 percent.

The proposal comes as Republicans are trying to change their image as the party looking out for the very rich.

"The uniqueness of this party today is we're the workers' party, we're the American workers' party," claimed House Minority Leader Kevin McCarthy in a Feb. 8 Punchbowl News interview.

Sen. Ted Cruz of Texas tweeted Friday, "The Republican Party is not just the party of country clubs, the Republican Party is the party of steel workers, construction workers, pipeline workers, police officers, firefighters, waiters and waitresses." He also tweeted Friday, "The Republican Party is not the party of the country clubs, it's the party of hardworking, blue-collar men and women."

Still, not a single Republican lawmaker has co-sponsored the Ultra-Millionaire Tax Act so far.

In addition to the three lead sponsors, it is co-sponsored by Sens. Bernie Sanders (I-VT), Sheldon Whitehouse (D-RI), Jeff Merkley (D-OR), Kirsten Gillibrand (D-NY), Brian Schatz (D-HI), Ed Markey (D-MA), and Mazie Hirono (D-HI).

Published with permission of The American Independent Foundation.

Can America Afford To Underwrite Universal Child Care?

Reprinted with permission from The American Prospect.

When Senator Elizabeth Warren issued a bold plan for universal child care last week, the question some people asked was the usual one: How will she pay for it? Warren has a good answer to that question, which I’ll come to. But there’s a second question that is actually more difficult: How will child care get the necessary public and media attention to make it a top priority?

In 2016, Hillary Clinton issued a proposal for universal access to child care that was similar to Warren’s, though not as extensive. Clinton called for federal subsidies to cap child care costs at 10 percent of family income, whereas Warren proposes to cap those costs at 7 percent. Like Warren today, Clinton wanted to build on existing locally run programs such as Head Start to make child care affordable for all families. And like Warren, Clinton also framed the program as serving the purposes of both economic growth and family well-being, as Katie Hamm and Sarah Jane Glynn of the Center for American Progress explained in a fall 2016 American Prospect article, “Putting Family Policy on the Governing Agenda.”

Some people writing this week about Warren’s proposal seem to have forgotten or to be unaware that the last Democratic presidential candidate wanted to move in the same direction. But if you never heard about that Clinton child-care proposal, it’s hardly your fault. Media coverage of all substantive policy issues was astonishingly limited in the 2016 presidential race. In a study in the Columbia Journalism Review, Duncan J. Watts and David M. Rothschild found that in just the six days after FBI Director James Comey announced the reopening of the agency’s email inquiry, The New York Times published as many cover stories about Clinton’s emails as it had published about all policy issues combined in the two months before the election.

The analog to coverage of Clinton’s emails may be coverage about Warren’s Native American ancestry. Still, the chances may be better this time for putting work-family issues at the center of public debate. The midterms saw an upsurge of political activism among women and a record number of women elected to Congress, and the race for the Democratic presidential nomination has not just one woman in the running but at least four who are in the top tier of candidates.

That’s not to say child care is exclusively a “women’s issue,” just that women in the public arena are more likely to make an issue of it. The changes in gender politics over the past several years could help elevate child care to the prominence it deserves. Let all the candidates, not just Warren, come up with proposals and debate child care the way Democratic candidates in recent elections have debated health-care reform.

Back to the financing: In a column on paying for a progressive agenda, Paul Krugman makes a useful distinction among three types of expenditures: investments that can be paid for through borrowing because they generate an economic return; benefit enhancements that can be paid for through higher taxes on the rich; and major system overhauls that involve such drastic changes in taxes and social arrangements that Democrats would be wise to put them off.

As an example of a major system overall, Krugman points to pure Medicare for All proposals that would replace employer-sponsored coverage with tax-financed public insurance. As he says in an understatement, that would be “a much heavier political lift” than the other two types of expenditures: “You don’t have to be a neoliberal tool to wonder whether major system overhaul should be part of the Democratic platform right now.”

That’s exactly my view of Medicare for All proposals, but that is not tantamount to saying Democrats should refrain from ambitious ideas. On the contrary, those other ambitious ideas—like universal child care—wouldn’t have a chance if Medicare for All, with its staggering fiscal demands, dominates Democratic priorities. As Krugman argues, Democrats have options that are both good policy and good politics for financing both big investments (such as many of the Green New Deal ideas) and benefit enhancements (such as universal child care). Those are the ideas that should be at the top of their agenda for 2020.

Warren calls for financing her Universal Child Care and Early Learning Act with the proceeds from the wealth tax that she proposed earlier—a tax of 2 percent on net worth for people with more than $50 million in assets and an additional 1 percent for those with more than $1 billion in assets. Public opinion surveys have shown strong support for the general idea of higher taxes on the rich and in particular for Warren’s wealth tax. I have some concerns about the wealth tax because of its vulnerability to a challenge in the Supreme Court, given the Court’s current right-wing majority. But I believe its aims could be achieved through changes in the income and estate taxes, where the legal foundations are firm.

In an economic analysis of Warren’s proposal, Mark Zandi and Sophia Koropeckyj of Moody’s Analytics find that the wealth tax would more than cover the cost of the child care plan, which they put at $70 billion annually, when taking into account its first-order economic effects in stimulating consumer spending and increasing labor participation. There are also longer-term benefits from improvements in early childhood learning; to use Krugman’s categories, the child-care proposal is both an investment and a benefit enhancement.

Of course, there’s a lot more that would need to be done to resolve the problems in child care. Warren’s proposal aims to improve the pay of child-care workers and the quality of child-care services, but it would take time and government involvement to build out the capacity to provide that high-quality care on a fully universal basis. An alternative approach presented last week by Matt Breunig calls for more direct government involvement on the supply side and free access to child care (under Warren’s proposal only families with incomes below twice the poverty level would get child care at no charge). Curiously enough, coming from the left, Breunig also criticizes Warren’s proposal for not including payments to parents who care for their children at home and for lacking adequate cost controls (and he may well be right about that).

These are exactly the kind of questions that ought to be front and center in the national debate on child care policy as the 2020 campaign unfolds. It’s time American politics gave young families the attention and help with child-care costs they need. This baby is long overdue.

At Last, Democrats Have Broken The Taboo On Raising Taxes

Class Warfare? Most Americans Support Higher Taxes For The Rich

Before the GOP presidential hopefuls take the stage for tonight’s debate and prepare to decry Obama’s “class warfare,” they might want to mull over the fact that most people — including 53 percent of Republicans — support higher taxes for the wealthiest Americans. Even so, not a single politician participating in the debate has backed a tax increase on households with more than $250,000 in annual income. Despite outrage by Republican politicians at the mere suggestion of more taxes for the rich, a new poll reveals that most people think it’s not such a bad idea:

More than two-thirds of Americans, including a majority of Republicans, say wealthier people should pay more in taxes to bring down the budget deficit, and even larger numbers think Medicare and Social Security benefits should be left alone.

That sentiment on taxes is at odds with the Republican presidential candidates, who will meet tonight in a Bloomberg- Washington Post-sponsored debate focused on economic issues.

More than 8 out of 10 Americans say the middle class will have to make financial sacrifices to cut the federal deficit even as the public just as strongly opposes higher taxes on middle-income families, according to a Bloomberg-Washington Post national poll conducted Oct. 6-9.

The ‘Occupation’ Of Wall Street Spreads To Boston

In a square named after a Spanish-American war hero, crowds of middle-class youth stuck in economic despair listened to slogans about and speechifying on raising taxes on the wealthy and waved signs quoting Franklin Delano Roosevelt. A stray person on the outskirts handed out the lyrics to socialist anthem “The Internationale,” more in the hope than in an expectation that it would be sung, while the crowd of around 150 stood on improvised sidewalks of plywood over mud to hear the words of the speakers over a rickety PA.

But this wasn’t 1933. It was yesterday in Dewey Square in downtown Boston where the Occupy Boston protests continued onwards, an eclectic mix of humanity ranging from polite college students bearing signs about their questionable job prospects and certain student loan debt to anarchists hiding their faces behind black bandanas. Aside from the mentions of Roosevelt, there were no other mentions of political figures, unless one counted a t-shirt for “Bill Belichick for President 2004.” Nor was there any structure: All decisions are said to be made “democratically” by a group named General Assembly, which meets nightly for around three hours at a time. Even the guy wearing the tie who originally seemed like a professional organizer turned out just to be a minor YouTube celebrity from January 2008.

When the first of five busloads of members of the Massachusetts Nurses Association showed up, a representative of Occupy Boston with a scraggly beard walked up to them excitedly and asked if they wanted to march on Mass General — Harvard’s massive main teaching and research hospital. The nurses demurred. Instead, they agreed to stroll around a block of downtown Boston’s financial district.

“Garbage,” said one of the bankers or traders milling outside as he saw the protestors walking by. “They should get a job,” he said, which was, of course, exactly what many of those demonstrating wanted.

Others were more appreciative, with some people stepping out of bars and coffee shops to applaud. One sympathetic spectator who worked in the financial services industry downtown told me that he worked his way up from washing dishes. Now, because of layoffs, as he put it, he “was surrounded by empty cubicles.”

I spotted one sign during the walk — outside the towering skyscraper at 100 High Street was a sign asking all who entered “use the revolving door to save energy.” It was a striking counterpoint to the crowd walking by. They might not have an articulable list of demands, or a clear sense of how to go after “Wall Street,” but they knew one thing: a revolving door was not going to bring them change they could believe in.

Why They Hate Warren Buffett

WASHINGTON — Maybe only a really, really rich guy can credibly make the case for why the wealthy should be asked to pay more in taxes. You can’t accuse a big capitalist of “class warfare.” That’s why the right wing despises Warren Buffett and is trying so hard to shut him up.

Militant conservatives are effective because they are absolutely shameless. Many of the same people who think the rich should be free to spend unlimited sums influencing our politics without having to disclose anything are now asking Buffett to make his tax returns public. I guess if you’re indifferent to consistency, you have a lot of freedom of action.

Buffett has outraged conservatives by saying that he pays taxes at a lower rate than his secretary. He’s said this for years, but he’s a target now because President Obama is using his comment to make the case for higher taxes on millionaires.

Thus did The Wall Street Journal editorial page call on Buffett to “let everyone else in on his secrets of tax avoidance by releasing his tax returns.”

Somehow, the Journal did not think to ask its friends who battle vigorously for low taxes on capital gains to release their tax returns, too. But aren’t they just as engaged in this argument as Buffett is? Shouldn’t accountability go both ways? Nor, by the way, did the Journal suggest that the Koch brothers could serve the public interest by releasing a full accounting of all their political spending.

Buffett’s sin is that he spoke a truth that conservatives want to keep covered up: Taxing capital gains at 15 percent means that people who make their money from investments pay taxes at a much lower marginal rate than those who earn more than $34,500 a year from their labor. That’s when the income tax rate goes up to 25 percent. (For joint filers, the 25 percent rate kicks in at $69,000.) For singles, the 28 percent bracket starts at $83,600, the 33 percent bracket at $174,400.

So if an investor such as Buffett pockets, say, $100 million of his income in capital gains, he pays only a 15 percent tax on all that money. For everyday working people, the 15 percent rate applies only to earnings between $8,500 and $34,500. After that, they’re paying a higher marginal rate than the multimillionaire pays on gains from investments. Oh, yes, and before Obama temporarily cut it by two points, the payroll tax added another 6.2 percent to the burden on middle-class workers. That levy doesn’t apply to capital gains, or to income above $106,800, so it hits low- and middle-income workers much harder than the wealthy.

No wonder partisans of low taxes on wealthy investors hate Warren Buffett. He has forced a national conversation on (1) the bias of the tax system against labor; (2) the fact that in comparison with middle- or upper-middle class people, the really wealthy pay a remarkably low percentage of their income in taxes; and (3) the deeply regressive nature of the payroll tax.

And it’s worth noticing that while conservatives who talk about religion get a lot of coverage — and I will always defend their freedom to speak of faith in the public square — what really get the juices flowing on the right these days are tax rates. I’m not sure that a politician who renounced the Almighty would get nearly the attention Buffett has received for his renunciation of low capital gains taxes.

Advocates of higher taxes on the wealthy do not want to “punish” the successful. Buffett and Doug Edwards, a millionaire who asked Obama at a recent town hall event in California to raise his taxes, are saying that none of us succeeds solely because of personal effort. We are all lucky to have been born in — or, for immigrants, been admitted to — a country where the rule of law is strong, where property is safe, where a vast infrastructure has been built over generations, where our colleges and universities are the envy of the world, and where government protects our liberties.

Wealthy people, by definition, have done better out of this system than other people have. They ought to be willing to join Buffett and Edwards in arguing that for this reason alone, it is common sense, not class jealousy, to ask the most fortunate to pay taxes at higher tax rates than other people do. It is for this heresy that Buffett is being harassed.

E.J. Dionne’s email address is ejdionne(at)washpost.com.

(c) 2011, Washington Post Writers Group

Clinton: Pass Obama’s Job Bill (And Of Course I’ll Pay The ‘Millionaires Tax’)

Nothing excites Republicans more these days than to draw contrasts — and foment dissension — between President Obama and former president Bill Clinton, his most recent Democratic predecessor. Much as the Republican right despised Clinton when he was in the White House, they pretend to yearn for him today.

The political media delight in the same game, which is why so many news outlets seized on Clinton’s remarks in an exclusive interview on Wednesday with the conservative Newsmax website that seemed to put him at odds with Obama’s policies — especially at a moment when the stock market fell steeply again and economic confidence appears to be ebbing.

“I personally don’t believe we ought to be raising taxes or cutting spending until we get this economy off the ground,” Clinton told Newsmax Editor-in-Chief Christopher Ruddy last Wednesday. The resulting headline — “Ex-President Clinton to Newsmax: Raising Taxes Won’t Work” — was accurate when compared with the headlines that swiftly followed in other media, which suggested that Clinton had “rejected” Obama’s proposed tax on millionaires and “undercut” the president. The Republican National Committee distributed the Newsmax interview in a press release, asking “Is Clinton off script or tired of using this White House’s talking points?”

Responding to those jibes on Thursday at the Clinton Global Initiative meeting in New York, the former president said, “I don’t disagree with President Obama, and he doesn’t disagree with me, because he isn’t proposing to raise taxes now. But I understand why there was some confusion about what I said, because we’re discussing how to stimulate the economy and how to reduce the deficit at the same time.”

As Clinton explained, he has long supported raising taxes on those who, like him, can well afford to pay more. He noted bluntly that “a lot of the stories I read today said that I disagreed with [Obama], that I wasn’t for [raising taxes] now. He’s not for doing it now. His proposal is for triggering this [tax increase] in 2013 and going forward.”

Over the years since he became a multi-millionaire, Clinton has often urged the restoration of the higher tax levels on the wealthy that he passed during his first year as president (which didn’t seem to hinder the vast growth and investment during his administration). On Thursday, he noted that “those of us in the very highest income groups, the top 1 percent of the American people, got more than 40 percent of the income gains of the past decade. We got a huge chunk of the tax cuts. We did just fine, people in my income group, under the [tax] system that prevailed when I was president. So, in some form or fashion we’re going to have to pay a little more. Not because it’s class warfare, but because we got most of the gains of the last decade, we got the benefit of most of the tax cuts, and we’re in the best position to make this contribution.”

President Obama, said Clinton, “doesn’t propose to raise any taxes until 2013, or to cut any more spending until 2013, because we need to get economic growth going again. I completely agree with that. I’m for a long-term plan to reduce the debt that triggers when we’ve got normal growth, which is now estimated to be some time in 2013. And between now and then we ought to do everything we can to get the economy going again.”

Indeed, Clinton’s approach to both taxes and spending is entirely in keeping not only with Obama’s plan but with the Keynesian approach that Republicans and conservatives dismiss. He believes that the original 2009 stimulus “was good for the country,” but that the continued downturn has proved that it wasn’t sufficient to fill the gap caused by the financial crash.

As for the “millionaire” tax proposed by Obama this week, “I’m fine with that,” he said, “but what we need to do is calibrate it so that both [increased taxes] and spending reductions are taking place in an atmosphere of economic growth — so that private sector growth will more than offset public sector reductions.”

His support for Obama’s jobs bill could not be plainer, as he reiterated on Thursday when he described the plan as “well-conceived” and quoted Republican economists who say that the jobs program will promote higher GDP and “give us between a million and two million more jobs than we would have otherwise.”

But he went still further: “There are other countries… doing things better than we are now, including providing more broad-based economic growth and lower unemployment — and without exception, they have public-private cooperation. They have the government and private sector working together.” What will not work, he said, is the ideological approach of the far right, as represented by the Republicans’ Tea Party wing.

As he bid farewell to dozens of heads of state, corporate leaders and nonprofit entrepreneurs attending his global meeting, Clinton warned: “The vision that the Tea Party’s articulating — of the weakest possible government where there’s no such thing as a good tax or a bad tax cut, no such thing as a good regulation or a bad deregulation, no such thing as a good program or a bad program cut — there’s not a single place on the planet where that [approach] is giving birth to a modern, successful, broad-based economy.”

Spain Soaks The Rich To Trim Deficit

MADRID (AP) — Spain’s Parliament restored a deficit-reducing wealth tax Thursday in its final session before dissolving to make way for an election that opposition conservatives are favored to win.

Most opposition parties criticized the tax bill as a desperate electoral maneuver by the beleaguered ruling Socialists, who argue it is only fair to hit the rich harder in times of crisis, highlighted by Spain’s 21 percent jobless rate.

Still, there were only two votes against the new tax for no party wanted to be seen as coddling the wealthy in an election year. The yes votes totaled 176 — most from the Socialists — while 166 deputies abstained.

The government says the tax will affect 160,000 people whose net worth is more than euro700,000 ($950,000). It will run for only two years — 2011 and 2012 — to bring in euro2 billion ($2.7 billion) just as Spain needs it the most as it works to cut its deficit from 9.2 percent of GDP last year to the EU limit of 3 percent in 2013.

The net worth threshold is roughly seven times the one in a law the the same government suspended in 2008. At the time, the economic crisis was just starting to bite hard and the government argued that the tax — a levy on a person’s assets minus their debts — hit the middle class too hard.

Parliament will formally dissolve Monday to allow time for campaigning for Nov. 20 general election. Debate will be dominated by the staggering jobless rate, anemic growth and debt woes that prompt worries Spain might still need an international bailout.

The opposition Popular Party, which is favored to win the election, said the Socialists have left a major piece of business undone: a decree extending this year’s budget numbers into 2012, since there will not be time to pass a new budget for 2012 by the Dec. 31 deadline.

The conservative party said was how the Socialst government plans to avoid debating public finances and acknowledging during an election campaign that its growth forecasts — 1.3 percent GDP growth this year — are too optimistic. The European Union, the International Monetary Fund and many private economists have all issued lower forecasts.

“They do not want to acknowledge the inconsistency of their predictions,” said Soraya Saenz de Santamaria, a Popular Party spokeswoman.