Heavens to Blethen! McDermott introduces estate tax.
Seattle Post Intelligencer - USA
April 22, 2009
Seattle Congressman Jim McDermott introduced an estate tax bill on Wednesday.
In a news release, his office said the Democrat introduced the Sensible Estate Tax Act and that it “would finally and fairly reform existing tax law that swings wildly between collecting no revenue to collecting billions from year to year, threatens tens of billions in existing revenue to the Treasury and affects only a fraction of 1 percent of the very wealthiest Americans.”
The Seattle Times, the largest newspaper in McDermott’s district, is a long-time opponent of the estate tax. We’ll to have to wait to see what Fairview Fanny thinks of McDermott’s idea.
But the congressman says, “Those Americans who have reaped huge fortunes as a result of their enterprise in America’s free-enterprise system owe their country something in return. This legislation provides for a modest and reasonable return on the investment America made in these people through the system we all work hard to support and advance.”
He said his bill (HR2023) would exclude the first $2 million for an individual and $4 million for a couple from the tax. Allow surviving spouses to get the full $2 million exclusion their dead spouse was entitled to. It would also use progressive tax rates.
Where are the prophetic voices on the topic of taxation this April 15?
In 2001, President Bush pressed for massive tax cuts including abolishing the federal estate tax, our nation’s only levy on inherited wealth. The highlight of that April 15, eight years ago, was learning that 2,500 multi-millionaires and billionaires had signed a public call to retain the estate tax rather than abolish it. Led by Bill Gates, Sr. and Warren Buffett – what Newsweek dubbed the “billionaire backlash” – they changed the moral conversation about taxing inherited wealth.
Today, the economic crisis has led to state budget cuts that hurt the most vulnerable.
Our government is borrowing money at a furious pace to provide stimulus funds to states to forestall some budget cuts and make long overdue investments in education, health care, and green energy infrastructure.
There is nothing wrong with borrowing during an economic downturn. Unfortunately, we’ve just lived through eight years of “borrow and squander.” The previous administration added over $5 trillion to the national debt to pay for war and give tax cuts to the wealthy and bailouts to Wall Street. The national debt now tops $11 trillion and we’re facing an annual deficit of close to $2 trillion, in part because President Obama refuses to play hide and seek with budget numbers.
We need a plan for how to pay. We should cut obsolete weapons systems and Pentagon cost overruns, as Jim Wallis wrote recently. But how many poor and disabled people will suffer before we can have a moral discussion about taxation?
For three decades, we’ve shifted tax responsibilities off of the wealthy and onto wage earners. A new study that I co-authored, “Reversing the Great Tax Shift,” examines the declining percentage of taxes paid by the wealthiest one percent of taxpayers. Since 1955, the effective tax rate paid by those with incomes over $2 million (in 2006 dollars) has declined by half. If this top earner group today paid at 1955 tax rates, our Treasury would have collected $202 billion more – enough to alleviate the cruelest cuts at the state level and contribute to global poverty efforts. The silence over these trends is troubling.
The good news is an emerging network, Wealth for the Common Good, is collecting input from business leaders and high net worth individuals as to what tax proposals they publicly support. They are enlisting support for a petition to repeal tax breaks for households with incomes over $250,000 – and plan to go public later this spring.
Edgar Bronfman, former chair of the World Jewish Federation, is one of those who has called on President Obama to “Raise My Taxes” and go forth with his campaign promise to raise taxes on those with incomes over $250,000. “For the past eight years, the wealthy have benefited from both the reduced taxes and failure to regulate that made so many fortunes balloon while bringing disaster to our economy,” wrote Bronfman. “The poor and the middle class now are disproportionately suffering the effects. The rich now should pay disproportionately for the corrections that are needed.”
Indeed, over 52 percent of those with incomes over $250,000 voted for President Obama – who made no secret of his intention to rebalance the tax code. Perhaps there is a silent majority among most affluent households that support rolling back the Bush tax cuts of 2001 and 2003. But we could use a few more like Edgar Bronfman to change the stale conversation about taxes. Silence condones the status quo of borrowing and budget cuts.
Tax Rates for America
The Nation
posted by Katrina vanden Heuvel on 04/13/2009 @ 10:06am
With Tax Day just around the corner, and the nation attempting to recover from our worst financial crisis since the Great Depression, a new report from the Institute for Policy Studies (IPS) — “Reversing the Great Tax Shift” — offers seven strong recommendations on how to pay for the recovery and rebuild an economy of shared prosperity.
There is good momentum for reversing the disaster of thirty years of tax cuts for the wealthy that have contributed to growing inequality, concentration of wealth, and a shifting of the economic burden to the poor and middle class. In New York, for example, a strong progressive coalition won a key victory in pushing through a new tax structure that requires the wealthy to pay their fair share instead of paying the same rate as those earning just $20,000 a year.
The IPS report provides a good dose of historical perspective at a time when Republicans and too many Democrats fulminate at the possibility of raising the highest tax rate from 35 percent to 39.6 percent for households earning over $250,000. It notes that in 2006 (the most recent IRS data) the 139,000 taxpayers reporting incomes of $2 million or more paid just a 23 percent rate thanks to mega-loopholes; in 1955, people earning over $2 million in 2006 dollars paid a 49 percent rate. The top 400 taxpayers paid a 51 percent in 1955; in 2006 they paid just 17 percent of their incomes in federal income tax.
IPS’ seven policy proposals would result in over $450 billion in annual revenues from the wealthiest people who have benefited the most from the failed conservative economic policies embraced by both parties. Some of these practical proposals include supporting the bipartisan Stop Tax Haven Abuse Act which would crack down on individuals and corporations to the tune of $100 billion annually; reversing the Bush tax cuts on income, capital gains, and dividends for households earning over $250,000, bringing in $43 billion annually (and impacting just 2.5% of taxpayers); a progressive estate tax on large fortunes — exempting estates worth under $2 million, or $4 million per couple — that would bring in $40-$60 billion per year while taxing no more than 1 of every 200 estates; a 50 percent tax rate on incomes over $2 million, generating $60 billion a year.
IPS says there are things you can do right now to drive these good proposals. You can contact your representatives and tell them to support the following: the president’s budget — which includes an increase in the top tax rate (35 percent to 39.6 percent) and closes overseas tax havens; the Income Equity Act introduced by Representative Barbara Lee which would eliminate tax subsidies for excessive executive compensation; and the Sensible Estate Tax Act, which will be reintroduced by Representative Jim McDermott later this month (in contrast to too many weak-kneed Senate Dems who have bought hook, line and sinker the absolute hogwash that the estate tax is hurting small businesses and family farms, and voted with the GOP to cut it.) Wealth for the Common Good is also building support among small and large business leaders and high net worth individuals who will pay these higher taxes.
Finally, in June, look for IPS to formally launch a “revenue campaign” to rally support around these proposals. There will be more opportunities for action as supporters push for further legislative action.
In the mean time, check out this smart and valuable report to learn more about good policies and for a clear historical perspective on tax rates in America. As we look to address challenges on health care, energy, global warming, and a more equitable economy, this is the kind of good work that will help provide the solutions we need.
Three stunning facts, from this new report published by the Institute for Policy Studies: “Reversing the Great Tax Shift: Seven Steps to Finance Our Recovery Fairly.”
* America’s top 400 taxpayers in 1955 paid three times more of their income in taxes than the top 400 of 2006, the most recent year with IRS data available.
* If the most affluent 400 of 2006 had paid as much of their incomes in taxes as the top 400 in 1955, the federal treasury would have collected an additional $35.9 billion more in revenue in 2006 - just from these 400 ultra-rich individuals.
* The 139,000 U.S. taxpayers who made over $2 million in 2006 averaged $5.9 million in income. If these individuals had paid taxes at the same rate as their 1955 counterparts, the federal treasury would have collected, in 2006, an additional $202 billion.
The report offers proposals that would raise $450 billion of revenue to support economic recovery.