CBS Sunday Morning, April 17, 2011
Morris Pearl, Leo Hindery, and Dennis Mehiel speak to CBS Sunday Morning about raising taxes for the wealthy.
By DOUG MATHESON, JERRY BROWN, RICK VROMAN, and CHUCK and SALLY WELLS
At tax time this year, with the last-minute budget wrangling and state and national deficit problems, there’s even more than the usual reason to consider taxes. Unfortunately, we’re still a long way from addressing them realistically, honestly, responsibly, and urgently.
Let’s start by acknowledging one reality. Most people seem to think their vote carries a magic wand quality – they can vote for high government services (a forever superior military, unlimited Medicare, quality infrastructure, schools, and public safety, etc.), and vote for low taxes, and voila … you get them. Fortunately states can’t borrow to make up the difference so our struggle with those incompatible expectations is immediate. Still, many seem genuinely frustrated by the realities of services being cut because we’re unwilling to pay for them.
At the national level, our resorting to borrowing to fill the gap between what we expect and what we’re willing to pay for has been growing steadily since about 1980. The recent compromise between Democrats and Republicans that resulted in trimming $38 billion from one year’s budget is, forgive us, almost a joke. We can’t pat each other on the back for ever-so-slightly reducing the rate at which we’re digging our national hole deeper.
Please, what makes us think we have a right to spend to maintain our quality of life, but refuse to pay for it ourselves? Really! If we just stick with our current habits, we’re passing a giant credit card bill down to our grand or great-grandchildren. Is that conscionable?
Assuming we finally understand that we can’t keep doing this, how do we actually change our habits? The proposed solution in many states, and coming from the Republican wing nationally, is “cut spending, cut services.” That does need to be part of the solution, but it can’t be the only part.
Many have heard Paul Ryan’s more radical proposals to cut national spending. For a politician, he is certainly showing guts to offer major changes to Medicare, a program prized and protected by the most faithfully voting group. Overall, his numbers go well beyond joking. Unfortunately though, his proposals aren’t half broad enough.
Is there some good reason we can’t significantly cut back on spending seven times more than any other nation on defense? Rep. Ryan seems willing to ask for sacrifice from regular citizens … but not from the military industrial complex.
Further, is there some good reason we can’t step up to the plate and raise tax revenue? Many are aware that numerous giant corporations (GE, Bank of America, ExxonMobil, Citigroup, and more) paid a big zero in taxes last year … after making billions. Check out USUncut.org. No, we don’t want to overtax corporations; they are a reality in our nation, but if they want to play here, they should pay here and not use deceptive bookkeeping to offshore their profits. If we insist, the loopholes could be closed, but it’s going to require guts to break the golden rule (he who has the gold makes the rules). If we want to put some pressure on corporate practices, let’s change where we spend and keep our personal money.
Capital gains tax
One more major change involves changing capital-gains tax. Billionaire Warren Buffet has pointed out the absurdity of his paying a lower tax rate than his receptionist. Current tax code allows the wealthiest (those who have enough money to make their living off of investing their money) to pay a maximum tax of 15 percent on the profits they make. Those of us with “jobs,” from the burger flipper to the plastic surgeon, pay at rates that can easily double that of the wealthy investor.
There are wealthy people who speak out about their responsibility, and their privilege, to do more to close the deficit gap; check out wealthforcommongood.org and businessforsharedprosperity.org. Understandably, they want the tax code changed so they are not the only ones among the wealthy who put their shoulders to the plow and make a difference.
Consider one long-term consequence of our perpetual expectation of low taxes. We aren’t producing enough doctors, nurses, and engineers of numerous types to meet our own national needs so we brain-drain other places and issue green cards to import them. Why aren’t we producing more of these? Many well-qualified applicants don’t get accepted to these specialty programs and universities. Why? Because building, developing, and running such aspects of our national infrastructure costs real money … and we haven’t been willing to pay up.
Taxes aren’t good or bad; they’re just necessary and the responsible thing.
Contact: Scott Klinger, 433-602-0136
Ann Manning, 612-802-8513, ann@wealthforcommongood.org
Washington, DC. April 13, 2011 — Amid fierce federal budget debates, and press reports about large companies such as General Electric paying no US income taxes, more than 800 business organizations and business people are publicly calling on Congress and the President to stop corporate tax haven abuse. They say that tax dodging deprives our nation of revenue needed for a strong economy.
They have signed a statement from a coalition of business organizations, Business and Investors Against Tax Haven Abuse. The statement says in part, “Offshore tax havens reward tax evaders, rob public coffers of needed revenue and offload taxes to responsible businesses and households.” Find the full statement and a partial list of the signers here: http://businessagainsttaxhavens.org
“Small businesses are the lifeblood of local economies. We pay our fair share of taxes, shop locally, support our schools and actually generate most of the new jobs. So why do we have to subsidize the U.S. multinationals that use offshore tax havens to avoid paying taxes?” said Frank Knapp, President and CEO of The South Carolina Small Business Chamber of Commerce. “We need to end tax havens and use that revenue to invest in growing our small businesses. That is how we create a healthy economy.”
“Our current upside down corporate tax system forces a U.S. manufacturer or insurance company, community-oriented bank, retailer, or local technology firm to compete against another company based not on product quality and services, but on accounting gymnastics. As the chairman and CEO of a U.S. technology company, I believe it is myopic tax policy to force domestic enterprises to compete on an unlevel playing field against companies that use offshore tax havens to relocate profits,” said Paul Egerman, CEO and Chairman, eScription, Boston, MA.
David Levine, Executive Director of The American Sustainable Business Council, which represents more than 70,000 businesses in the U.S., said, “We represent a wide range of businesses that are being forced to compete against U.S. multinationals that use tax havens as profit centers. This enables them to drive small and mid-sized and other beneficial companies out of business. If that’s not anti-business, I don’t know what is. Let’s reclaim those dollars and use them to build our U.S. businesses and economy”
Ben Kyriagis, President of Small Business Minnesota and President of World Trade Network in Minneapolis, MN, said, “If a US citizen was using foreign bank accounts and tax havens overseas to evade US taxes, he could go to prison. Yet hundreds of large U.S. corporations do exactly that every day and also claim to have the same rights as citizens. If they have the same rights as citizens they should also be subject to the same laws as all US citizens.”
Debra Ruh, Founder and CEO of TecAccess of Rockville, VA, said, “As a small business person, I’m incensed that other companies in our country are able to game the system and force the rest of us to take up the slack. When they avoid their normal tax obligations, that puts more of a burden on responsible and sustainable businesses like mine.”
Business and Investors Against Tax Haven Abuse supports policies that end tax avoidance and evasion through offshore tax havens. The petition is cosponsored by Business for Shared Prosperity, Wealth for the Common Good and the American Sustainable Business Council.
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Note to editors: Business leaders and owner/operators are available for comment.
For Immediate Release: Contact: Jesse Beck at AGENDA PROJECT
April 13th, 2011 212-481-8302
or jbeck@agendaproject.org
**** www.patrioticmillionaires.org
Patriotic Millionaires Strike Again
Millionaires to President, Reid and Boehner:
“Increase our taxes NOW!”
Signers include: Director Doug Liman (Bourne Identity, Mr and Mrs Smith and Fair Game), actress Edie Falco (Nurse Jackie), the founder of Esprit, the founder of Ask.com, the founder of the Princeton Review, legendary philanthropist Michael Steinhardt, top Google engineers, famed economist Nouriel Roubini, financial guru Andrew Tobias, top executives from Blackrock and Warburg, Pincus, and many more.
In a letter to President Obama, Hon. Harry Reid, and Hon. John Boehner, today some of the country’s most prominent millionaires from business, entertainment, finance and technology asked the nation’s leaders to RAISE THEIR TAXES FOR THE GOOD OF THE COUNTRY.
Although the change would cost them thousands of dollars, the group says they want to do their “fair share.” Each of the Patriotic Millionaires who signed the letter have made more than $1 million in a year and are THE SAME people who would pay the increased taxes.
THE LETTER
Dear Mr. President, Hon. Harry Reid, and Hon. John Boehner,
We are writing to urge you to put our country ahead of politics.
For the fiscal health of our nation and the well-being of our fellow citizens, we ask that you increase taxes on incomes over $1,000,000.
We make this request as loyal citizens who now or in the past earned incomes of $1,000,000 per year or more.
Our country faces a choice – we can pay our debts and build for the future, or we can shirk our financial responsibilities and cripple our nation’s potential.
Our country has been good to us. It provided a foundation on which we could succeed. Now, we want to do our part to keep that foundation strong so that others can succeed as we have.
Please do the right thing for our country. Raise our taxes.
Sincerely,
Patriotic Millionaires
The Patriotic Millionaires created a media firestorm during last year’s lame duck session when they called on the President to ‘stand firm against those who would put politics ahead of their country’ (press coverage below).
“These Patriotic Millionaires are willing to put duty to the country first – they hope the President and the leaders in the House and Senate will do the same thing,” said Erica Payne, Founder of the Agenda Project and lead coordinator of the millionaires campaign with Wealth for the Common Good.
“Raising millionaire tax rates could raise $60-$80 billion a year in revenue,” said Alison Goldberg, Coordinator of Wealth for the Common Good.
“This small monetary sacrifice is both an ethical and patriotic decision, made in the hopes of allowing the United States of America to continue to be a leader economically, politically, and morally,” said Garrett Gruener, founder of Ask.com.
“We have only three choices: cut spending, raise taxes, or go bankrupt. Congress seems to be utterly incapable of cutting spending, and I don’t want the country to go bankrupt,” said Ron Garret a former Google software engineer and former Principal Research Scientist at Jet Propulsion Laboratory.
Patriotic Millionaires for Fiscal Strength 1.0 received major media coverage including:
ABC, CNN, The Washington Post, Fox Business (twice), MSNBC, CBS, and Yahoo News, Salon, Forbes, Slatest, PressTV, Personal Finance Bulletin, Daily Kos, The Nation, New YorkMagazine, Wall Street Journal, The Atlantic, Chicago Sun Times
Originally posted on My San Antonio
Millionaires and billionaires have several options. They can:
A. Do nothing except enjoy their wealth.
B. Make an effort to position their money so that they avoid paying taxes.
C. Continue working and investing, leveraging their wealth to become even richer.
D. Sign a letter to Congress asking to pay higher taxes.
At least 17 millionaires have chosen to circle option D.
They have signed a letter, sponsored by an organization called Wealth for the Common Good, in support of a bill filed in Congress last month by U.S. Rep. Jan Schakowsky, D-Ill. The bill proposes five new federal income tax brackets with higher tax rates:
$1 million-$10 million in annual income: 45 percent
$10 million-$20 million: 46 percent
$20 million-$100 million: 47 percent
$100 million to $1 billion: 48 percent
$1 billion and up: 49 percent
Those tax rates would bring about $78 billion in new federal tax revenues.
One of the 17 millionaire signers lives in Texas. John Kortenhaus is a North Texas investment banker. For privacy reasons, he wants his exact residence undisclosed.
“The tax code is broken,” Kortenhaus said. The country is in a fiscal crisis but finds itself with tax rules that favor the wealthy, he said. Theoretically, the wealthy will create jobs and boost incomes when allowed tax breaks to invest their money, he said. “But ‘trickle down’ doesn’t work in reality.”
Kortenhaus said he would pay even less taxes under a flat tax system that some people advocate. The wealthy, he said, ought to pay progressively higher percentages of their incomes in taxes because they benefit more from national security, education and other government services than people with lower wages.
Most of the wealthy would disagree, Kortenhaus acknowledged. “There are too many people who are arrogant. They think they worked hard to get their wealth. In some cases, that is true. But many inherited their wealth or are people who have been fortunate or lucky in business or their inventions,” he said.
He cited obscenely high incomes for entertainers and athletes.
“I have trouble with people who think they are worth that much, but that’s the way the system is set up,” Kortenhaus said.
How top-heavy have the wealthy become in the United States?
A separate analysis by the Economic Policy Institute last month states that the top 5 percent of wealth holders own 63.5 percent of the country’s wealth, using 2009 figures. The bottom 80 percent hold just 12.8 percent of the country’s wealth.
Ten years ago, the argument from the George W. Bush administration was that if income taxes were going to be cut to stimulate the economy, the cuts should be for the people who pay most of the taxes, the wealthy.
If that is true, then when it becomes necessary to raise taxes at a time of frighteningly large federal debt levels, the wealthy must accept that they must shoulder most of the increase.
But Schakowsky’s bill won’t become law. Kortenhaus knows why.
“There will be no tax code reform unless there is also lobbying reform,” Kortenhaus said. “There’s too much self-interest” to do lobbying reform.
dhendricks@express-news.net