There is a highly polarized conversation about the role of government and taxes in advancing a healthy and fair economy.  Does the concentration of wealth and power undermine our democracy?  What is the role of public investments and our “commonwealth” in wealth creation and individual success?  How do we celebrate both individual achievement and acknowledge societal investments?  Where will the money come from to pay for overdue investments in infrastructure, energy, and education?

ABOUT THE SPEAKER:  Chuck Collins is co-founder of Wealth for the Common Good, a network of business leaders, wealthy individuals and investors that support fair taxation and shared prosperity (www.wealthforcommongood.org). Chuck is a national expert who has worked to change the conversation about wealth and taxes and responsibility. Chuck is co-author with Bill Gates Sr. of Wealth and Our Commonwealth: Why America Should Tax Inherited Wealth and The Moral Measure of the Economy.

Join business people and investors around the country who are supporting a watchdog for financial product safety and fair competition.

We’re starting 2010 with the launch of a new campaign: Business and Investors Against Tax Haven Abuse. Please sign the petition calling on policymakers to end tax dodging and support a level playing field for business. An estimated $100 billion or more in tax revenue is lost every year to tax havens. We’re pushing for strong legislation to end tax haven abuse.

You can read more about this issue and share your input at www.businessagainsttaxhavens.org.

Also in this issue:
-Workshops on Wealth, Taxes and Economic Justice sponsored by Resource Generation and Bread and Roses Community Fund.
-The latest Action Alert on the estate tax.

Many thanks for your support,
Chuck Collins, Alison Goldberg, Bill Lyons, Ann Manning and Scott Klinger

Estate tax: Contact your Senators today!

As of Jan. 1, the estate tax is suspended for the duration of 2010. This is because the Senate failed to act before the end of 2009. But it’s not too late: Some leaders, recognizing the fiscal irresponsibility of this act, have promised to take action in the early part of the year to restore the tax.

Please help us urge Congress to reinstate the estate tax. Visit United for a Fair Economy for a toll-free number and information you can use to call your members.

Upcoming workshops in Philadelphia and Los Angeles

We are partnering with Resource Generation, and Bread & Roses Community Fund in Philadelphia, to sponsor workshops on Wealth, Taxes, and Economic Justice. They focus on the roles young people with wealth can play in progressive tax reform. Upcoming events:

Philadelphia: Saturday, Jan. 23, 2010 from 3-5:30 pm
Los Angeles: Thursday, Feb. 11, 2010 from 7-9:00 pm

Contact Alison at alison@wealthforcommongood.org for more information and to RSVP.

Featured signer:

“That something so important to every American as their taxes should fall lightly on those most able to afford proportionately higher taxes and penalize those least able, is not only a disgrace, but it is surely not American.”

-John Law Steel
Attorney, Former Mayor, Telluride, Colo.

Many of us find our way into philanthropy because we want to be on the “resource side” of social change – to help get money to where it needs to go. And foundations certainly control a lot of money – The Foundation Center reports total giving in 2007 reached almost $43 billion.

But once we start doing this work, it can feel like our grant budgets are never big enough, especially in today’s context. We’re deep in an economic crisis where 50 million Americans are living in poverty. Communities face tremendous need while at the same time foundation giving has declined. Even those of us on the “resource side” of the equation are finding ourselves looking for more resources.

So where will the money come from?

In philanthropy circles, this conversation often moves to one about fundraising. Growing the donor base is critical, and groups like Resource Generation and Bolder Giving are playing a necessary role in this by challenging new givers to not only give more, but to direct that giving to address the root causes of social, economic and environmental injustices.

But in order to make a fundamental shift in the amount of resources available to communities, we also need to bring taxes into the conversation.

Here are three reasons why the philanthropic community has a stake in the tax policy debates in 2010 and beyond:

1) Tax policy has the ability to increase the dollars available to foundations, since the higher the taxes for high-income and wealthy families, the more money that is given to philanthropic foundations. More progressive tax rates increase the resources available to the nonprofit sector.

2) By the same token, tax policy has the ability to decrease the dollars available to our sector. In fact, it’s happening right now. With the disappearance of the federal estate tax for 2010, we’re likely to see an estimated decline in charitable giving of $13-25 billion. And this is just the latest in a whole series of tax cuts for the wealthy that has shifted the tax burden to wage earners. 

3) Philanthropy can’t be a substitute for what the public sector can provide. In 2009 Congress allocated $54 billion for food stamps (known as the Supplemental Assistance Nutrition Program). Without increasing payout, all foundations working together would be unable to meet the funding needs for just this one program. While we can – and should – debate where our federal resources go (and fund advocacy groups that are putting on the pressure!), philanthropy is no match for the government’s ability to fund the safety net, infrastructure, health care, and education.  Our government relies on revenue from taxes to invest in these vital programs and that money should be raised from those with the greatest capacity to pay.  Reversing the Bush-era tax cuts for high-income households is an important place to start – with the potential to raise over $43 billion in revenue a year.

Many people view philanthropy as an alternative to taxes, but our sector is inextricably linked to the tax code. There will be many opportunities in 2010 to work toward more progressive policy. The funding community can’t afford to be absent from these debates.

Alison Goldberg coordinates Wealth for the Common Good and is co-author of Creating Change Through Family Philanthropy: The Next Generation.

Los Angeles: Thursday, February 11, 2010 from 7:00-9:00 pm

Wealth for the Common Good is partnering with Resource Generation, and Bread & Roses Community Fund in Philadelphia, to sponsor these workshops. They focus on the roles young people with wealth can play in progressive tax reform and are open to anyone who wants to explore the intersections of taxes, privilege and wealth from this perspective.

For more information about the Philadelphia workshop, contact Leah Pillsbury at leahpillsbury@gmail.com.

For more information about the Los Angeles workshop, contact Alison Goldberg at alison@wealthforcommongood.org.

This was posted on December 17, 2009 on City Brights.

The Wall Street Journal reports that the effort to extend the current Estate Tax regime through next year has failed. As part of the Bush tax cuts, the exemption, above which taxes are due, has been slowly rising. The Conservative plan, put in place in 2001, phases out the tax entirely next year, and then, in the following year, reverts to the 2001 rates and much lower exemption. They couldn’t make it permanent then, as they wanted to do, because it simply cut too much revenue out of the equation, even for the then-dominant Republican leadership on both ends of Pennsylvania Avenue.

Beneath the din of the healthcare debate, and Joe Lieberman’s stunning profile in cowardice and betrayal of his constituency, the inexorable process of displacing taxes from the super-wealthy to the middle class continues its stealthy pace. It is stunning to me that in these particularly dire economic times, the progressive majority in both the House and Senate has squandered the opportunity to extend current year provisions into next year. Neither the House nor the Senate could muster the will to adopt the extension. Lieberman-type leadership at its best?

And the conservatives – wow, they are a whole other kettle of fish. Cynical beyond measure, they figure a bankrupt government is better than no government at all. (Remember that stellar statement by neo-conservative, Grover Norquist: “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” So helpful in tough times.)

But this Estate Tax matter is really serious for the non-profit sector – not that you’d really understand that from the way many in philanthropy have used their considerable resources. The Council on Foundations, for instance, does support making permanent the current estate tax regime, though the matter shows up way down their list of public policy priorities, and one has rarely if ever heard the Council’s leadership making the case for the Estate Tax. Even with the more broadly-based, and often far more insightful, Independent Sector, this issue has not really achieved traction with the membership despite the best efforts of its leadership to remind us all of its importance.

Best estimates suggest that the sector will lose $25 billion each year, if the estate tax is abolished. The incentives for the creation of new foundations or the making of very large testamentary gifts to churches and non-profit organizations shift from financial to purely altruistic. In other words, without the tax deductions, people give less. And it means that if a billionaire expires during the next calendar year, she will pass down that entire fortune to her children or other beneficiaries intact. No taxes. No obligation to share with the society that enabled the accumulation of that fortune in the first place. As Bill Gates, Sr. has often commented, these huge fortunes are not easily assembled in other parts of the globe. The infrastructure, educational systems, regulated financial markets (okay, so we still have some work to do!), transportation systems, and everything else that contributes to the creation of successful businesses needs to be supported somehow, and the Estate Tax is a valuable tool for this.

Even more compelling to me, though, are the tragic social and economic consequences evolving from the advent of a new, permanent Upper Class. Declining family size almost ensures that fortunes of $100 million or more can become self-perpetuating fiefdoms in economic terms. In a manner similar to the nobility of the Middle Ages, who reigned over their lands with impunity through primogeniture (i.e. the oldest son gets the whole thing), the new economic elite will become sequestered and insulated from the broader society. Taxes on the income or realized gains from a large fortune will hardly dent its ability to be self-perpetuating. I just fail to see how this benefits society, this diverse and dynamic set of economic and social forces that has created so much in the world. In Kevin Phillips’ Wealth and Democracy, the author draws out the inextricable tie between social equity and the vibrancy of our democratic practice. The fact is inescapable – government must dampen the accumulation of “super-wealth”, and use the proceeds to create opportunity for “the many,” for, after all, the latter is what has always produced the best that America has achieved.

If Congress takes no action before the end of the year, the estate tax will expire for 2010. Let them know NOW that you support the tax, and that you are against tax breaks for multi-millionaires and billionaires.

Thanks for your support,
Chuck Collins, Alison Goldberg, Scott Klinger, Ann Manning and Bill Lyons
Wealth for the Common Good

BACKGROUND on the estate tax:

The U.S. House voted on Dec. 3 to permanently extend the estate tax at its current level. The Senate should do the same or at least pass a one-year extension of the estate tax. Sen. Baucus has implied the Senate may adjourn before addressing the estate tax, and return in early 2010 and retroactively impose it.

In either scenario, your Senator needs to hear from you. According to the Center for Budget and Policy Priorities, if the estate tax were to expire, family farms and small businesses would actually be worse off.

Here’s an op-ed by Bill Gates Sr. and Chuck Collins: Stephen King meets the estate tax.

For eight years I have spoken to anyone who would listen about the importance of creating a strong estate tax, and there is no more critical time for action to be taken by Congress on this matter than now.

In a few days the Senate will break for their holiday recess and if they do not act the estate tax will disappear in 2010. The House of Representatives recently cast a 225-200 vote in favor of Rep. Earl Pomeroy’s estate tax proposal, which makes 2009 estate tax law permanent, with a $3.5 million exemption ($7 million for married couples), and a 45% tax rate. If the Senate agrees, the result will still be a loss of $391 billion over 10 years, although that is better than no tax.

Letting the tax disappear entirely will be even more devastating and will cost upwards of a trillion dollars in lost revenue; revenue that supports vital public systems — including transportation and energy infrastructure, education and healthcare — that are the foundation of our broad-based prosperity and economic stability.

This is why I believe we must do more and strengthen this levy, which is our county’s only tax on inherited wealth and applies to less than 1 percent of American families. The estate tax raises substantial revenue from those with the greatest capacity to pay.

If abolished or weakened, there are only three ways to make up the resulting shortfall: cut spending, raise taxes on the middle class, or pile it on to the national debt and leave it to our children and grandchildren who will inherit the consequences of the decisions we make now. This why I and thousands of other wealthy individuals have joined a campaign led by United for a Fair Economy to call on Congress to strengthen the estate tax.

A common, and misguided, criticism of the estate tax is that individuals who work hard and save their money should be entitled to pass on the fruits of that labor to their family. I am not against working hard, saving money, or taking care of your family.

However we must acknowledge that the person who accumulates wealth in this country was not able to do that independently. The simple fact of living in America, a country with stable markets and unparalleled opportunity fueled in part by government investment in technology and research (something my family has plenty of firsthand experience of), provide an irreplaceable foundation for success and have created a society which makes it possible for some men, women and their children to live an elegant life.

I attended the University of Washington under the G.I. Bill, and then became a lawyer enjoying a successful career that allowed me to provide well for my family so that they in turn were able to create their own wealth. So I believe that those of us who have benefited so greatly from our country’s investment in our lives should be asked to give a portion of our wealth back to invest in opportunities for the future.

Society has a just claim on our fortunes and that claim goes by the name estate tax.

Imagine a story about tax policy created by horror writer Stephen King. A fictional Congress, divided between anti-tax ideology and fiscal responsibility, amends the inheritance tax on the very wealthy so that it disappears entirely one year and then returns at steeper rates the following year. Over the “zero year,” death rates skyrocket in the nation’s most affluent ZIP codes. Seemingly robust and healthy billionaires perish in mysterious accidents. Lexus wheels fall off from Bloomfield Hills to Scarsdale to Beverly Hills. Sailboats and yachts inexplicably crash in calm coastal and Caribbean waters. Tainted champagne wipes out clusters of prosperous alumni at class reunions from dozens of elite prep schools from Groton to Choate.

Meanwhile, thousands of infirmed elders take their own lives in organized rituals called “legacy sacrifices.” Pledging unlimited inheritances to their heirs, these multi-millionaires die with smiles on their faces knowing theyve outfoxed Uncle Sam one last time.

If only this were a fiction.

We could actually see these scenarios play next year, unless the real U.S. Congress takes action and prevents one of the more bizarre twists in tax legislation in history from coming to pass.

In 2010, the estate tax, our nation’s only levy on inherited wealth, is set to disappear completely. Then in 2011 the tax returns to 2001 levels, with substantially lower wealth exemptions and higher rates. Talk about perverse incentives.

The stage was set for this scene in 2001, when President Bush and conservative tax cutters tried to abolish the estate tax. They didn’t have the Senate votes, however, for permanent repeal, nor could they afford to lose the hundreds of billions of dollars the estate tax would generate over the subsequent decade.

Congress structured the law to gradually phase out the tax, allowing it to expire in 2010. Then, in a gimmick to mask the real cost of the tax cut, the law sunsets in 2011, reverting back to its 2001 levels.

Tax cutters in 2001 were confident they would return in subsequent years to finish off the estate tax. But the nation’s fiscal situation immediately began to deteriorate and Republicans lost their majority in Congress. In October of this year, the organized wealthy families that spent millions in lobbying Congress to save billions finally conceded they lacked the votes to get rid of the estate tax forever.

You have to remember that the estate tax - at its 2009 level - affects only one in 500 estates. Over the last eight years, the law has been revised so the wealth exemption level rose from $1 million to where it is today, at a generous $3.5 million or $7 million for a couple. Rates declined from 55 percent in 2001 to 45 percent today. This exclusive tax cut for multi-millionaires and billionaires cost hundreds of billions of dollars in lost revenue, a cost added directly to our national debt.

Two weeks ago, the U.S. House of Representatives voted to freeze the federal estate tax at this current level. This is a positive and responsible step. Now the Senate must act.

The Senate could pass legislation that mirrors the House version and settle the issue for years to come. Or they could freeze the tax at its current level for one year - and take it up next year. What they shouldn’t do is further weaken the estate tax by passing proposals such as those introduced by Sens. Jon Kyl, R-Ariz., and Blanche Lincoln, D-Ark.

Without the estate tax, we could lose almost $1 trillion in revenue over the next two decades. There are only three ways to fill that gap: cut spending, raise taxes on the middle class, or - our current favorite - pile it onto the national debt. Instead of leaving prodigious amounts of debt for the next generation, we should retain a meaningful estate tax.

During a time of war and economic crisis, the idea of further tax breaks for multi-millionaires and billionaires is unseemly and unfair.

Bill Gates Sr. is a retired Seattle attorney and author of “Showing Up for Life.” Chuck Collins is co-founder of Wealth for the Common Good (www.wealthforcommongood.org). They are co-authors of “Wealth and Our Commonwealth: Why America Should Tax Accumulated.”

For more information, contact Ann Manning at ann@wealthforcommongood.org