By Naomi Sobel

President Obama has made it clear that he wants to erase the Bush-era tax cuts for the highest earners in the country, even as he preserves the tax cuts for middle- and working-class Americans.

There are plenty of Republicans and even some Democrats who are ready to pounce on this proposal. They’ll say it will hinder economic recovery, even though the change will only affect about 2.5 percent of all U.S. taxpayers.

As someone who would pay those higher taxes, I support Obama’s plan. By effectively raising the tax rate for the wealthiest Americans, Congress could generate as much as $43 billion in new revenue, every year.

We urgently need to find ways to pay for long-deferred investments in education, infrastructure, and other essential parts of what keeps America going. These public goods all require revenue, and right now our government is giving money back to those of us that need tax cuts the least.

Because my own family’s good fortune came out of a century of public investments, it makes sense to me that a substantial part of our wealth should be reinvested for the public good.

In 1900, my great-great-grandfather co-founded a mining and construction business in Utah. Shortly after that, the company obtained a number of federal contracts for large infrastructure projects out west, including railroads, bridges, and dams. Perhaps the most famous of these was the Hoover Dam–the largest construction project the U.S. government had ever tackled.

Our family business relied on existing infrastructure like roads and bridges to transport materials. It benefited from government grants intended to spur additional development. We also benefited from our nation’s remarkable system of property laws, deeds, patents, and mortgage systems.

Our business was built upon a commonwealth of public resources, scientific knowledge, and shared institutions. Those of us who have disproportionately benefited from these investments have a corresponding patriotic responsibility to reinvest in the common good.

Some critics worry that increasing taxes on America’s wealthiest citizens will impede growth. But they ignore that tax rates on the wealthy have dramatically fallen over the last six decades.

My grandfather taught his three children that their earnings should be distributed in thirds: A third for charitable community organizations, a third for taxes, and a third for themselves. But today, many wealthy Americans pay far less than a third of their income in taxes, because tax rates have been slashed and the income from capital gains is taxed at much lower rates than income from wages.

That’s among the main reasons we must change our tax code, shifting obligation to those of us with the greatest capacity to pay.

During the past 30 years, however, federal policy has moved in the opposite direction. We have seen a great tax shift in this country, off the wealthy and onto the middle and working class. Reduced income taxes at the top, a shrinking capital gains tax, the diminished estate tax—these policies have contributed to an increasingly unequal society where today the richest 10 percent of families own two-thirds of the wealth.

That’s why, along with hundreds of other members of Wealth for the Common Good, a network of wealthy individuals and business leaders, I have signed a petition asking Congress and President Obama to reverse the irresponsible 2001 and 2003 tax cuts on households with incomes over $235,000. It would be a crucial first step to rebalancing our tax code.

The myth of the “self-made businessman” persists in this country. Of course my family members worked hard. But without many public investments, our family enterprise simply wouldn’t exist. I support higher taxes on the wealthy to continue this tradition of public investments. It will give other families the opportunity to succeed the way we have.

–
Naomi Sobel is a writer and editor living in Boston. She’s a member of Wealth for the Common Good, a network of high-income individuals and business leaders advocating for progressive tax reforms.

Last week, the President released his budget with some important provisions, but we are already hearing the voices of those who want to block any tax increase for wealthy people. Now is the time for us to speak out in support of progressive reform.

Wealth for the Common Good is planning a number of activities during the next three months to build awareness and jump-start public conversations about how our country can rebalance the tax code, and we need your help.
Below you’ll find a variety of actions you can take. We welcome your thoughts about how we can make the most of this tax season.

Thanks for your commitment to tax fairness,
Chuck Collins, Alison Goldberg, Bill Lyons, Ann Manning and Scott Klinger

Help us mobilize this tax season:

1. Share a quote and picture for our video. We are producing a video with the voices of high-income taxpayers who believe they should pay more. Visit our web site to learn more.

2. Write! We are looking for 20 people who can write an op-ed or letter to the editor in the next month. Interested? We’ll provide talking points and samples. Contact Alison at alison@wealthforcommongood.org.

3. Sign the petition to end the Bush-era tax cuts for high-income households. If you’ve already signed, please recruit three others.

4. Join Business and Investors Against Tax Havens Abuse and sign our petition. Anyone who is an investor can sign, small or large.

5. Join our team of media spokespeople. We’ll provide talking points and training. Contact Alison at alison@wealthforcommongood.org.

This month’s Featured Signer:

“My success owes as much to luck as hard work, and much of that luck is a function of the social, political, and economic structures that the government makes possible.  I’ve had a good run over the last few years.  There’s no question that others now deserve to share in that prosperity.”

– Jeffrey Hayes, President, Stratalys Research & Consulting

This tax season, we’re producing a video to help convey this message, and we need your help. We are looking for high-income taxpayers who are willing to submit a quote and picture to include in our video.

Here’s what we are looking for:

1) 1-2 sentence statement about why you think progressive tax reform is fair.

2) A picture of you: this could be a head shot, an action shot, or even an image with you holding up a “picket sign” of your quote.

3) Your effective tax rate (optional). To figure this out - divide the dollar amount you paid in taxes by your Adjusted Gross Income for that same year.

Please email these materials to Alison at alison@wealthforcommongood.org by March 15th, indicating that you give Wealth for the Common Good permission to use them for promotional materials.

Thanks for your help putting a face on tax fairness!

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.

By Drummond Pike, Founder and CEO of Tides.

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.