By Lynnley Browning

On Tuesday, hundreds of these businesses will join in the announcement of a grass-roots campaign against tax avoidance that has already drawn support from a prominent lawmaker.

The campaign, Business and Investors Against Tax Haven Abuse, is backed by Senator Carl Levin, Democrat of Michigan, who in recent years has investigated offshore tax havens and the large companies and wealthy investors that use them.

Senator Levin plans to announce the campaign with its supporters, a coalition of three nonprofit groups — the American Sustainable Business Council, Business for Shared Prosperity and Wealth for the Common Good.

They will release a 25-page report that contends that American multinational corporations use havens to avoid $37 billion in federal taxes each year, a figure the groups call conservative.

“This $37 billion could be used to fund initiatives to support America’s small businesses — the nation’s biggest job creators — by increasing their access to capital, increasing their opportunities to invest and rewarding entrepreneurship,” the report says.

With that money, the report says, “we could establish a $30 billion Small Business Lending Fund to provide capital investments to small community banks (those with less than $10 billion in assets) to increase lending to small enterprises.”

Bob Keener, a spokesman for a coalition member, Business for Shared Prosperity, said on Monday that 400 executives, investors and representatives of businesses had signed a petition in support of the campaign. They included a small shoe company in Maine, a consultancy in Virginia and cleaning services, he said.

The campaign is unusual because it is the first time that small businesses have organized to combat offshore tax avoidance and evasion in a significant way.

“The Business and Investors Against Tax Haven Abuse campaign represents the first time in recent years that business people who believe tax havens are bad for business are mobilizing publicly to end the abuse,” Mr. Levin said Monday in a statement.

The Treasury Department estimated in 2009 that the international gap between taxes owed and taxes paid ranged from $43 billion to $123 billion a year for corporations and individuals.

The report calls for laws that would block transfers of intellectual property designed to evade taxes; ban shell corporations that earn profits offshore, even when a corporation’s management team is based in the United States; repeal a rule that allows American corporations to reduce or eliminate their United States tax bills if 80 percent of their business takes place overseas; and set penalties for government contractors that use tax havens.

• Help us close overseas tax havens and recover tens of billions of revenue.
• Eliminate the unlevel playing field that favors big companies over domestic business.

All corporations should pay their fair share of taxes for the infrastructure and services that support the economy on which their businesses depend. Yet, many global corporations are taking advantage of tax haven loopholes in the tax code to avoid taxes. In fact, our upcoming report will show that the corporate taxes paid by giant companies is a much lower rate than for smaller businesses , mostly because of tax haven abuse. By avoiding their fair share of taxes, companies like Best Buy and Citigroup, for example, shift their responsibility for taxes to the local appliance store or community bank.

We’ve teamed up with Business for Shared Prosperity, the American Sustainable Business Council and others to form Business and Investors Against Tax Haven Abuse, to push law makers to close these loopholes.

Tax Haven Briefing Call: Tuesday, July 13, 1:00 PM EASTERN TIME

You are invited to learn more from a telephone briefing by Elise Bean, the legislative expert on the topic for Senator Carl Levin, lead sponsor on legislation to close tax havens. If you’d like to participate, please email Bob Keener at bob@wealthforcommongood.org for the call-in number.

Sign Our Petition: Going Public in Two Weeks

If you haven’t already, please join our campaign by signing the petition. Momentum is building. In the quiet phase we’ve already collected 340 signatures. Please help us get to 500 before the public launch. The petition says, in part:

We, the undersigned business owners, executives and investors, call on the President and Congress to end tax dodging and support a level playing field for business by enacting strong legislation to stop tax haven abuses. Offshore tax havens reward tax evaders, rob public coffers of needed revenue and offload taxes to responsible businesses and households.

There is no justification for tax avoidance and evasion through tax havens. They should be made illegal and strongly enforced. Everyone needs to pay their fair share to keep America moving forward.

By Chuck Collins

A century ago this summer, Theodore Roosevelt gave his remarkable “New Nationalism” speech about the dangers of concentrated wealth and corporate power. After witnessing a decade of financial corruption and corporate malfeasance, Roosevelt called on the nation to “effectively control the mighty commercial forces which they have themselves called into being.”

Part of his vision was a “graduated inheritance tax on big fortunes, properly safeguarded against evasion and increasing rapidly in amount with the size of the estate.” Congress instituted an estate tax in 1916 that was in place until last January. For most of the last century, the estate tax was a single tax rate. A person with $5 million was taxed at the same rate as someone with $5 billion.

A century later, a group of Senate progressives have heeded Roosevelt’s call. On June 24, four US senators introduced the “Responsible Estate Tax Act,” which includes a graduated rate structure that taxes billionaires at rates significantly higher than it does multimillionaires. Preliminary estimates indicate the proposed tax would generate $319.2 billion over the next decade.

Led by Senator Bernard Sanders and joined by senators Sheldon Whitehouse, Tom Harkin and Sherrod Brown, the proposed estate tax reform would close loopholes, encourage conservation easements and exclude from the tax the minuscule number of small businesses that would otherwise be subject to the tax. This estate tax rate would range from 45 percent on estates under $10 million to a 65 percent “billionaire surcharge” on estates over $500 million ($1 billion for a couple).

The timing is great, because the Senate may deliberate the future of the estate tax in July.

Due to Senate inaction last fall, the estate tax expired last January 1. The absence of an estate tax for 2010 will cost an estimated $14.8 billion this year. Already, one Texas oilman, Dan Duncan, became the first billionaire in US history to die without any estate tax in place. Duncan was worth $9 billion and would have paid an estimated $4 billion in estate taxes.

Progressives in Congress are in an advantageous position to press for a good reform. If Congress takes no action, the estate tax law sunsets on January 1, 2011, and reverts to its year 2000 levels—with a wealth exemption of $1 million and a 55 percent rate.

Unfortunately, Senate Democratic leaders are like poker players with three aces in their hands but who are considering folding. They don’t view their leverage as an opportunity to press for a bold and creative reform. Instead, they are leaving the estate tax redesign to senators Blanche Lincoln and Max Baucus, politicians committed to weakening the law.

We need a mighty mobilization to pressure the Senate to take up the Responsible Estate Tax Act. Fair tax advocates are mobilizing, including Wealth for the Common Good, a network of business leaders and wealthy investors. They are backing the legislation and have compiled fact sheets and other resources.

Theodore Roosevelt had nothing against the wealthy. “We grudge no man a fortune,” he said, “which represents his own power and sagacity, when exercised with entire regard to the welfare of his fellows.”

But Roosevelt understood that concentrations of wealth undercut the common good—and threatened democratic institutions. “The really big fortune, the swollen fortune,” Roosevelt intoned in his “New Nationalism” speech, “by the mere fact of its size acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means.”

A century later, as we live through our Second Gilded Age, we must rally for a progressive estate tax as a way to raise urgently needed revenue, create real jobs and thwart plutocracy.

Sens. Sherrod Brown (D-OH), Tom Harkin (D-IA), Bernard Sanders (I-VT) and Whitehouse (D-RI) sent a “Dear Colleague” letter requesting Senate co-sponsors for the Responsible Estate Tax Act, which would create a progressive estate tax with graduated rates. This is a major victory for those us fighting to rebalance the tax system.

We need your timely help:

CONTACT BOTH YOUR SENATORS TODAY: Ask them to co-sponsor the Responsible Estate Tax Action in the Senate. Call the Senate Switchboard at: (202) 224-3121 to be connected to your Senators. Let us know when you’ve made the calls by replying to this email.

Call even if you think your Senator is a “lost cause.” Senators only hear from opponents of the estate tax and rarely hear from supporters. Urge them not to compromise by passing the Lincoln-Kyl version of the estate tax that would gut the law and give multi-millionaires and billionaires additional tax cuts.

SEND A LETTER TO EDITOR: Click here to send a letter to your local newspaper. You can use our letter or personalize it. It will only take a few minutes to help amplify our message.

LEARN MORE: Download our Legislative Fact Sheet and look at the Wealth for the Common Good site for resources and links to Center on Budget and Policy Priorities and United for a Fair Economy estate tax information.

Thanks for your prompt attention.
Chuck, Alison, Bob, Bill, Ann and Scott

After months of debating health care and financial reform, the U.S. Congress will be turning its attention to energy reform, the budget deficit, and taxes. We’re going to need your voice and engagement.

There are four revenue issues that we are tracking closely

-The Expiring Bush Tax Cuts for High Income Earners
-Estate Tax Reform
-Overseas Tax Havens
-Financial Speculation Tax

We hope you will pick one where you want your voice to be heard this summer.

Stay tuned for the fireworks,
Chuck, Bill, Bob, Ann and Scott

Financial Speculation Tax?

Next week President Obama will travel to Toronto to participate in the G-20 Summit. German Chancellor Angela Merkel, French President Nicolas Sarkozy and Wealth for the Common Good will be pressing President Obama to institute a U.S. financial speculation tax.

In our surveys, you expressed support for a modest financial transaction tax, similar to what exists in England. We support the Harkin-Defazio proposal to collect a penny on every four dollars of financial transactions, with exemptions that assist small investors. This levy would raise an estimated $177 billion a year.

See why John Bogle, the founder of Vanguard Mutual Funds, and John Fullerton, former Managing Director at J.P. Morgan, believe this tax will put a brake on speculative trading while raising urgently needed revenue.

You can also read The New York Times blog Dealbook, discussing the Institute for Policy Studies report, “Taxing the Wall Street Casino.” And check out Chuck Collins’ HuffPost piece on the report.

A Progressive Estate Tax Reform

Wealth for the Common Good was in The New York Times twice last week, discussing the need for reasonable estate tax reform. We’ll keep you posted as the estate tax reform debate heats up this summer –- and a progressive estate tax bill is introduced in the Senate.

Check out our coverage:

Legacy for One Billionaire: Death, But No Taxes >>>

What An Estate Looks Like to the Taxman >>>

Stop Overseas Tax Havens

In July, we’ll be releasing our report on the business case against overseas tax havens. We’ve teamed up with the American Sustainable Business Council and Business for Shared Prosperity to co-sponsor the campaign, Business and Investors Against Tax Haven Abuse.

Learn more and sign our petition >>>

Leaders from business and finance are stepping forward to support a financial speculation tax, a modest levy on the purchase and sale of stocks, bonds, derivatives, and swaps.  England and Taiwan have such taxes on securities that encourage productive investment and discourage reckless trading behavior.

Leaders in the U.S. Congress have introduced a proposal to collect a penny on every four dollars of financial transactions. This would raise an estimated $177 billion a year.

Wealth for the Common Good has initiated a campaign of business leaders and investors who support the tax. John Bogle, the founder of Vanguard Mutual Fund, supports the tax as “a way to slow the rampant speculation that has created such havoc in our financial markets, but also for its revenue-raising potential in this time of staggering government deficits.”

A financial speculation tax discourage the short-term investment outlook that lay at the heart of the financial crisis. “We have lost the distinction between real investment in the real economy and short-term speculation,” said John Fullerton, a former JP Morgan Managing Director. “A financial transactions tax should, at the margin, shift investment horizons out to longer holding periods by making high turnover trading strategies marginally less profitable.”

As President Obama heads to Toronto on June 26th for the Summit of the G-20 leaders, he’s going to find lots of other presidents asking about the F.S.T.  German Chancellor Angela Merkel and French President Nicolas Sarkozy have renewed calls for a financial speculation tax. Sign our petition and join the call.

For more information, see the new report from the Institute for Policy Studies, Taxing the Wall Street Casino. You can also read Andrew Ross Sorkin’s Dealbook, in yesterday’s New York Times about our push for a financial speculation tax.

By David Kocieniewski

When Congress passed a law that eliminated the estate tax for people who die this calendar year — with plans to bring it back with a vengeance in 2011 — the joke among estate planners was that 2010 might go down as the year of
“Throw Momma From the Train.”

The estate tax is one of those hyper-combustible issues where emotion, and shrewd lobbying, can loose an outsize uproar. That point was made last week with news that the multibillion-dollar fortune of a Texas oil tycoon, who died this year, would pass to his children and grandchildren free of the federal estate tax.

But before railing against the wealthy — or encouraging your rich relatives to take up cliff diving — it might be wise to look at what the real-world effects might be next year, when the estate tax of up to 55 percent might be levied on any estate worth more than $1 million.

At first blush, that policy sounds destined to take big chunks out of estates across a broad swath of the population. While supporters say the estate tax affects only the richest members of society and helps counteract the concentration of wealth, that million-dollar limit would seem to ensnare many people who consider themselves decidedly middle class — especially in the Northeast and California where home values are high.

What is the dividing line between wealthy and upper middle class? Or between someone who owns an estate and someone lucky enough to have bought a home decades ago and watched its value grow to seven figures?

According to the Tax Policy Center, a research group, unless Congress revises the law by Jan. 1, the number of estates affected in 2011 would increase to 44,200 next year from 5,500 in 2009.

Even so, that figure represents less than 2 percent of the 2.5 million Americans expected to die next year, and is far below historical levels. In 1976, 139,000 estates representing 7.6 percent of all deaths were taxed when the exemption was set at $60,000 (nearly $230,000 in buying power today).

And these figures also don’t take into account the world of estate planning, where numbers can be fungible. With a bit of planning, tax lawyers say, most families can legally shelter significant portions of their estates. In addition, the law contains provisions that allow owners of small businesses and farms to take additional exemptions.

Such caveats offer little comfort to those who call the tax the “death tax” and have fought for repeal, saying it is a form of double taxation.

“The proper exemption should be everything,” said Dick Patten of the American Family Business Institute, a lobbying group that says the estate tax stifles job creation. “These people have already paid a lifetime of taxes to build the businesses they own.” (Estate tax supporters say the levy helps the government capture a portion of capital gains that have never been taxed at all.)

But with the federal deficit soaring and Democrats in control of Congress, even the most ardent advocates of repeal have resigned themselves to trying to limit the estate tax this year rather than eliminate it. Last Thursday, Senator Jon Kyl, Republican of Arizona, said he was close to a deal that would raise the exemption to $5 million and lower the rate to 35 percent. President Obama has said he favors restoring the 2009 levels of $3.5 million for individuals and $7 million for couples, but it is unclear what, if any, changes might make it through Congress by year’s end.

The lurching debate in many ways reflects the country’s historical ambivalence about the issue. For most of American history, inheritance taxes were imposed on the wealthiest citizens only as a temporary measure in times of war. By the early 20th century, as the Industrial Revolution led to a growing gap between rich and poor, leading figures like President Theodore Roosevelt and the steel baron and philanthropist Andrew Carnegie began promoting estate taxes as a way to diffuse a concentration of wealth that they considered a threat to democracy.

While much of the anti-estate-tax movement has been financed by a handful of wealthy families, there are also billionaires who have spoken out in favor of the tax, most notably Bill Gates and Warren Buffett. Mr. Buffett warned Congress in 2007 that without an estate tax, the United States runs the risk of becoming a “dynastic plutocracy.”

But where does that dynastic plutocracy begin? There is an astronomical gap between Mr. Buffett’s fortune, which Forbes estimated at $47 billion, and two retirees in Marin County, California, whose life’s work might have allowed them to leave their heirs $3.5 million in assets, mostly in the value of a house.

Even some strong supporters of an estate tax would say that the couple in Marin is not wealthy, and support the 2009 exemption of $7 million for couples, saying that it offers a dividing line between the upper middle class and the wealthy. And then there are those who would say that at least relative to the rest of the population, that couple is rich. “If a couple has $7 million to leave to their three children, their kids could conceivably never have to work again,” said Chuck Collins, co-founder of Wealth for the Common Good. “I don’t think most people would consider that middle class. Or think that creating a generation of dilettantes is a good thing.”

* Monday, June 14th, 5:00-7:00 pm

* Tuesday, June 15th, 11:30 am-1:15 pm

You are invited to hear Ann Manning, Outreach Director for Wealth for the Common Good, speak on economic inequality and the role of business leaders and wealthy individuals in advocating for shared prosperity.

We know many of you are concerned about the state of our vital public institutions and services- whether quality public education for children, transportation infrastructure, green energy projects, unemployment compensation, affordable health care, effective public health services, or a high functioning judiciary.

Wealth for the Common Good is working to shift the stuck conversation about taxes and help pave the way for progressive tax reform, so our public institutions have the resources they need from those of us with the greatest capacity to pay. Right now they are leading a campaign, calling on President Obama and Congress to allow the Bush-era tax cuts to expire at the end of 2010 on household incomes over $235,000. This could raise an estimated $45 billion in annual revenue.

Join us and learn more about the issues involved.

For more information and to RSVP, contact ann@wealthforcommongood.org.

Co-sponsors:

Headwaters Foundation for Justice is a catalyst for social, racial, economic and environmental justice. Through grantmaking and capacity building support to grassroots organizations, our goal is to foster just and sustainable communities that embrace social racial, economic and environmental equity.

Growth & Justice is a leading progressive voice on state economic issues committed to making Minnesota’s economy simultaneously more prosperous and fair.

Along with our partners the American Sustainable Business Council, Business for Shared Prosperity, and Growth & Justice, we are seeking thousands of business people and investors who will call on the President and Congress to strengthen our economy by enacting strong legislation to stop tax haven abuse.

Please sign our petition.

Why are we challenging tax havens? Responsible businesses are at a competitive disadvantage when other firms hide assets in tax havens and avoid paying their fair share of taxes. Our communities lose the revenue needed to fund essential services and the infrastructure that supports economic growth. An estimated $100 billion or more in tax revenue is lost every year to offshore accounts.

Washington has been hearing mostly from business lobbyists opposed to strong legislation to stop tax haven abuse. Underfunded, non-profit watchdog groups cannot provide enough pressure on Congress. The voice of business people and investors can make a crucial difference in this debate. Learn more about the campaign and share our campaign page on Facebook with friends, family and colleagues.

Thanks for your commitment to tax fairness,
Chuck, Alison, Bill, Bob, Ann and Scott

Take Action:

Please sign the petition calling on policymakers to end tax dodging and support a level playing field for business.

Send a letter to the editor to raise awareness about the cost of tax havens in your community.

Speak out. We are looking for business people who are willing to speak to the media in the coming weeks. Contact Bob Keener at bob@wealthforcommongood.org.

Upcoming Events

Please join us, in partnership with Headwaters Fund and Growth & Justice for two special events in Minneapolis:

* Monday, June 14th, 5:00-7:00 pm
* Tuesday, June 15th, 11:30 am-1:15 pm

You are invited to hear Ann Manning, Outreach Director for Wealth for the Common Good, speak on economic inequality and the role of business leaders and wealthy individuals in advocating for shared prosperity.

To RSVP contact ann@wealthforcommongood.org.

For more details >>>

In The News

In The News:

Wealth for the Common Good co-founder Chuck Collins was featured in the New York Times today, talking about estate tax reform.

Read the story >>>

The Times picked up on our recent HuffPost article about the first billionaire to die without an estate tax in place.

Read the story >>>

Promoting Financial Transparency:

Global Financial Integrity, a key ally in our work to stop tax haven abuse, is seeking 100,000 signers on a petition calling for the G-20 to insist on greater transparency in the world’s financial system, in order to address tax have abuse and other illicit flows of money.

Learn more and sign the petition at www.g20transparency.com.

Care to talk about taxation of carried interest?

Right now the jobs legislation pending in the Senate would close an unfair loophole that allows private equity and hedge fund managers to pay 15% capital gains tax rates on the income they receive from management services, so called “carried interest.” The new rules would tax this income at ordinary income tax rates and could raise over $14 billion in revenue.

Are you an investment manager who would be impacted by the carried interest provisions and supports this proposal? Contact Bob Keener at bob@wealthforcommongood.org if you are interested in speaking out on this issue at press events organized by our partners, including this week.

Featured Signers:

“As a former CPA, I have always found these ‘tricks’ of tax avoidance/evasion to be unconscionable. We need the revenue in order to govern responsibly, and our tax burden should be spread fairly.”
-Sally Thomas, retired business owner

“It is only fair and just that all businesses pay their share of the costs of society.”
-Robert Dyck, professor emeritus of Urban Affairs and Planning, Virginia Tech

By Chuck Collins & Sam Pizzigati

How can a civilized nation afford to hand the heirs of the super-rich billions of dollars tax-free and not afford to keep teachers in classrooms?

Dan Duncan died at the end of March. The Houston gas pipeline mogul left behind a spouse, four children, four grandkids, and a fortune worth $9 billion.

Duncan, a prominent philanthropist who supported cancer research and the Boy Scouts, left behind another distinction. He was the first American billionaire to ever leave his heirs a tax-free fortune.

America’s first-ever billionaire, John D. Rockefeller, died in 1937. His heirs faced a 70 percent estate tax on the bulk of his estate. Duncan’s heirs are enjoying a zero percent estate tax. When he died, his son and three daughters became instant billionaires.

If Duncan had died last year, his heirs would have had to share their new billions with the rest of America. But for the first time since 1916, no estate tax graces the tax code. That’s because it’s been suspended for the duration of this year, thanks to a 2001 Bush administration maneuver and an impasse in Congress.

Heirs to billion-dollar fortunes, if they sell the assets they inherit this year, will have to report whatever windfalls they rake in as taxable capital gains. But analysts don’t expect this new capital gains rule to raise nearly as much money as the estate tax would have.

How much will the absence of an estate tax this year cost the Treasury? It’s impossible to say. No one knows how many other billionaires may pass to the great beyond between now and New Year’s Eve. We do know that in 2008, the latest year with figures available, the federal government collected $25.7 billion in estate tax revenue.

That sum, by coincidence, would be enough to fully fund the $23 billion Rep. George Miller (D-CA) and Sen. Tom Harkin (D-IA) want Congress to appropriate to avert the nation’s worst teacher layoff crisis since the Great Depression. Without additional federal funding, our schools may lose 300,000 teachers, causing class sizes to balloon across the country.

But getting that help seems to be a long shot. The 2009 stimulus legislation saved tens of thousands of teacher jobs. But stimulus dollars are running out, and deficit hawks in Congress say we can’t afford more.

How can a civilized nation afford to hand the heirs of the super-rich billions of dollars tax-free and not afford to keep teachers in classrooms?

We can trace our current budget inanity back to when the Bush White House put on a full-court press to repeal the federal estate tax. The administration lacked the votes needed for a permanent repeal. However, it did manage to pass lower estate tax rates over the rest of the decade and a repeal in 2010. Under that legislation, the estate tax would reappear in 2011.

White House strategists never expected to see this reappearance. They counted on a future Congress to extend the repeal beyond this year. But by 2007, the GOP had become a minority in the House and Bush lost his shot at permanently scrapping the tax.

Meanwhile, estate tax supporters were confident the 2008 election results would make it possible to overturn the 2010 repeal. But in 2009, lawmakers deadlocked over many issues.
The year ended without any congressional estate tax action.

Apparently no one in Congress expected a billionaire of Dan Duncan’s magnitude to actually go and die without an estate tax on the books.

There’s hope that Congress will bring the estate tax back for the remainder of the year, and apply it retroactively. But with so much at stake, lawyers for Duncan’s heirs would likely battle that kind of action in the courts. The longer we go without the tax on the books, the higher the chances the courts will agree with them.

After his death, a close friend of Duncan’s noted “he really wanted to help everybody.” If Duncan’s heirs want to help everybody, they’ll troop over to Capitol Hill and demand the immediate reinstatement of a meaningful federal estate tax.

Chuck Collins directs the Institute for Policy Studies Program on Inequality and the Common Good. Sam Pizzigati edits Too Much, the Institute’s online weekly newsletter on excess and inequality. This column was distributed by OtherWords.