Published in Sojourners Magazine, April 2011

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	When Jesus invited the tax collector Zacchaeus down from his sycamore tree, did they sit in the shade and discuss capital gains rates and oil depletion allowances? We’re missing some transcripts that could serve as an ethical guide to our current tax debates. The already-contentious dispute over tax policy promises to be even more polarized this year, with growing evidence of aggressive corporate tax avoidance, rising concern over our national debt and deficit, and the devastating impact of budget cuts at the federal, state, and local levels. Everyone agrees we should reform the federal tax code, but there are widely divergent visions as to how. The Business Roundtable, a private organization comprised of major corporate CEOs, advocates reducing the already loophole-ridden corporate income tax. Rep. Jan Schakowsky of Illinois calls for $144 billion in new taxes on the wealthy to trim down the deficit and reduce glaring economic inequalities. Most lawmakers agree that our revenue system should be simple and fair and raise adequate revenue. Yet there is also recognition that the rules of our tax system should reflect deeper values and serve the larger common good. Just as “budgets are moral documents” — reflecting our most deeply held beliefs and priorities — so are tax policies. There is no such thing as a “value neutral” tax system. Our present tax code values income from wealth, such as capital gains, over income from work and wages. It gives preferential treatment to the investment income of a hedge fund investor and taxes that income at a lower capital gains level of 15 percent. But we tax the earned wages of a doctor or a scientist at a top income tax rate of 35 percent. Our present tax system gives advantages to global corporations over domestic businesses and small enterprises. Local businesses must compete on an uneven playing field with global companies that game the system, move income overseas, and pay little corporate income tax toward the public infrastructure, education system, and other public investments that we all depend upon. Our tax code offers larger incentives to mature extractive industries such as oil and natural gas than for activities that conserve resources, care for the earth, and catalyze new green enterprises. Our present tax rules do not reflect the widely held values of our society. Rather, they reflect the designs and worldview of powerful global corporations and wealthy individuals. A tax code skewed to benefit the powerful is a huge impediment to progress. Our present tax rules freeze us into the economy of the past, rather than help us make a transition to a new economy rooted in ecological sustainability, good jobs, and greater social equality. Conventional tax wisdom asserts that we should “tax the bads,” by putting a higher price on harmful activities. Hence the notion of “sin taxes” levied on liquor, tobacco, and now, with increasing ferocity, junk food. Taxing these items raises revenue to offset negative societal costs such as alcoholism, cancer, obesity, and poor health. But sin taxes, like any sales tax, are regressive, requiring lower-income households to pay a higher percentage of their income than do the wealthy. What are the new “bads” of today? What behaviors should we discourage and encourage in the tax system of the future? There are three “bads” that our tax code should be redesigned to address, and in doing so support our transition to a more healthy and sustainable economy: 1) Extreme concentrations of income, wealth, and power that undermine social cohesion and a healthy democracy; 2) Financial speculation, such as the activities that destabilized our economy in 2008, and profligate consumption and waste; and 3) Pollution and the depletion of our ecosystems. Creating a “Virtuous” Tax Policy Any discussion of revenue must move in tandem with thoughtful reductions in unnecessary spending, including Pentagon spending that has little to do with our real security. The following proposals are aimed at taxing the “bads” and encouraging a more rapid transition to a new sustainable economy. 1. Taxing dangerous concentrations of income and wealth. A century ago, Theodore Roosevelt advocated for progressive estate and income taxes as a way to reduce the corrosive impact of concentrated wealth and power on our society. Today, extreme levels of inequality are undermining our public health, social mobility, and economic growth. Historically, tax policies have been one of the most important interventions to reduce inequality. • Levy a progressive estate tax on large fortunes. At the end of 2010, Congress reinstated the estate tax on estates over $5 million ($10 million for a couple) at a 35 percent rate. Congress could close loopholes and raise additional revenue from those with the greatest capacity to pay. The Responsible Estate Tax Act establishes graduated tax rates, with no tax on estates worth under $3.5 million, or $7 million for a couple, and including a 10 percent surtax on the value of an estate above $500 million, or $1 billion for a couple. Estimated annual revenue: $25 billion. • Institute a wealth tax. A “net worth tax” could be levied on individual or household assets including real estate, cash, investment funds, savings in insurance and pension plans, and personal trusts and can be structured to tax wealth only above a certain threshold. For example, France’s solidarity tax on wealth is for those who have assets in excess of $1.1 million. • Create additional tax brackets for higher incomes. Under our current rate structure, households with incomes over $350,000 pay the same top income tax rate as households with incomes over $10 million. In the 1950s, there were 16 additional top rates over the highest tax rate (35 percent) that we have today. A 50 percent rate on incomes over $2 million would generate an additional $60 billion a year. 2. Taxing financial speculation. The economic meltdown of 2008 has had huge human costs in the form of unemployment, home foreclosures, and the destruction of private savings. The driving engine of the financial collapse, as recently articulated by the Financial Crisis Inquiry Commission, was a bloated “shadow banking” system that encouraged speculative practices and risk-taking. Monies generated by these proposed taxes could fund proper oversight of the financial sector and consumer protection. • Speculative trading now accounts for up to 70 percent of the trades in some markets. Commodity speculation unnecessarily bids up the cost of food, gasoline, and other basic necessities. A modest federal tax on every transaction that involves the buying and selling of stocks and other financial products would both generate substantial revenue and dampen speculation. Small investors could be exempted. Estimated revenue: $150 billion a year. • Another distortion that encourages speculation is the advantaged taxation of income from wealth. Current law subjects most dividend and capital gains income — the income that flows overwhelmingly to wealthier Americans — to a 15 percent tax rate. The tax on wage and salary income, by contrast, can run up to 35 percent. With carefully structured rate reform, we can end this preferential treatment for capital gains and dividends and at the same time encourage average families to engage in long-term investing. Estimated revenue: $88 billion per year. • End corporate tax dodging through overseas tax havens. Aggressive corporate and individual tax avoidance deprives our nation of revenue needed to maintain and modernize the infrastructure and services underpinning a strong economy. Responsible businesses and banks are hurt when other firms use tax havens to avoid paying their fair share of taxes. In using tax havens, companies such as General Electric and Citigroup, for example, shift their responsibility for taxes to the local appliance store or community bank. Estimated revenue: $37 billion per year. 3. Taxing the destruction of nature. Several tax interventions could have a positive impact on reducing the pace of environment destruction and could spawn new industries that are essential for our transition to the new economy. Instead of taxpayers paying indirectly for the huge social costs associated with climate change, pollution, and irresponsible consumption, these taxes would build some of the real costs of destroying nature into purchases. • Perhaps the most critical tax intervention to slow climate change would be to put a price on dumping carbon into the atmosphere, from our transportation, energy, and other sectors. A gradually phased-in tax on carbon would create huge incentives to invest in energy conservation and regional green infrastructure. Proposals include a straight carbon tax or a “cap and dividend” proposal that would rebate 50 percent revenue to consumers to offset increased costs of some products and still generate $52 billion per year. We could also explore taxes on other pollutants, such as nitrates that are destroying our water supplies. • Consumption of unnecessary stuff is filling our landfills and destroying our environment. A tax on certain nonessential goods, such as expensive jewelry and techno-gadgets, can be modeled after the European “Value Added Tax” and charged as a percentage of the price of the good. It could apply only to purchases that exceed a certain amount, such as cars that cost more than $100,000. Some states currently charge a luxury tax on high-end real estate transactions. Objections to these proposals will be strong, along with howls of “class warfare” and “job killing.” Some will argue that government shouldn’t be in the business of “picking winners” in the economy. But the reality is, our current tax policy is picking winners every day. The tax rules are rigged to benefit the wealthy and global corporations at the expense of everyone else. For several generations after the introduction of a federal income tax at the end of the 19th century, our progressive federal tax system was moderately effective in reducing concentrations of wealth. For example, during the 1950s, wealthy individuals paid significantly more taxes than they do today. Since 1980, however, we’ve lived through a “great tax shift,” as lawmakers moved tax obligations off the wealthy and onto low- and middle-income taxpayers, off corporations and onto individuals, and off today’s taxpayers onto our children and grandchildren. There is a role for everyone in reversing these backward tax policies. Around the world, coalitions are coming together to push for financial speculation taxes, carbon taxation, and uniform rules to crack down on corporate tax dodging. Important business leaders and small business owners, workers, and consumers are advocating for greater fairness in the tax system. Together, we can press for real changes in the tax code that will help us make the fundamental shift required in the coming decade. Chuck Collins is co-founder of Wealth for the Common Good, a network of business and civic leaders, wealthy individuals, and partners that promotes fair taxation to support public investment in a healthy economy. Check out the “listening project” at wealthforcommongood.org.

	Taxes and the Common Good. By Chuck Collins. Sojourners Magazine, April 2011 (Vol. 40, No. 4, pp. 28)

by Chuck Collins

February 28, 2011

Originally published at OtherWords

We’re chumps unless we force Congress to stop tax haven abuse.

Instead of cutting state and federal budgets, the United States should crack down on the corporate tax dodgers thumbing their noses at us.

Across the nation, states are making deep cuts that will wreck the quality of life for everyone to close budget gaps that total more than $100 billion.

But there’s a more sensible option. Overseas tax havens enable companies to pretend their profits are earned in other countries like the Cayman Islands. Simply making that ruse illegal would bring home an estimated $100 billion a year.

The next time you read a story about some politician bemoaning that “there’s no money” and “we have to make cuts,” just point to artful tax dodgers in our midst.

They include some of the banks that trashed the economy but gladly took our tax dollars to stay alive after the economic meltdown. Bank of America. Wells Fargo. Citigroup.

Goldman Sachs took a $10 billion taxpayer bailout but then gamed its effective tax rate down to one percent through what its shakedown-artist executives call “changes in geographic earnings mix.” Shame on them. Pay up.

See that FedEx delivery van go by on the roads you paid for? Pay up FedEx! Don’t pretend you’re not making billions in the U.S. Don’t lie and tell us you made all those profits on some island with more palm trees than people. We know the demand for coconut delivery isn’t that big.

These corporations are heavy users of our taxpayer funded public infrastructure and property rights protection systems. They use our regulated marketplace, call upon our law enforcement system and judiciary to remedy disputes. They’re protected by U.S. police forces and firefighters. They enjoy all the privileges and benefits of tax-paying citizens. They just don’t pay their fair share for them.

So, ExxonMobil: the next time your gas station erupts in flames, why don’t you call the fire department on the Cayman Islands? Or when someone holds up the joint, how about calling the Luxembourg police, since that’s where you claim your profits so you don’t have to pay the taxes you owe Uncle Sam.

Hey, Pfizer. Without our remarkable taxpayer-funded system of patents and intellectual property rights protections, everyone and their brother would be making Viagra and undercutting your sales of little blue pills. Pay up!

Those of us who pay sales taxes and have income taxes withheld from our paychecks will bear the brunt of state and federal budget cuts in schools, public transportation, and recreational facilities. Our most vulnerable family members and neighbors will suffer thanks to cuts in mental health services, elder care, and Medicaid.

Oh yes, and children. Arizona is cutting health care for 47,000 children. California, New York and Mississippi are cutting K-12 education funding. Hey, kids don’t vote. Nor do they have corporate lobbyists. An estimated 900,000 jobs will be cut, including teachers, firefighters, police officers, and medical first responders.

Boeing, you want another contract for a taxpayer-funded military jet? Well, pay up! Pay up General Electric, Mattel, Dow Chemical, Hewlett-Packard, and Cisco. Yes, we know you pay some taxes. But look these children who are losing their health insurance and teaching aides in the eye. Tell them you’re paying your fair share.

These global corporations will complain that forcing them to pay their fair share of taxes will “kill jobs.” Let’s be clear: the patriotic businesses that currently pay their taxes and have to compete against these tax dodgers are the employers we want. It undercuts U.S. jobs for domestic banks, retailers, and manufacturers to have to compete against companies that can game the tax system.

The next time you’re waiting longer for a bus or train than you should, or someone you know can’t get timely mental health or drug treatment services, remember the tax dodgers. The next time your car hits a pothole or your kid’s teacher loses her job, remember the corporations that are using armies of accountants to lower their tax bills.

In a democracy, if we sit back and just grumble, we get what we deserve. We’re chumps until we wake up and force our members of Congress to stop tax haven abuse.

Originally posted at Common Dreams, December 9, 2010

In 2010, an essential moral test of a public policy choice is: Does it further concentrate wealth and power in the hands of a few?

Or does it disperse concentrated wealth and power and strengthen possibilities for a democratic society with greater equality, improved health and well-being, shared prosperity and ecological sustainability?

Does it move us toward Plutocracy or Peace and Plenty?

Supreme Court Justice Louis Brandeis said, “We can have democracy or concentrated wealth. But we cannot have both.”

By the Brandeis Test, President Obama’s “Tax Compromise” fails. By extending the Bush tax cuts for the wealthy and instituting a significantly weakened estate tax, more wealth will flow into the hands of the richest one percent and within that to richest one-tenth of one percent.

Most of us are aware of President Obama’s willingness to trade away his campaign promise to let the tax cuts for high income households expire. This will cost $60 billion next year and an estimated $700 billion if it is permanently extended.

But Obama also backed away from his position on the federal estate tax, which was to freeze it at 2009 levels (wealth exempted to $3.5 million, 45 percent rate). He now supports the Kyl-Lincoln amendment which would raise the exemption to $5 million ($10 million for a couple) and drop the rate to 35 percent. The cost difference between these two measures is at least $100 billion over ten years.

For the last generation, this richest one percent, with some admirable exceptions, has been using its considerable wealth and clout to push for public policy changes that have further concentrated wealth.

We are now in what I could characterize as “Death Spiral To Plutocracy.” As wealth concentrates, a hyper-organized segment of this wealth-holder class uses its wealth, privilege and power to change the rules of the economy to further concentrate wealth and privilege.

The logical progression of these policies is a society governed by wealth, a modern high-tech version of the Gilded Age of 1900.

For thirty years, liberal Presidents and Democratic Congress members have cut deals with a growing a bi-partisan (mostly Republican Party) Pro-Plutocracy faction. We’ve won victories for working families family leave, increased minimum wage, expanded health care, middle class tax cuts but the price has always been very expensive tax cuts for the wealthy and corporations. Under Clinton and Bush II, you couldn’t get anything faintly progressive done without a big bone to the wealthy or corporate class another capital gains tax cut or corporate loophole.

Such compromises have been central to the Obama political strategy: To get a stimulus package to save the economy, Congress allocates a third of $780 billion for tax breaks to corporations (and still didn’t get one GOP vote).

To get broader health care coverage for the uninsured, lawmakers surrender the “public option” that would have forced competition and cut into the power and profits of the health industry cartel.

To get a Consumer Financial Protection Bureau included in the June 2010 financial reform bill, lawmakers allow Wall Street to keep its risky casino operation in place laying the groundwork for future bubbles, meltdowns and bailouts.

This is a very costly strategy. It diverts trillions of dollars from the Treasury that could be used for long overdue investments in infrastructure, education, energy independence things that could truly boost the real economy. But worse, it sets up future political battles where the very wealthy and powerful corporations continue to have most of the ammo. In the post “Citizens United” campaign finance environment, this is premeditated surrender.

There are only a few ways to intervene to prevent the “Death Spiral to Plutocracy” and reverse course. They all require an engaged citizenry to clearly say: “We want an economy that serves everyone, not just the wealthy.”

The first intervention is through progressive income, wealth and estate taxes. We urgently need to reinstitute a progressive estate tax. Instead of cutting a deal to institute the Republican estate tax proposal that greatly weakens the law, Congress should press for the Responsible Estate Tax Act which would chip away at concentrated wealth.

The second is through robust campaign finance reform that closes the nexus between wealth and political power. Anything that puts a speed bump between wealth and political influence helps slow the Death Spiral.

The third is to mobilize the silent faction of the wealthy elites that actually see their stake in the common good. Not everyone in the wealth-holding class are actively lobbying to protect their power and privilege. We need a progressive counter-weight to organized defenders of power and privilege. The Wealth for the Common Good network is an inspiring start with several thousand business leaders and wealthy individuals advocating for policies to broaden prosperity and opportunity. They can counter the deep mythology around wealth creation and deservedness that often justify tax cuts for the wealthy and support the positions of engaged citizens.

Senator Bernard Sanders is proposing a filibuster against the tax cuts and he plans to read hundreds of documents about the dangers of extreme inequality in the U.S. Let’s all take a similar stand in our own lives and urge our elected officials to do the same.

By Chuck Collins

Originally published by Other Words

How would you spend $700 billion? Congress has to decide this month.

One simple solution would be for Congress to extend the Bush-era tax cuts for households with incomes over $250,000 for another decade. That would use up all $700 billion.

I feel bad for Congress. Lawmakers are under a lot of pressure to extend these tax cuts by New Year’s Eve when they expire. Of course, it’s similar to my teenage daughter who spent all weekend goofing off and was up late on Sunday night doing her homework. She’s feeling pressure, too.

Congress must decide by year’s end whether to give these high-income households an extravagant holiday package. These are the same fortunate people who gave Congress those memorable campaign contributions in September and October. Members of Congress, at least those who won their re-election campaigns, may be feeling generous.

On the other hand, opinion polls show that the U.S. public strongly supports letting the tax cuts for high-income households expire. We’ve got a list of other priorities, such as fixing our infrastructure, reducing our energy bills, and reducing the deficit.

Congress has been putting off this decision all year. But if lawmakers are mindful of America’s best interests, it shouldn’t take long to make their decisions.

It’s the choice between putting “chicken in every pot” or putting a Bentley in every Wall Street banker’s garage by extending tax cuts for the richest Americans.

Congress could extend tax cuts for the wealthy so that every affluent U.S. teenager could receive free Justin Beiber tickets once a year for life. Or lawmakers could extend unemployment insurance at a time when every available job has five applicants.

We need a combination of paying down the debt and making strategic investments that will strengthen our economy. Borrowing during hard times and making smart investments could boost future productivity and create good jobs in the process.

Such investments could include reducing our dependence on foreign oil, repairing our aging infrastructure, retrofitting buildings to make them energy-efficient, and ensuring that our children have the skills they need to participate in the new economy. These kinds of investments would pay for themselves quickly in increased productivity and tax revenues to pay down debts.

So, what could we do with $700 billion over the next decade?

Well, we could build 107,666 new green schools, at the estimated cost of $6.5 million per school. These could replace energy-inefficient schools, generate millions of jobs in the real economy, and create healthy learning environments for the next generation.

Or we could weatherize every home in the United States. The estimated cost of retrofitting all of our 129 million residential units to geographically appropriate standards is $650 billion. This would greatly reduce the need for imported oil and new power plants–and save residents billions of dollars in future energy costs.

How about fixing every substandard bridge? The American Society of Civil Engineers argues we need a 30-year plan to fund needed repair, renovation, or construction of our nation’s deficient bridges. Seven hundred billion dollars would cover the investment needed for the next 41 years.

We could fund a “G.I. Bill” for the next generation, providing 14 million college scholarships for eligible graduating seniors. Making a bold investment in the next generation, like we did with the post-World War II generation, would have enormous pay back.

Almost every state in the union is facing huge budget deficits. The Great Recession has taken a hit against state tax revenues. A percentage of the $700 billion could help strapped states maintain essential services, and employ enough police officers, fire-fighters, and teachers to keep their communities safe and constituents educated.

Congress is truly in a bind. Should the nation borrow $700 billion to help the wealthy, $826 billion if we include interest costs? Or should we pay down the deficit, help ourselves at the state level, and invest in the infrastructure for future prosperity?

Congress is waffling. Our representatives and senators are talking about a compromise of extending the high-income tax cut for two years. This would cost $67 billion.

What would you do with $67 billion? Lawmakers may need our help to make a wise decision.

Huffington Post, Nov 23, 2010

A Mighty Mobilization to Prevent a Democratic Cave-in is Underway

After the mid-term elections, the Obama Administration and some Democratic leaders signaled that they might compromise on extending the Bush-era tax breaks for wealthy households. Compromises include extending them for several years — or raising the income threshold higher to $1 million.

Two years ago, President Obama took enormous lumps for his campaign pledge to let the Bush tax cuts for higher income households expire (Remember “Joe the Plumber”?). And the polls consistently indicate that the public supports letting the tax cuts for the rich expire, even after Tea Party anti-tax campaigning and a drum beat of misinformation alleging that tax hikes will decimate small business.

Right after the election, the Obama Administration signaled that they would meet with GOP leaders on November 18th to capitulate. Fortunately, the meeting was postponed until November 30th. In the meantime, progressives have mobilized with unusual force and clarity.

Americans For Responsible Taxes is coordinating a national mobilization of organizations pressing to extend the middle class tax cut and let the income tax cuts for the wealthy expire.

Net roots groups such as Moveon.org and Progressive Change Congressional Committee, have gathered hundreds of thousands of signatures to petitions urging the President not to cave in. The Other 98 percent put up a clever graphic campaign illustration, “The $700 Billion Question,” juxtaposing choices such as “Fix every substandard bridge in America,” vs. “Fix America’s Gold-plated foot rests.” There is a plan to publicly display these petitions in Lafayette Park after Thanksgiving.

The small business community has pushed back against claims that letting the tax cuts expire would hurt small business. Coalitions of businesses, including Business for Shared Prosperity and Main Street Alliance have made the business case for letting the tax cuts expire. Business for Shared Prosperity issued a report demonstrating how few small enterprises would pay the tax increase. Thoughtful accountants like Brian Setzler have pointed out in op-eds that small businesses make hiring and business reinvestment decisions before their income is taxed.

Even some of those who would pay the higher taxes are stepping up to. Over 415 high income individuals, those who would pay the higher taxes, have signed a “Let Our Tax Cuts Go” petition at Wealth for the Common Good. And a new effort, a group of 45 “Patriotic Millionaires for Fiscal Strength” have issued a call to President Obama to let their tax cuts expire.

The lesson for progressive activists is we can’t depend on President Obama to do the right thing without substantial pressure. He still may compromise, but at least it won’t because progressives didn’t fight for the right thing. We knew that already, didn’t we?

Huffington Post, October 14, 2010

“Expecting high-end tax cuts to trickle down as job creation is about as reasonable as pouring gasoline on your hood and expecting it to fuel your car.”

– Lew Prince, owner, Vintage Vinyl, an independent music store.

Congress left town in early October without addressing the future of the Bush-era tax cuts that are scheduled to expire at the end of 2010. This sets up a “lame duck” session debate over their future in November and December.

After the mid-term election, anti-tax legislators will press to extend tax cuts for households with incomes over $250,000. Anti-tax activist Grover Norquist argues that allowing these tax cuts for higher incomes to expire would be a “body blow to the small business community.”

This isn’t the first time small businesses have been used as a prop by anti-tax lobbyists. The impact on small business is routinely used in arguments against policy that would require wealthy individuals to pay higher taxes.

Enter several refreshing new voices in this debate — the American Sustainable Business Council and Business for Shared Prosperity — networks of enterprises rooted in their localities. In their recent report, “Restoring Top Tax Rates Makes Sense for Small Business,” they make a business case for allowing the top tax rates to expire.

These business organizations point out that very few small businesses are effected. Less than 3 percent of tax filers with any business income earn over $200,000 as individuals or $250,000 as couples in a year — and many of these are Wall Street investment partners, big business CEOs paid to sit on boards of other big companies, and wealthy folks renting out investment properties and vacation homes.

If Congress wants to help small business, they argue, Congress shouldn’t spend $700 billion over the next decade in poorly targeted tax cuts.

“Letting high end tax cuts expire is a good business decision,” said Frank Knapp, CEO and President of the South Carolina Small Business Chamber of Commerce.

“Boosting our local economy by helping real small businesses create jobs should be our goal. We can either cut taxes for CEOs or Wall Street traders, or we can invest the money to generate more customers for small business by keeping teachers, police officers and other Americans on the job rebuilding the crumbling transportation, water, and energy infrastructure small business depends on.”

This longer view is echoed by other small business leaders who lament the decline in public infrastructure and investment that strengthens local economies. They challenge the tired orthodoxy that cutting taxes for high-income households always has a positive impact on economic growth and job creation.

Hiring decisions for small business are driven by consumer demand, not tax cuts. “As a fellow businessman once told me,” said Rick Poore, owner of Design Wear, an apparel manufacturer based in Lincoln, Nebraska, “Give me more customers and I’ll be forced to buy equipment and hire people to meet demand. Give me a tax break without more customers and I’ll just go to Aruba.”

Under President Obama’s plan to extend the 2001 income tax cuts for families with incomes under $250,000, all taxpayers will get a share of tax cuts. Higher-income taxpayers would get thousands of dollars more in tax cuts than middle-income households. The congressional Joint Committee on Taxation estimates that extending just the middle class tax cut would provide more than $6,300 in permanent tax relief for families earning more than $200,000, on average, compared to just $916 in tax relief for families earning between $40,000 and $50,000.

Restoring tax rates for high-income households won’t fix our economy. But it is a step in the right direction to fiscal sanity and being able to make investments that move us toward a sustainable economy. That’s good for businesses that are committed to their communities.

Originally published at YES! Magazine online.

By David R. Francis
The Christian Science Monitor
May 3, 2010

“When you spread the wealth around, it’s good for everybody,” presidential
candidate Barack Obama famously told an Ohio man, soon dubbed “Joe the
Plumber.”

With passage by Congress of healthcare reform, Joe should pay attention. The
redistribution of income favored by President Obama will soon begin in
earnest.

The new healthcare law will cost the richest 1 percent of families an
average $52,000 apiece, or $61.2 billion as a group, in fiscal 2016,
according to estimates by the conservative Tax Foundation. That’s largely
due to a Medicare tax hike on those earning more than $200,000 (singles) and
$250,000 (couples). That tax will apply for the first time to investment
income, which includes capital gains, dividends, and interest, which
generally make up a larger portion of the income of wealthier people.

There is more redistribution to come:

The Internal Revenue Service has stepped up audits of those making $1
million to $5 million by 33 percent in 2009, compared with 2008; and up 8.5
percent for those earning $10 million or more.

Uncle Sam has been boosting revenues by an unspecified number of billions
by cracking down on overseas tax shelters, including those in Switzerland,
used mostly by the affluent.

Congress must decide what to do with Bush tax cuts that favor the rich but
expire at the end of 2010. The Senate Finance Committee, under chairman Max
Baucus (D) of Montana, had not at this writing set a date to consider what
to do with the cuts or whether to revive the estate tax, which expired this
year.

Obama has proposed raising $364 billion over 10 years by raising the top
two tax rates from 33 and 35 percent to 36 and 39.6 percent. He suggests
boosting the tax on dividends and capital gains from 15 percent to 20
percent which could bring in an estimated $105 billion.

He aims for another $500 billion over the next 10 years by capping and
phasing out various exemptions and deductions.

Boosting taxes on the rich won’t cure the burgeoning federal deficit,
conservative groups say. It’s “a dangerous delusion,” because the rich
always find loopholes  or leave the country, notes Alan Reynolds, a senior
fellow at the libertarian Cato Institute in Washington.

“That is far out of any mainstream economic thought,” counters Craig
Jennings, director of fiscal policy at OMB Watch, a group that aims for
better balance in the federal budget.

Over the past 50 years, the wealthiest US taxpayers have seen their tax
outlays as a share of income drop enormously. In 1955, the top 400 incomes
paid 51.2 percent of their income in taxes; by 2007, that was down to 16.6
percent, notes an April study by Wealth for the Common Good, a group of
business leaders, high-income householders, and others pushing for “fair
taxation.”

Both Chuck Collins, an author of the study, and Mr. Jennings figure that
huge revenue could be raised by taxing the rich more: maybe as much as $100
billion a year from tax shelters alone, says Mr. Collins. The Bush tax cuts
for the wealthy cost the US Treasury $700 billion between 2001 and 2008, and
would cost another $826 billion in the next decade if they are retained.

A batch of tax measures hitting the rich might put their tax burden back to
the level existing in 1982, but not back to that of 1960, Collins reckons.

Learn how those of us in the philanthropy world can leverage billions of dollars towards causes we care about – by speaking up for fair tax policies. Register here for the call.

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.

By Bill Gates Sr. and Chuck Collins