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

By David R. Francis, Staff Writer

Raise my taxes, says millionaire Chuck Collins.

The scion of the Oscar Mayer family supports a House panel’s healthcare plan that would boost taxes for families earning more than $350,000 a year. He also advocates ending the Bush tax cuts for the rich right away, rather than when they expire at the start of 2011, and closing foreign tax havens to Americans.

Although the financial burden would be sizable, Mr. Collins is busy urging other wealthy Americans to sign a tax-me petition.

“The good news is there are still people out there willing to pay for the common good,” says Collins, whose nonprofit Wealth for the Common Good is collecting the names.

As of July 21, some 210 wealthy people had signed. Collins hopes to get more than 1,000 signatures before delivering it to President Obama and House leaders.

The idealist wealthy are “not as small a minority as one might think,” says Eric Schoenberg, an investor and Columbia University Business School professor, who also signed the petition.

It is “reasonable and fair” for “the people who have done best out of the economic system in the last 20 years” to pay in extra taxes the bulk of the cost of healthcare reform, says Mr. Schoenberg. “Healthcare ought to be a basic right of citizenship.”

His research suggests the really rich are more willing than the modestly rich to share their wealth for the common good.

There are other indications of idealism among business people and the well-to-do:

•Responsible Wealth, a nonprofit group that includes several wealthy members, has been advocating for years that the estate tax be retained.

•A group of business owners and leaders called Business for Shared Prosperity welcomed the July 24 rise in the federal minimum wage from $6.55 to $7.25 an hour, although it costs their firms more money.

“It is an unsustainable and dangerous downward spiral to push American workers into
poverty and expect taxpayers to pick up the bill for the consequences,” states Margot Dorfman, CEO of the U.S. Women’s Chamber of Commerce.

But wait! Don’t these taxes on the rich burden the very people who start the most firms and create the most jobs? Statistics suggest the burden is not overwhelming. Households with incomes over $250,000 have saved more than $700 billion from the Bush tax cuts of 2001 and 2003. The proposed graduated surtax under the House Ways and Means Committee’s healthcare plan would take back $544 billion over the next 10 years, providing about half the cost of the entire plan, calculates the Joint Economic Committee of Congress.

What that means is that even after digging deeper to help pay for expensive healthcare reform, the wealthy would still be paying less in taxes than during the Reagan administration – and far less than in President Eisenhower’s time.

In 1955, the top 400 US taxpayers paid 51 percent of their average income of $12.3 million (adjusted to 2006 dollars), according to Sam Pizzigati, a fellow at the Institute for Policy Studies in Washington. In 2006, the most recent data available, the top 400 paid 17.2 percent of their average income of $263 million in federal taxes.

That 17.2 percent rate is also “much lower” than tax rates for the rich in Britain, France, Germany, or Japan, he adds.

Nor, some economists note, did the US economy grow more slowly when taxes on the rich were far higher in the 1950s and 1960s – or grow more swiftly after the Bush tax cuts.

Tom Petruno, Los Angeles Times

Upper-income earners who actually want to pay higher taxes have launched a public campaign calling for an immediate rollback of the tax cuts enacted under President George W. Bush.

The group, which calls itself Wealth for the Common Good, believes that people who have taxable income of more than $235,000 a year should support restoring their top federal income tax rate to 39.6 percent from 35 percent – and now, not in 2011, when the higher rate is scheduled to return anyway.

From their Web site:

“Our country is facing the worst economic challenge since the Great Depression and an urgent need to make a long overdue investment in bringing jobs and stability back to our communities. This investment should be paid for, in part, by repealing the Bush-era tax cuts our country cannot afford.

“Those of us with taxable incomes over $235,000 benefited from the upside of the economy during the last decade and profited for eight years from a 2001 tax cut. Now is the time to give back.

“We would see a minimal tax increase – from 35 (percent) to 39.6 (percent), a rate still far lower than the one under President (Ronald) Reagan – but the increased revenue would raise an estimated $43 billion per year.”

The group’s founders include Chuck Collins, who inherited some of the Oscar Mayer meat fortune and who has long been involved in agitating on income-inequality issues.

He may be best known for co-writing the 2003 book “Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes” with Bill Gates Sr. The book made the case for retaining the federal estate tax.

This month, Wealth for the Common Good sent its request, including a petition with more than 1,000 signatures, to President Obama and to House and Senate leaders.

The program is free and open to the public, but please RSVP to dfelder@mecep.org

The Maine Center for Economic Policy advances public policies that help people prosper in a strong, fair and sustainable economy. We advance this mission through high-quality research, analysis, citizen education, and coalition building. MECEP is an independent, nonpartisan organization. To learn more, visit www.mecep.org

By Chuck Collins

When members of Congress proposed paying for expanded health care with a tax surcharge on America’s wealthiest citizens, the attack was swift but predictable. Taxing the top was

Latin Public School in Boston is the oldest public school in the U.S.

labeled “class war,” n attack on the successful, and bad for business and the economy.

So it was refreshing when the high-income members of a new network –Wealth for the Common Good (WFCG) –stepped forward to essentially say “Sure, raise our taxes.” Why? Because it’s fair, and because they can afford it.

“In hard times it is important for Americans to come together and unite over the idea that medical care ought to be a basic right of citizenship,” said former investment banker Eric Schoenberg, a member of the organization. “It’s only fair for those of us who have benefited the most from this system to contribute the most.”

Over the last 30 years, our economic policies have slowly changed to disproportionately benefit our nation’s top-earners and concentrate wealth into the hands of a few. The members of Wealth for the Common Good, a network of business leaders, entrepreneurs, professionals, and other high-income individuals, are among those who have benefited from such policies. Their goal now is to help shape policy so that it benefits people of all income levels

Wealth for the Common Good went public on July 29th with their public call to immediately reverse the Bush-era tax cuts on households with incomes over $235,000. Thousands signed the petition, including hundreds of high-income individuals who would personally pay the tax.

Many members directly support the health care surcharge, but their objectives go beyond that proposal. The broader debate over taxes will be heated in the coming years as we see the expiration of the Bush-era tax cuts and face the consequences of an unprecedented national deficit. Wealth for the Common Good, advocating for a rebalanced tax code, wants to be part of the debate.

Changing the conversation is key to this effort. Arul Menezes, a principal architect at Microsoft and member of the initiative, acknowledged that fact when describing his own financial success during a Wealth for the Common Good press conference.

“I could choose to tell my story this way: ‘I arrived [in the United States from India] with $250 in my pocket, and got where I am based entirely on my hard work.’ This is true, but it’s not the whole truth.” Menezes then gave “a more honest reckoning” that took into account his publicly funded education, government investments in the technology industry, and all of the benefits he gains from “schools, hospitals, roads, bridges, parks, and civic amenities that were built and paid for by previous generations…[that] had the collective will to invest in their future and the future of their children.”

In the coming months, Wealth for the Common Good is leading focus groups on a number of proposals that would raise revenue, such as eliminating tax preferences for capital gains and subsidies for excessive executive compensation. Later this fall, it will amplify the voices of small business owners that want to close overseas corporate tax havens.

“Our current tax structure is regressive and unfairly burdens those in the middle and bottom tiers,” said Todd B. Achilles, a WFCG member and a leading executive in the telecom industry.  “Ensuring that everyone has an opportunity to be successful and pursue their dreams means ensuring that each and every American contributes appropriately to the nation’s well-being.”