Taxing the Wealthy – TED Talk by Chuck Collins is an article on Wealth For Common Good.

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.

Chuck Collins: Obama Tax Deal Further Concentrates Wealth and Power: Stop the Death Spiral to Plutocracy is an article on Wealth For Common Good.

This lame duck Congress is actively debating the future of the Bush-era tax cuts that are scheduled to expire at the end of 2010. Most attention has focused on the fate of income tax cuts, particularly for those households with incomes over $200,000.

Equally vital, however, is the future of the federal estate tax, our nation’s only levy on inherited wealth. At the beginning of 2010, the federal estate tax was temporarily repealed. If Congress fails to act, the estate tax will return to its 2001 levels.

I support retaining the estate tax – and believe we have an opportunity to proactively shape it to be an intergenerational pact.

In the October issue of The Atlantic, Michael Kinsley argues in an article, “The Least We Can Do,” that my generation, the so-called baby boomers, has one last chance to leave the next generation a positive economic future by eliminating the massive level of public debt we have accumulated over the last 30 years and to demonstrate that we have not squandered the legacy of economic prosperity we inherited from the Greatest Generation.

Kinsley argues for a broad estate tax to skim a portion of the estimated $41 trillion intergenerational wealth transfer that will occur in the next 40 years.

Previous generations created a remarkable fertile ground for wealth creation and broad based prosperity. By taxing themselves and investing in educational institutions, scientific research, public infrastructure, and other social investments like health care and the G.I. Bill – our parents’ generation left us the preconditions for prosperity.

But over the last three decades, we’ve underinvested in this infrastructure, run up huge structural deficits, and tolerated the emergence of extreme levels of income and wealth inequality. Will this be our legacy?

The growing and long-term structural deficits cannot be addressed by spending cuts alone, especially those that undercut productively going forward. We need to identify sustainable sources of revenue that do not disproportionately burden lower and middle-income households.

At the same time, we should reverse of a generation of tax cuts for the wealthy and collect more from those who have benefited from our society and who can afford to pay more. We should discourage the build-up of wealth dynasties that undermine our American value of meritocracy.

As much as possible, we should tax activity that doesn’t serve a productive purpose in the economy – and minimize taxation on activity that is associated with economic growth.

Retaining a robust estate tax meets these tests and should be a pillar of our revenue system. An estate tax is levied at the intergenerational transfer of wealth, not at the time of its creation. It raises substantial revenue from those with the greatest capacity to pay.

Families should be able to pass on a modest amount of wealth to children and other heirs before an estate tax is applied. But as an estate exceeds $2 million in value, a gently graduated estate tax should apply at low rates – for instance at 10 percent. By the time fortunes exceed the $20 million level, substantially higher rates such as those historically associated with the estate tax should apply.

If such a broadly applicable tax were instituted over the next thirty years, as baby boomers exit the stage, this revenue would hugely help eliminate deficits and generate resources for the types of investments that previous generations made for us.

I’ve worked in a variety of fields during my career, as an attorney in private practice, government prosecutor and presently as an entrepreneur in the life science industry. I’ve seen what it means for Massachusetts to be a Commonwealth in the value of a strong judicial system, regulatory agency to thwart market excesses, a set of public and private educational institutions, and thriving companies that foster medical innovation and advances in healthcare quality. None of these valuable institutions emerge without significant public investment.

Congress should reinstate the estate tax at the end of this year. It could be the most important gift we make to future generations.

Howard Brick is the COO and a director of Medpanel LLC.

Howard Brick: Reinstate the estate tax is an article on Wealth For Common Good.

In the coming months, Congress will be decide the future of the federal estate tax and whether or not to continue substantial tax cuts for the very wealthy.

As someone who would personally benefit from these tax cuts, I believe Congress should act responsibly and reverse the generous tax breaks they gave to wealthy families in 2001 and 2003, letting income tax cuts for those with annual incomes over $235,000 expire at the end of this year.

They should also reinstate the federal estate tax, our nation’s only levy on inherited wealth. I believe the estate tax, which temporarily expired this year, is a fair and responsible way for those of us who have grown wealth in the U.S. to pay back the society that created the fertile ground for wealth creation.

My conservative friends ask: Why do you feel you have an obligation to society? My progressive friends ask: Why don’t you give more money to charity instead of the government? My answers to both questions are rooted in the history of public investments that directly and indirectly benefited my family.

Paying Back Public Investments

In 1900, my great-great-grandfather co-founded a mining and construction business in Utah. Shortly after the business was created, it received a number of federal grants for large infrastructure projects, including the Hoover Dam, the largest construction project ever tackled at the time.

My family’s business was built upon a common wealth of public resources, scientific knowledge, and shared institutions. Those of us who have benefited from these investments have an obligation to reinvest in the common good.

During the 1930s, our family enterprise expanded thanks to Depression-era public works projects. By mid-century, the company, under my grandfather’s leadership, had become one of the most profitable mining and land development firms in the country.

Our family business was strengthened by a public infrastructure of roads, ports, and bridges that allowed us to easily transport materials. We also benefited from our nation’s unparalleled system of property laws and legal remedies, designed to protect private property and investment.

These public inputs have benefited the majority of enterprises. Where would today’s technology companies be without public investments in scientific knowledge, computer research, and the Internet? Where would many businesses be without our education system, transportation system, and the millions of direct and indirect subsidies that create the fertile ground for a healthy and vibrant economy?

My family’s business was successful thanks to hard work. But it was also built upon a common wealth of public resources, scientific knowledge, and shared institutions. I believe that those of us who have disproportionately benefited from these investments have a corresponding obligation to reinvest in the common good.

Why Taxes, Not Charity?

I’m a strong believer in charitable giving, which when done well can advance innovative approaches to social problems. Maintaining a progressive tax system will not diminish charitable giving—in some cases, it will encourage it. Many of the wealthy households touched by the proposed higher taxes already give substantially to charity, and a return to a fairer level of taxation on those households is unlikely to substantially reduce their level of giving.

What is Real Wealth?

We’ve been measuring happiness in all the wrong ways.

More importantly, taxes and charity pay for different things. The public investments that have built our infrastructure and ensured greater opportunity were made mostly with tax dollars, not charitable contributions.

Our tax dollars pay for big public investments such as water treatment systems, rail links, food stamps, environmental protection, national defense, bridges and roads, registries of deeds, and more. Philanthropic dollars contribute to a different infrastructure, often in the form of hospitals, cultural institutions, and colleges and universities.

We need both of these types of investments. But there are many things that philanthropy is not equipped to do—and yet are critical to the functioning of our society. Wealthy individuals should not aggressively avoid paying their fair share towards the commonwealth in the form of taxes.

This is one of the main reasons why I believe we should rebalance the tax code and allow the Bush tax cuts expire at the end of this year. This would represent a small increase on my taxes, but could raise an estimated $45 billion a year for the nation as a whole.

Toward a Fair Estate Tax

We should also reinstate the federal estate tax, which was allowed to expire at the beginning of 2010. I support the Responsible Estate Tax Act, which would reinstate taxes on the estates that wealthy individuals leave behind. It would also exempt farms and small businesses, institute graduated rates on larger estates, close loopholes, and encourage conservation easements. The Act also imposes a “billionaire surcharge” rate of 65 percent on estates over $500 million.

Reinstituting a progressive estate tax would be reasonable and fair. The Responsible Estate Tax Act would exempt estates below $3.5 million, so it would be paid by fewer than one in two hundred estates. It would generate at least $264 billion over the next ten years.

Raising taxes on middle income households will have a negative impact on the economy, but maintaining the estate tax will not. As former Treasury Secretary Robert Rubin and venture capitalist Julian Robertson recently wrote in The Wall Street Journal, “An estate tax can provide revenue—with little, if any, adverse supply-side economic impact—to fund deficit reduction, additional public investment or added assistance to those affected by the economic crisis.”

More importantly, maintaining a fair estate tax is the right thing to do. It disperses concentrations of wealth and power that undercut our democratic society. It encourages charitable giving and also raises substantial revenue for public investments that will enable future generations to share prosperity. For my family, it is one of the important ways we pay back the society and commons that make private wealth possible.

Naomi Sobel: Raise My Taxes, Please is an article on Wealth For Common Good.

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.

The Nation: The Plutocracy Prevention Act is an article on Wealth For Common Good.

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.”

NYT: What an estate looks like to the taxman is an article on Wealth For Common Good.

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.

Huff Post: Resurrect the Estate Tax is an article on Wealth For Common Good.

May we all thrive
by Libbey Goldberg

If all of us are to thrive in the United States, we need accountability and support from our public systems of education, health, and transportation —the very systems that we invest our hard-earned tax dollars in.

Unfortunately, the 2001 Bush-era tax cuts gave $700 billion in breaks over eight years to those with annual incomes more than $250,000. The government borrowed money to make these tax cuts possible.

These cuts are due to expire at the end of 2010, but Congress is considering a proposal that would extend them. I come from a family that will pay more if the cuts expire, and I’m urging our lawmakers and President Obama to allow let this happen. We can’t allow these irresponsible tax breaks for the wealthiest Americans continue.

If restored, these taxes could bring in an estimated $45 billion in annual revenue. That is money that could be far better spent on investments in our schools, infrastructure, research institutions and social services.

The story that I was told about how my family accumulated its wealth is a common one: “My grandfather grew up poor, the son of produce peddlers, Jewish refugees from Poland. He made his own fortune through sheer will, hard-work, shrewd business sense and intelligence.”

I know that this story is in large part true, but there are gaping holes. The truth is that my grandfather would never have achieved his success without the public education system, not to mention his white skin privilege, albeit Jewish. He would never have achieved this success without the community of Jewish professionals who had also depended on public infrastructure for their success. Attending the University of Texas opened all the doors to upward class mobility for my Papa Billy.

By allowing our public institutions to wither away without proper funding, we are closing the door for others to achieve success. The idea of the American Dream, pulling ourselves up by our bootstraps, is always an incomplete story.

Those of us who have disproportionately benefited from public institutions have a special responsibility to make sure that others can also benefit. Unless all of us are thriving, none of us is truly thriving. It is immoral and short sighted for wealthy families to evade paying their share of taxes so that their wealth accumulates more and more, being passed on through the generations. For this reason, I also urge Congress to restore the estate tax, which is suspended for the duration of this year, thanks to a 2001 Bush administration maneuver.

The wealth that I inherited is supposed to be “just for me,” according to my father. I see it differently. In order to take care of myself, I must also take care of my community. By investing in public institutions and community organizations, I am helping to create a society where everyone has enough, not just a select elite.

May we all thrive.

Libbey Goldberg is a chef and social justice activist living in Oakland, California

RG blog: May we all thrive is an article on Wealth For Common Good.