Meijer Tax Break Would Come At Expense Of Key Services

I’m generally skeptical of many tax breaks given to corporations for development projects. All too often, the projects come at the expense of tax revenue that could be otherwise used to provide social services. In many cases, projects fail to deliver on their promises of economic and neighborhood revitalization.

Most often, the local media acts as a cheerleader for development projects and never questions the need for tax breaks nor do they explore the basis on which the request was made. However, a recent article in The Grand Rapids Press–“Michigan rejects Brownfield tax credits for 28th Street Meijer store, but Grand Rapids may grant project local Brownfield status“–recently caught my eye because it was one of the few articles that I have seen that actually says what it will mean to give Meijer a tax break.

Meijer is asking for “brownfield” status on a project to redevelop their 28th Street and Kalamazoo store. According to Meijer, a 1 acre parcel of land that will be used in the development is contaminated. Interestingly, Meijer admits that it was the source of the contamination–its leaky gasoline storage tanks contaminated the groundwater.

However, The Grand Rapids Press reports that if the tax break is granted, it will come directly from money that could be used to provide key services:

If approved, the money will come from new property taxes generated by the store over the next 27 years. Those new taxes would otherwise fund city services, local public schools, Kent County operations, the Kent County jail, the local transit millage and Kent County’s senior millage.

So, the choice is clear–we can either fund critical social services, or we can have a redone Meijer store.

Advertisements

Local/Michigan Headlines: Chrysler Closing Dealerships; New Study on Tax Breaks and Jobs

Here’s some of what has been happening in Grand Rapids and Michigan in the past twenty four hours:

If we missed anything, let us know in the comments.

Local/Michigan Headlines: Predictions that Michigan’s Economy will get even Worse; Grand Rapids Facing $7.1 million Revenue Decline

Here’s some interesting stories covering Michigan and Grand Rapids that were published elsewhere in the past 24 hours:

  • Economist predicts worst is yet to come for Michigan – An economist with the conservative Mackinac Center for Public Policy is predicting that unemployment will be between 17% and 20% by the end of the year.
  • House lawmakers weighing changes to bias crime laws – Lawmakers in the Michigan House of Representatives are hoping to pass legislation that would make it illegal to target a person because of their real or perceived involvement in any of a variety of protected classes, such as sexual orientation, gender identity, disability, veteran’s status, race or religion. Similar legislation passed last year but failed to pass in the Senate.
  • Supreme Court puts off decision on attire rules – The Michigan Supreme Court put off a decision on whether or not judges could force witnesses to show their faces in court. The question stems from a lawsuit brought by a Muslim woman whose case was dismissed because she would not remove her face covering.
  • Drop in state revenue sharing, sharp decline in income tax revenue mean deeper cuts in Grand Rapids – City Commissioners were told yesterday to expect a $7.164 million decline in overall revenue due to falling income taxes and less state revenue sharing money. In 2010, there will be a $7.34 million reduction.
  • Over 2 Million Michigan Families Spend More Than 10% On Health Care – Families USA reports that the number of insured people in families paying 10 or 25 percent of their pre-tax income on health care has climbed dramatically, a symptom of the runaway costs plaguing the U.S. health care system.
  • Grand Rapids joins vigil on anniversary of massive Iowa immigration raid – St. Joseph the Worker Catholic Church in Grand Rapids was part of churches nationwide that held vigils Tuesday night to mark the one-year anniversary of a huge immigration raid in Postville, Iowa. Those commemorating the raid called for immigration reform to prevent more raids and deportation proceedings. Sadly, this article from the Grand Rapids Press has nothing about the specific reforms sought.
  • Pair of rallies in Wyoming call on Americans to save manufacturing jobs, buy U.S. goods – The Grand Rapids Press reports on two rallies in Wyoming calling on elected officials to save manufacturing jobs and revive the middle class. The rallies focused on the closure of the General Motors plant in Wyoming and the need to make changes to the auto industry that protect worker–and union–jobs.
  • West Michigan, statewide foreclosure filings fall in April – Foreclosures are down in West Michigan and the state, but Michigan remains in the top 10 states in the country with some of the highest numbers of foreclosures.
  • Michigan Has Become a Buyer-Beware State – Banks, mortgage brokers, debt collectors, finance companies, home improvement contractors, new and used car dealers, auto repair shops, funeral homes, plumbers and electricians, and builders are all excluded from Michigan’s Consumer Protection Act. According to Blogging for Michigan, the state supreme court’s weakening of the law is driving people out of the state.
  • GOP Plays Politics With Michigan Infrastructure – Even with the release of a new report documenting the poor state of Michigan’s infrastructure, Republicans are unwilling to pursue additional funding for infrastructure because they don’t want to be associated with a “tax increase.” The reason? The 2010 elections.
  • MPA: Newspapers are “alive and well” – This piece on Michigan Liberal features some email correspondence between the Michigan Press Association (MPA) and members of the Michigan House of Representatives. In it, the MPA reminds legislators that many cities and counties are required to print notice of legal proceedings in newspapers. What does this mean when the newspaper business is continuing to decline? Is it just the newspaper industry trying to protect a source of interest that it has the monopoly on?

If we missed anything, please leave a comment.

Analysis: Obama Tax Proposals could be More Progressive

United for a Fair Economy has released a new report analyzing President Barack Obama’s tax proposals. In the report, the progressive organization argues that Obama’s tax proposals fall short of what is needed to implement a progressive tax structure and to reduce incentives for the kind of financial risk-taking that led to the current economic crisis.

The report compares Obama’s tax proposals–unveiled in his 2010 budget–with recommendedations from the Institute for Policy Studies (IPS). The report finds that the IPS proposals would generate significantly more revenue and curtail many of the practices that led to the financial crisis. Their proposals would increase the tax rates on the richest Americans to bring them closer to what the average taxpayer pays.

United for a Fair Economy argues that while the wealthiest taxpayers profited greatly over the past several years, their profits did not lead to greater stability and that the theory of “trickle down” economics failed:

Highly concentrated wealth did not lead to shared prosperity, higher incomes for most people, or a healthier economy. Instead it created a dangerous imbalance between investment capital and investment opportunities. An investor class had too many dollars for the legitimate investments available. Meanwhile, the consumer majority had too few dollars to buy the goods and services they required. The unbalanced distribution of our national income led to runaway debt for the majority and runaway financial speculation by the few.

As an alternative, the organization argues for a progressive tax system:

Progressive taxation – people paying taxes based on their ability to pay – is fundamental to a fair society and true democracy. Society needs some of everyone’s wealth to reproduce the infrastructure, services, public safety, education, and other public investments that support the economy and create prosperity. However, because the free market system within which we operate is both imperfect and produces harsh economic inequality, the market’s distribution of income cannot be the final word on economic justice. Progressive taxation changes the market’s distribution of income and therefore advances equality of opportunity.

The organization says that Obama’s tax proposals are moving in that direction, but they could be far better.

Obama’s tax proposals:

042009-taxes_obama.gif

IPS tax proposals:

042009-taxes_ips.gif

According to the analysis, the IPS proposals would help secure the economy and pay for public services, thereby adding much needed stability to the economy.

Petition Calls for 25% Reduction in Military Spending

Beyond War: Another Economy is Possible

Over the past few days, we’ve highlighted the percentage of income taxes that go to fund the military as well as President Barack Obama’s Defense budget, which actually increase the spending of the Bush administration.

United for Peace and Justice–one of the country’s largest anti-war groups–has a new petition online calling for a 25% decrease in military spending by 2010:

APPEAL TO PRESIDENT OBAMA AND THE U.S. CONGRESS: CUT MILITARY SPENDING 25% BY 2010

In the spirit of Martin Luther King, Jr.’s work to end poverty, racism, and war, we, the people of the United States, call on the Obama administration and the U.S. Congress to end the U.S. wars and occupations in Iraq and Afghanistan, and to address the economic and environmental crises by cutting military spending by 25% in 2010 and redirecting our tax dollars to housing, health care, education, green jobs, and clean energy.

The petition is part of the organization’s ongoing“Beyond War” campaign that seeks to connect the issues of war, racism, and poverty. The group is working to link the solutions to the current economic crisis to its long-term calls for ending the occupation.

It’s hard to say how effective the petition campaign will be, but it’s a lot easier than war tax resistance.

Where Do Our Federal Tax Dollars Go?

041409-npp_logo.jpg

A few weeks ago, we posted the War Resisters League’s annual chart that shows how much of federal tax money goes to pay for the military, today we are sharing another breakdown of tax spending from The National Priorities Project.

The National Priorities Project says that for every income tax dollar spent in 2008, 37.3 cents went towards military-related spending (military and military-related debt), while environment, energy and science-related spending split 2.8 cents.

For taxpayers in Michigan–who pay an average of $4,072 in federal income taxes–that money is spent in the following way:

  • Military $1,197
  • Health $867
  • Non-military Interest on Debt $485
  • Military Interest on Debt $322
  • Income Security & Labor $293
  • Housing & Community $155
  • Veterans’ Benefits $155
  • Food $147
  • Government $126
  • Education $122
  • Environment, Energy & Science $114
  • International Affairs $49
  • Transportation $41

As you can see, the majority goes for military spending–not meeting human needs.

Moreover, for those who criticize taxes from the right, taxes are at their lowest rates in decades, particularly for high income households.

54% of Tax Revenue Goes to Fund the Military

The War Resisters League has released its annual pie chart showing how federal tax dollars are used to support the military. This year, 54% will be spent on past and current military operations.

The United States accounts for 47% of the total world military spending on the military. The United States spending is more than the next 15 countries combined (12 of these countries are the United States’ allies).

The chart:

033109-military_tax.png

War Tax Activism

As with previous years, the War Resisters League encourages people to take action on the issue by flyering with the chart on Tax Day, engaging in a war tax boycott, or simply using the information as a way of talking about how little is spent on social services in the United States.

Headlines: Bailout Firms Owe $220M in Taxes; Obama Treasury Dept. Sought Bonus Protections in Stimulus Bill

Democracy Now Headlines:  Bailout Firms Owe $220M in Taxes; Obama Treasury Dept. Sought Bonus Protections in Stimulus Bill

Headlines from DemocracyNow.org, a daily TV/radio news program, hosted by Amy Goodman and Juan Gonzalez, airing on over 650 stations, pioneering the largest community media collaboration in the US.

Seeking Return of AIG Payouts, House OKs Tax on Bonuses

The House has overwhelmingly approved a measure to recoup taxpayer money by imposing a 90 percent tax on bonuses paid to employees at the insurance giant AIG. The tax would also apply to any company receiving more than five billion dollars in bailout funds. A Senate version would impose a lower rate than the House’s 90 percent. The vote came hours after AIG complied with a New York state subpoena and disclosed the names of employees who received bonuses.

Protesters Rally Outside AIG Offices

Public outrage over the AIG bonuses fueled the Congressional response. On Thursday, demonstrators gathered outside AIG’s offices in Washington, DC to decry the bonus payouts.

Amy Swanson: “It’s not fair to all the working people here who struggle daily for our health care, income, pay their rent, pay their bills.”

Joan Nemeth: “Being paid 15 thousand dollars an hour compared to your workers’ hours at eight dollars or 10 dollars or even 15 dollars, where’s the justice in that? There is no justice in being paid that much more.”

Francisco Cuison: “This bailout money is from the government, it’s taxpayers’ money, and it should be spread out to the people who need it.”

Geithner Admits Requesting Bonus Protection Provision

Treasury Secretary Timothy Geithner meanwhile has admitted his staff asked Senator Christopher Dodd to insert a provision in the economic stimulus bill that allowed AIG to hand out the $165 million dollars in bonuses. Geithner made the admission in an interview with CNN.

Treasury Secretary Timothy Geithner: “We expressed concern about this specific version. We wanted to make sure it was strong enough to survive legal challenge. But we also worked with him to strengthen the overall framework and his bill has this very important provision we’re relying on now to go back and see if we can recoup payments that were made that there was no legal ability to block.”

The New York Times reports Senator Dodd is drawing outrage from constituents in his home state of Connecticut for his role in the AIG bonuses controversy. Dodd has come under scrutiny for admitting he was asked by the treasury to include the bonus protection provision in the stimulus bill after initially claiming he didn’t know how it got inserted.

AIG Sues for Return of $300M in Taxes

As AIG faces the loss of its bonuses, it’s quietly filed a lawsuit to recoup more than $300 million dollars in what it says are overpaid taxes. The company says it overpaid the government in charges for using off-shore tax havens. The suit effectively means AIG is using U.S. taxpayer money to sue its majority owner, the U.S. taxpayer. The government owns an 80 percent stake in AIG following its $170 billion dollar bailout.

Holbrooke Served on AIG Board

Meanwhile a top Obama administration official is coming under scrutiny for his ties to AIG. Richard Holbrooke, the U.S. special envoy to Pakistan and Afghanistan, served on AIG’s board from 2001 until early last year. Holbrooke is believed to have collected up to $800,000 during his AIG stint.

Probe: Bailout Firms Owe $220M in Taxes

In other bailout news, a Congressional probe has found the top thirteen firms to receive bailout money owe more than $220 million dollars in unpaid federal taxes. Congressmember John Lewis of Georgia, the chair of the House Ways and Means subcommittee on oversight, says two of the companies owe more than $100 million dollars apiece. The review only looked at the top twenty-three bailout recipients, leaving open the possibility of further owed taxes from nearly 450 remaining companies. The inspector general overseeing the federal bailout says he will investigate whether recipient companies misled Congress on their tax obligations.

Citigroup to Spend $10M on Exec Offices

The bailed-out financial giant Citigroup meanwhile is coming under scrutiny for a ten million dollar plan to build new offices for top executives. Citigroup has received $45 billion dollars under the taxpayer-funded bailout.

Auto Parts Suppliers to Receive $5B in Aid

The Treasury Department is set to provide up to five billion dollars in financing to auto parts suppliers. The money will come through the government’s Troubled Assets Relief Program, or TARP. Auto parts suppliers have asked for up to $25 billion dollars amidst the auto industry decline.

Obama Apologizes for “Special Olympics” Gaffe

President Obama continued his criticism of AIG Thursday on the second day of his trip to California. Appearing on the Tonight Show with Jay Leno, Obama said the AIG case exemplified Wall Street excess.

President Obama: “The immediate bonuses that went to AIG are a problem but the larger problem we’ve got to get back to an attitude where people know enough is enough, and people have a sense of responsibility and they understand that their actions are going to have an impact on everybody and if we can get back to those values that built America then I think we are going to be okay.”

Obama’s appearance marked the first ever by a sitting U.S. president on a late-night talk show. He was later forced to backtrack after appearing to make fun of the disabled in joking about his bowling abilities. After Leno complemented him for a low bowling score, Obama said: “It’s like the Special Olympics or something.” In a statement, the White House said Obama didn’t “intend to disparage” the Special Olympics.

Obama Releases Videotaped Overture to Iran

President Obama meanwhile has released a videotaped appeal to the people of Iran. In a message timed to coincide with the Iranian holiday of Nowruz, Obama said he is prepared to meet with Iranian leaders.

President Obama: “My administration is now committed to diplomacy that addresses the full range of issues before us, and to pursuing constructive ties among the United States, Iran and the international community. This process will not be advanced by threats. We seek instead engagement that is honest and grounded in mutual respect.”

Iranian officials reacted to the tape by renewing calls for the U.S. to address Iranian grievances, including the 1953 coup that overthrew Iran’s nationalist government.

Obama Admin Seeks to Double Afghan Forces

The Obama administration is drafting a plan to double Afghanistan’s national security forces. According to the New York Times, senior administration officials say the U.S. is seeking a force of about 400,000 Afghan troops and police officers.

Israeli Soldiers Recount Killings of Unarmed Palestinians

In Israel and the Occupied Territories, several Israeli soldiers have provided new accounts of human rights violations during Israel’s attack on the Gaza Strip. The Israeli newspaper Haaretz published testimony from soldiers recounting the firing on unarmed Palestinian civilians and the intentional destruction of their property. The Israeli military says it will investigate.

UN Human Rights Investigator Accuses Israel of War Crimes

The allegations come as a top UN human rights investigator has accused Israel of committing war crimes during the Gaza attack. In an annual report, Richard Falk, the U.N. special rapporteur on human rights in the Palestinian territories, said Israel appeared to violate the Geneva Conventions code requiring forces to distinguish between civilians and armed combatants. Falk is calling on the Security Council to establish an ad hoc criminal tribunal to investigate alleged war crimes in Gaza.

Israel Arrests 10 Hamas Officials in West Bank

Meanwhile Israel has arrested ten Hamas officials in the occupied West Bank. Hamas is calling the move a blackmail attempt to pressure it for the release of the captured Israeli soldier Gilad Shalit. Talks on a prisoner exchange broke down this week in part over an Israeli demand that hundreds of the freed prisoners be arrested or deported upon their release. Israel has seized and jailed some forty elected Hamas lawmakers since Shalit’s capture in June 2006.

Bush Admin Aide: U.S. Knowingly Jailed Innocents Seized in Afghanistan

A former Bush administration official says the U.S. has continued to jail many Guantanamo Bay prisoners seized in Afghanistan despite knowing of their innocence. In an interview with the Associated Press, Lawrence Wilkerson, the former chief of staff to then then-Secretary of State Colin Powell, said the U.S. held on to the innocent prisoners in the hopes they could one day provide helpful intelligence. Describing the Bush administration mentality, Wilkerson said: “It did not matter if a detainee were innocent. Indeed, because he lived in Afghanistan and was captured on or near the battle area, he must know something of importance.” Wilkerson continued: “We need to put those people in a high-security prison like the one in Colorado, forget them and throw away the key. We can’t try them because we tortured them and didn’t keep an evidence trail.” Wilkerson says former Defense Secretary Donald Rumsfeld and Vice President Dick Cheney fought efforts to improve vetting of Afghan prisoners.

Judge Rejects Dismissal of CACI Torture Suit

The Pentagon contractor CACI has lost a bid to dismiss a torture lawsuit brought by four former Abu Ghraib prisoners. On Thursday, a federal judge made public a ruling rejecting CACI’s claim to be immune from prosecution. The case also names the company L-3 Services as well three individual contractors. One of the plaintiffs, an Iraqi farmer, alleges he was caged, beaten, threatened with dogs and given electric shocks during more than four years in U.S. detention.

El Salvador, Costa Rica Renew Cuba Ties

El Salvador’s new president-elect is vowing to restore diplomatic ties with Cuba. Mauricio Funes says he will reverse a policy that has not recognized Cuba since the 1959 Cuban Revolution.

El Salvadorian President-elect Mauricio Funes: “I said during my speech announcing running for the Presidency, I would reopen diplomatic relations with Cuba because, up to this date, we would be the only Latin American country who does not have diplomatic relations with Cuba and that’s what I plan on doing.”

Funes’ FMLN party won El Salvador’s election on Sunday, ending twenty years of governance by the U.S.-backed, right-wing ARENA party. His announcement comes as Costa Rica also reopened diplomatic ties with Cuba after nearly fifty years.

Documents: Reagan Officials Knew of Guatemalan Abuses

Newly de-classified material has provided further evidence the Reagan administration knowingly supported the Guatemalan government’s human rights abuses in its crackdown on guerrillas and leftist dissidents. The National Security Archive has released documents showing State Department officials directly reported that Guatemalan forces targeted anyone suspected of involvement with guerrillas or dissident groups. In 1984, then-U.S. Ambassador Frederic Chapin also reported labor activists were being “rounded up” for interrogation. More than 200,000 thousand people died under the U.S.-backed Guatemalan military between 1960 and 1996.

2012 GOP Hopefuls Reject Stimulus Aid

Back in the United States, Alaska Governor Sarah Palin has announced she’ll reject nearly half the federal stimulus funds allocated for her state. Palin cited her opposition to increasing the deficit and her desire to remain free of Washington control. The rejected spending includes $160 million dollars for education and $9 million dollars for public health. Palin becomes the third potential 2012 Republican presidential candidate to turn down stimulus funds, following governors Mark Sanford of South Carolina and Bobby Jindal of Louisiana. This week Texas Governor Rick Perry also rejected stimulus aid.

Decrying Homeless Policies, New York Housing Activists Occupy Vacant Building

Here in New York, dozens of people gathered at a vacant building in East Harlem Thursday to call for more affordable housing and better treatment of the homeless.

Protester: “We need housing now. I’m homeless. I’m tired of being homeless. When its $1,500 a month for a closet in NYC alone, in the Bronx they’re charging people $1,500. Section 8 is not there anymore. These housing programs that they give us are only 2 years. What happens after 2 years? We have to tell people today that we are tired of it. This is what we’re going to do: If there’s a homeless building we’re there, if there’s a shelter they’re not opening up to the homeless, we’re there. We need to change now.”

The event was organized by Picture the Homeless. The group says New York has up to 24,000 vacant apartments that could house every homeless family in the city.

Protests Mark 6th Anniversary of Iraq Invasion

And protests are underway in this country and around the world to mark the sixth anniversary of the U.S. invasion of Iraq. On Thursday, more than two dozen protesters were arrested at parallel events in San Francisco. Five of the arrested said they were Iraq veterans. Here in New York, hundreds gathered at Union Square and later outside the military recruiting station in Times Square. In Washington, D.C. a U.S. army veteran was arrested hanging up a sign near the White House that read “Veterans say NO to War and Occupation.” Protests are expected to continue in several major cities through the weekend.

Iraq War has Cost Grand Rapids $343.5 Million

The Iraq War Has Cost Grand Rapids Taxpayers $343.5 Million

As the anniversary of the United States 2003 invasion of Iraq approaches–and as the economy crumbles further–it’s worth looking at the cost of the Iraq War.

Thus far, the war has cost $604 billion while estimates are that the total cost over time could top $3 trillion.

For those of us living in Grand Rapids, our share is a $343.5 million.

That money could have been used for a number of more constructive uses, as shown by the National Priorities Project’s analysis of what the money could have bought:

  • 129,169 People with Health Care for One Year OR
  • 482,827 Homes with Renewable Electricity for One Year OR
  • 7,129 Public Safety Officers for One year OR
  • 6,218 Music and Arts Teachers for One Year OR
  • 35,329 Scholarships for University Students for One Year OR
  • 2,769 Affordable Housing Units OR
  • 256,882 Children with Health Care for One Year OR
  • 51,933 Head Start Places for Children for One Year OR
  • 4,853 Elementary School Teachers for One Year

This also doesn’t take into account more specific local needs, which could have been considered had the money not gone to sustaining the military occupation of Iraq.

Iraq Costs to Continue

While many people voted for Barack Obama in hopes that the spending on the Iraq War would end, earlier indications are that it will continue for some time.

When Obama spoke in Grand Rapids last October, he said that “ending a war in Iraq that is costing $10 billion per month” would be a way of funding different social priorities. However, Obama has pledged to continue the Iraq War for at least three more years, if not longer.

The continued presence in Iraq will continue to cost taxpayers significant amounts of money. Obama’s first budget includes more Pentagon spending than the Bush administration ever did. This amounts to $534 billion–an increase of $20 billion over last year. Total military spending will be near $664 billion.

Of this, the administration is planning to spend $130 billion on the war in 2010.

Don’t Forget the Human Toll

It’s also worth noting that while this piece looks at the financial costs of Iraq War for those of us living in the United States, the real price has been paid by the Iraqis. They have been killed by the hundreds of thousands, displaced from their homes, and seen their livelihoods destroyed.

Taxes on Wealthy Could Generate Revenue, Help Prevent Future Economic Crisis

030509-taxes.jpg

In the United States, the wealthiest citizens pay relatively little in taxes compared to the rest of us.

According to a recent article by the Institute for Policy Studies:

“As recent IRS data show, these elites are paying less in taxes – much less – than their deep-pocket counterparts used to pay. In 2006, the 400 highest-income Americans together reported $105 billion in income, an average of $263 million each.

Having trouble visualizing that? To pocket $263 million a year, you would have to take home over $60,000 an hour – and work 12 hours a day, seven days a week, for an entire 12 months. Sounds tiring, doesn’t it? But most of the top 400 make their fortunes buying and selling assets, everything from stocks and bonds to the exotic paper that helped inflate the housing bubble.

Uncle Sam taxes income from those assets – whether that income be capital gains or dividends – at a much lower rate than income from work.

The current top tax rate on “ordinary” work income sits at 35 percent. But dividends and capital gains from the buying and selling of most assets face only a 15 percent top rate. That’s why in 2006, America’s top 400 paid just 17.2 percent of their $263 million average incomes in federal tax.

Millions of middle-class American families, once you tally income and payroll taxes, pay far more of their incomes in tax. One particularly striking example from billionaire investor Warren Buffett: In 2006, he paid 17.7 percent of his income in total taxes. His secretary, who made $60,000, paid 30 percent of hers.

How did we end up with this sorry state of affairs? Lawmakers in Congress have spent the past several decades systematically slicing the tax rates on America’s top income brackets. Their rationale? Lower taxes on the top, free up capital for investment, and boost productivity.

In actual economic practice, those lower taxes have served instead to fuel speculation and increase budget deficits. For the ultrarich themselves, the tax savings have been nothing short of breathtaking. Back in 1955, America’s top 400 paid more than 50 percent of their incomes in federal tax, almost triple the rate of today’s top 400.”

A Solution to Revenue Problems: Increase Taxes on the Wealthiest

Late last month, the Institute for Policy Studies released a report that argues that taxes should be raised for the wealthiest Americans in order to fuel the economic recovery and address major national crisis like health care and global warming. Unlike what is frequently reported in the media and in Washington, the think-tank argues that this would make the U.S. economy stronger:

“Higher taxes on the wealthy, in our current economic situation, would actually have a positive impact. Appropriately targeted, these taxes would dampen the speculative frenzy of the last several decades. Over these years, grand concentrations of private wealth have been the engines behind the high-risk, high-return speculation that fueled economic bubbles in technology, housing, and commodities. Reducing these grand concentrations of wealth will help discourage future economic bubbles.

By the same token, carefully targeting higher taxes on U.S. corporations that have hidden dollars overseas to game the tax system would also raise federal revenues and, at the same time, help strengthen our basic economic foundation.”

Moreover, the report argues that increasing taxes would not impact consumption, which it says drives employment, thus refuting common arguments that raising taxes would result in lost jobs.

Specific Tax Changes Proposed

The report recommends seven specific tax proposals that it says would raise $500 billion a year in revenue and $3 trillion over five years.

These proposals include:

  1. Repeal tax breaks for households with annual incomes over $250,000: $43 billion per year.
  2. Tax speculative financial transactions: $100 2. billion per year. A modest tax on every transaction that involves the buying and selling of stock and other financial products — a penny, for instance, on every $4 traded — would both generate substantial revenue and, if calibrated to impose a stiffer burden on rapidly flipped investments, discourage economically reckless speculation. Several European countries already tax stock trans- actions.
  3. Eliminate the high-income tax preference for capital gains and dividends: $95 billion per year. 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.
  4. Levy a significant estate tax on grand fortunes: $60 billion per year.
  5. Establish a recovery emergency tax rate on extremely high incomes: $60-105 billion per year. High-income Americans currently face a top tax rate that runs less than half the top rate in effect over the half-century before 1981. Restoring a higher tax rate on high incomes could help finance our economic recovery.
  6. End overseas tax havens: $100 billion per year. Individual American taxpayers are now annually evading between $40 and $70 billion in U.S. taxes through offshore tax dodges. U.S. corporations use similar offshore schemes to evade another $30 billion.
  7. Eliminate subsidies for excessive executive compensation: $18 billion per year. As taxpayers, we subsidize over-the-top management pay through a host of tax loopholes. Congress should close these loopholes, starting with immediate action to deny all corporations, not just companies getting bailout dollars, tax deductions on any executive compensation that runs over $500,000, or 25 times, the pay of a company’s lowest-paid workers.