Tax Reform – R&R – Reachout and Rebuild

The Movement for a Wealth Tax in Washington State

David Posnett — Tue, 09 Feb 2021 16:04:48 +0000

The Movement for a Wealth Tax in Washington State

By Geraldine Maslanka

Legislators in Washington state are taking bold steps towards instituting a state-level wealth tax. The proposed tax is a 1 percent levy on wealth over $1 billion, applying to fewer than 100 households in the state.

According to the state’s Department of Revenue, the tax would raise an estimated $2.25 billion in 2023 and $2.5 billion in 2024. At a February 2 hearing, House Finance Committee chair Noel Frame said it’s time to put a new “tool in the toolbox for comprehensive structural tax reform.” The state’s current tax system places an enormous burden on Washington’s working class.

At the February 2 virtual hearing, over 40 witnesses lined up to testify in support of HB1406, an act to “improve the equity of Washington state’s tax code” by creating a wealth tax and “taxing extraordinary financial intangible assets.”

Many witnesses pointed out that Washington state has one of the most regressive tax systems in the country, with no income tax, a weak corporate tax system, and an overdependence on sales taxes. “Low income families pay 18 percent of their income in taxes while the very wealthy pay less than 3 percent,” observed John Burbank from the Economic Opportunity Institute in his testimony.

“This state is a wonderful place to raise a family and to plant roots,” said Mary Curry, a Tacoma resident and owner of a day care center, in testimony before the committee. “But how do I build when the tax laws are so harsh to the working class such as myself?”

Gerri

How to Climb out of the Financial Rut in NY State

David Posnett — Sat, 06 Feb 2021 20:16:07 +0000

On Feb. 5th R&R heard a presentation by Rebecca Saletan and Nick Lyndon on “The Invest in our New York Act”. It is a package of 6 bills for the State of NY. Together they are proposed to raise more than $50 billion/year in sorely needed revenue:

TAXING HIGH INCOMES

Progressive Income Tax S2622: Creates a tax system where New Yorkers pay a higher rate if they earn significantly more money.RAISES $12-18 BILLION

Right now, individuals with incomes between $21,400 and $1,077,550 are all taxed at roughly the same rate of 6.5%. Higher earners should pay a higher rate. This bill would raise the tax rates on the top 5% of income-earners ($300,000 and above).

Sponsored by Senator Robert Jackson and Assemblymember Demond Meeks

2. Capital Gains Tax A3152:

Taxes income from investments like stocks same as wages.RAISES $7 BILLION

Rich people make much of their income from investments like stocks, not from their jobs. The federal government taxes investment income at a much lower rate than wages. New York can fix this by adding a tax to investment income that’s equal to the tax break the rich are getting from the federal government.

Sponsored by Senator Gustavo Rivera and Assemblymember Ron Kim

TAXING WEALTH

3. Heirs’ Tax S3462 :

A progressive tax on large sums of inherited wealth.RAISES $8 BILLION

Many rich people also make their money from inheriting enormous sums. They can make up to $5 million in a year through inheritance and pay no tax on it. Inheritances of less than $250,000, family homes up to $2 million, money from pensions or retirement funds, and family farms will not be affected.

Sponsored by Senator Jabari Brisport and Assemblymember Michaelle Solages

4. Billionaires’ Tax:

An additional tax on billionaires, and constitutional amendment to allow a wealth tax. RAISES $23 BILLION IN THE FIRST YEAR, $1.3 BILLION PER YEAR THEREAFTER

New York already has a wealth tax: it’s called a property tax. Homeowners pay it every year. But if you own a massive stock portfolio, it is not taxed. This tax would treat billionaires’ gains in wealth as income, and these increases would be taxed at income tax rates. Additionally, a constitutional amendment would allow the state to tax large sums of intangible wealth—i.e., stocks, bonds and company ownership— in the future.

Sponsored by Senator Jessica Ramos and Assemblymember Carmen De La Rosa

TAXING CORPORATIONS AND THE FINANCIAL SECTOR:

5. Wall Street Tax : A small tax on Wall St. financial transactions.RAISES $12-29 BILLION

Unlike other major financial centers like London and Hong Kong, New York doesn’t place any tax on financial transactions. The financial industry is the state’s largest industry: it makes up 30% of our economy. This bill places small taxes on trades of stocks, bonds and derivatives; a similar tax on stocks existed in NY until 1981.

Sponsored by Senator Julia Salazar and Assemblymember Yuh-line Niou

6. Corporate Tax S2833: A bill to repeal the Trump tax cuts, by restoring taxes on the profit a corporation makes each year. RAISES $9 BILLION

In 2017, Trump’s tax cuts reduced the federal corporate profit tax rate from 35% to 21%, and cut taxes on real estate businesses by 20%. New York can end these tax breaks in our state so that businesses pay the same tax as they did three years ago.

Sponsored by Senator Brad Hoylman and Assemblymember Anna Kelles

There is a detailed discussion with over 50 slides which is well worth reading (and beyond this summary):

https://docs.google.com/presentation/d/1MX3-gtlQzBi0nRxNmfTKcziy7YjfB4Y6jnT5Gj-8jVo/edit?usp=sharing

Why are Drug Prices Going Through the Roof?

David Posnett — Fri, 01 Dec 2017 01:51:41 +0000

By Francesca Rheannon, Journalist

Writer’s Voice with Francesca Rheannon, Producer and Host

Twitter Accounts: @WritersVoice

On Facebook & LinkedIn

http://www.writersvoice.net/2017/11/wendell-potter-gerald-friedman/

Why are drug prices going through the roof? We talk with Wendell Potter about Big Pharma and what his new investigative journalism site, Tarbell, is finding out about it.

Critics say single payer health insurance would be too expensive. We talk with economist Gerald Friedman, who developed Bernie Sanders’ Medicare for All plan. He answers his critics point by point.

Wendell Potter

Are Americans getting swindled at the pharmacy? We pay an average of 300% more for medications than people in other major countries. And the costs just keep going up.

And of course, it’s not just drugs. We pay far more for all aspects of health care — insurance, doctors and hospital fees, tests and drugs — than other nations. But we aren’t getting our money’s worth.

Wendell Potter is a former health insurance industry executive turned whistleblower. We spoke with him several years ago about his book DEADLY SPIN, about how the health insurance industry skews the playing field in its favor, making sure to kill efforts at reform while getting laws passed that fatten its bottom line. His book NATION ON THE TAKE showed how corporate America in general does the same thing.

Now Potter has started a nonprofit investigative journalism site, Tarbell, to expose the inner workings of the healthcare industry. Tarbell went online in November with a series of investigative articles by different journalists about the influence of Big Pharma over our political process. We called up Wendell Potter to learn about the results of those investigations and to find out more about Tarbell itself.

How Big Pharma Keeps Drug Prices High

Gerald Friedman

During the presidential primary season last spring, we spoke with University of Massachusetts economist Gerald Friedman about Bernie Sanders’ Medicare for All plan. Friedman was the architect of that plan.

At the time, some mainstream economists published an op-ed in the New York Times saying the plan was too expensive. Then the Urban Institute came out with a study claiming that the Sanders’ plan would cost an extra $32 trillion. And candidate Hillary Clinton declared that single payer health care would “never, ever happen.”

Since then, Sanders has come out with a Medicare for All Senate bill that has actually garnered the support of sixteen Democratic senators, including some potential presidential hopefuls. Among them are Elizabeth Warren and Cory Booker.

With the GOP continuing its assault on health insurance coverage — the latest being the so-called Tax Reform bill that would collapse Obamacare and take billions out of Medicare — a push for single payer by an outraged electorate might actually gain steam.

So, would single payer really break the bank? We called up Gerald Friedman to ask him to address criticisms of his plan so we could make up our own minds. To listen to the interview on a podcast click on this link http://www.writersvoice.net/2017/11/wendell-potter-gerald-friedman/ and then click on the player to hear both interviews.

Your Coming Tax Increase

David Posnett — Thu, 14 Sep 2017 17:58:28 +0000

Your Coming Tax Increase

By David LeonhardtSEPT. 7, 2017

President Trump speaking about tax reform at an event in North Dakota on Wednesday. Credit Doug Mills/The New York Times

A 19th-century economist named Adolph Wagner made a prediction that came to be known as Wagner’s Law: As societies became wealthier, their taxes would rise. They would rise because people would want more of the services that government tended to provide better than the private market, like national security, education, medical care and a guaranteed retirement.

Wagner’s Law has proven truer than not, but there are still many people who would like to pretend otherwise. Specifically, they wish we could summon a country with a strong military, good schools, health care and comfortable retirements — but falling taxes. It’s a nice fantasy.

Yesterday, Larry Summers, the economist and former Treasury secretary, gave a lunchtime presentation in Washington laying out the statistics that debunk the falling-taxes fantasy. He effectively updated Wagner’s Law for the United States in 2017.

“With the same values and preferences, and the same basic attitude about government activity versus private activity,” Summers said, “you should expect government to be larger in the future than it has been in the past.”

There are four main reasons, he argued:

• One, society is aging, which calls for greater spending on retirees. The ratio of elderly Americans — those expected to be in the last 15 years of their lives — to all other Americans will rise about 50 percent from 2010 to 2030.

• Two, inequality has soared, with living standards stagnating for the middle class and poor. Taxes push back against inequality.

• Three, labor-intensive services, like education and medical care, have become more expensive, and they also tend to be the areas where the government spends money.

• Four, American military spending has not kept up recently with the spending by our main rivals, including China, Iran and Russia. This trend shouldn’t continue forever, Summers said.

I find his case compelling. Even if you disagree in one particular area — say, you favor more private-sector education, or a weaker military — the combined costs are so large that the argument holds up. That’s part of the reason that taxes on the wealthy should rise, and big tax breaks — like those for home ownership and employer health insurance — should be reduced.

I don’t mean to suggest that taxes should always be rising and that government will eventually take over the economy. Capitalism clearly has worked much better than any alternative. And there are times — for example, after a war or when a population is becoming younger — that taxes should fall. It’s also important to cut government where it’s wasteful.

But believing in capitalism is different from believing that government cannot grow. Modern capitalism depends on a well-functioning government. Capitalism has already grown a lot over the last century, across this country and much of the world, and the world is a vastly richer place than a century ago.

“If we want to maintain traditional American values,” as Summers said, “government will need to be significantly larger.”

For more details on the numbers, I recommend a new paper by Paul van de Water of the Center on Budget and Policy Priorities, which hosted Summers’s presentation. I first learned of Wagner’s Law from the writer Matt Miller.

In North Dakota yesterday, President Trump tried his best to summon a magical world in which life keeps getting better and taxes keep falling. His pitch “is divorced from reality,” Katrina vanden Heuvel says in The Washington Post. Richard Rubin of The Wall Street Journal called the speech a big step away from tax reform and toward a simple tax cut.

Remember: If Trump succeeds in cutting taxes for the wealthy, taxes for everyone else will eventually need to rise even more.

Where the truth lies in Donald Trump’s tax reform pitch

David Posnett — Thu, 31 Aug 2017 13:59:47 +0000

During a speech on tax reform on Wednesday, President Donald Trump recalled memories of President Ronald Reagan’s rewrite of the tax code in the 1980s.

“In 1986, Ronald Reagan led the world by cutting our corporate tax rate to 34%,” Trump said in his Springfield, Missouri, speech. “Over the past 30 years, the average business tax rate among developed nations fell from 45% to less than 24%. … They are taking us, frankly, to the cleaners. So we must — we have no choice — we must lower our taxes.”

This is core to Trump’s pitch that the tax rate on corporations be lowered from 35% to 15%. But while 35% is indeed among the highest in the developed world, it is actually nowhere near what most companies pay.

In 2016, the nonpartisan Government Accountability Office found at least two-thirdsof corporations did not pay any federal income tax between 2006 and 2012. One-fifth of America’s largest corporations who reported a profit in 2012 paid no income tax that same year.

A study released earlier this year found the effective tax rate for Fortune 500 companies that were consistently profitable is 21.2%. Eighteen of the more than 250 companies analyzed paid no corporate tax over an eight-year period; 48 paid less than 10%.

In fact, as Trump argues American companies leave the U.S. because of high tax rates, the percentage of federal revenue coming from corporations has fallen by two-thirds since 1950.

The U.S. still has one of the world’s higher corporate tax rates, but not to the extreme degree Trump has consistently alleged. American companies actually pay slightly less in overall taxes than companies in comparable countries.

Google paid less than 17% in 2015 and large drug manufacturers paid even less. General Motors paid a negative 34.3% tax rate.

How do companies pull this off? Deductions and tax breaks.

According to a Center on Budget and Policy Priorities study, while the corporate income tax in 2016 raised $300 billion in revenues, “targeted subsidies delivered to companies through the corporate tax code cost about $270 billion.”

It’s also worth noting that a corporate tax rate of 15% is seen as a nonstarter in Congress. Republicans would be hard-pressed to fund a deficit-neutral tax plan with that low a tax rate and Democrats would never support it.

The upshot of this is asking whether the estimated cost of Trump’s tax plan — $2 trillion over a decade — is worth it. There’s little evidence to suggest it would bring companies, particularly blue collar employers Trump hopes for, flooding back into the U.S.

CRFB President: Trump’s Tax Plan Will Add $5.5 Trillion to the Debt

David Posnett — Sat, 29 Apr 2017 14:33:35 +0000

This column first appeared in Time

Maya MacGuineas

Apr 27, 2017

Maya MacGuineas is president of the nonpartisan Committee for a Responsible Federal Budget.

President Trump is on the right track by turning focus toward fixing our nation’s broken tax code. But so far, he is going about it all wrong.

We desperately need tax reform. True reform requires making the tough choices about what works and what doesn’t, not simply offering tax giveaways for all. Tax rate cuts are important and a driver of growth, but do not be hoodwinked: no way will they pay for themselves.

The President understands the challenges we face. Growth is sluggish; our 35% corporate tax rate is the highest in the developed world; our strategy for international taxation is a mess; and the income tax seems to get more complicated and opaque every year.

But these problems cannot be solved by simply lowering all businesses taxes to 15% while cutting taxes for individuals. In fact, the President’s current proposal is likely to worsen our country’s growth prospects by ballooning our record high national debt.

The President’s plan could add over $5 trillion to the national debt over the next decade. As a result, debt would rise to a higher share of the economy than any time in history.

Treasury Secretary Steve Mnuchin, in a Wednesday morning speech, said the proposed overhaul would amount to “the biggest tax cut” and the “largest tax reform” in U.S. history.

When it comes to tax cuts, there is always the free lunch crowd claiming if we cut taxes, they will pay for themselves through growth. Here in the real world, smart, pro-growth tax cuts can at best cover a fraction of their costs. In fact, large tax cuts can actually harm economic growth by creating a massive debt load.

So if the initial Trump offer is unaffordable, what should we do?

Step one is thoughtful and responsible business tax reform. The average corporate tax rate among wealthy countries is about 10 points below ours, putting them at a competitive advantage. America is the greatest economy in the world, and if we can get our corporate rate to 25 or even 28 percent, we’ll be the most competitive as well. We should finance those rate cuts by ending tax breaks that favor some businesses over others and distort business decision-making. We can also raise revenue by shifting taxation from mobile business entities to the shareholders who actually profit from corporate gains. We can cut the rate further with more aggressive payfors.

Step two is to clean up and simplify the individual tax code. Most of the nation’s $1.6 trillion of annual tax breaks go to individuals – largely to wealthier Americans and mostly in ways that add complexity and hurt economic efficiency. The more tax breaks we can repeal or reform, the better. Most of the revenue can go to cutting individual rates; some should go for deficit reduction. One idea worth trillions is a cap I developed with Marty Feldstein and Dan Feenberg to limit the total value of major tax preferences as a share of income. The Administration could keep all the tax breaks it wants to protect (like the mortgage deduction) but include it in this limit.

Step three is to reform our entitlement programs. Social Security, health, and interest spending are responsible for 82 percent of projected spending growth over the next decade; and both Social Security and Medicare are headed toward insolvency. Thoughtful reforms can improve health outcomes, encourage work, strengthen retirement security, and reduce the long-term debt all while protecting the most vulnerable.

The final step is to do everything else we can to encourage economic growth. While promises of 4 percent annual growth are pure fantasy, we need to get our growth rates well above 2 percent. That faster economic growth needs to be broadly shared so it lifts all incomes, improves everyone’s wealth, and helps our fiscal situation. To achieve faster growth, policymakers need to fire on all cylinders — pursuing reforms to taxes and entitlements but also regulations, immigration, federal investment, trade, and energy. A critical component of the growth agenda is to get our debt under control.

As a nation, we cannot pretend we can grow our way out of any hard choices.

But the President is right to focus on economic growth. If we don’t get our economy growing again, the American dream may be history.