Time To Shift the Tax Burdon Back

by Dollars and Sense

A new report from the Institute for Policy Studies shows how the rich have shifted the tax burden onto the backs of workers over the past fifty years, and why we need to reverse the trend.

Download the full report here.

Here are the highlights:

Washington, D.C. - America's highest-income taxpayers, analysts at the Institute for Policy Studies detail in a new Tax Day report, pay a staggeringly smaller share of their incomes in taxes than America's rich did back in the 1950s.

"Since 1955," notes John Cavanagh, director of the Institute for Policy Studies, "we've seen a tax shift of truly epic proportions. Now more than ever, the ultra-rich need to contribute their fair share to help our economy get back on track."

America's top 400 taxpayers in 1955 paid three times more of their income in taxes, the new Institute for Policy studies report points out, than the top 400 of 2006, the most recent year with IRS data available.

If the most affluent 400 of 2006 had paid as much of their incomes in taxes as the top 400 in 1955, the federal treasury would have collected an additional $35.9 billion more in revenue in 2006 just from these 400 ultra-rich individuals.

The report found that the 139,000 U.S. taxpayers who made over $2 million in 2006 averaged $5.9 million in income. If these individuals had paid taxes at the same rate as their 1955 counterparts, the federal treasury would have collected, in 2006, an additional $202 billion.

The report, "Reversing the Great Tax Shift: Seven Steps to Finance Our Recovery" offers proposals that would raise $450 billion of revenue to support economic recovery. These include:

* Introducing a modest financial transaction tax that will chill speculation and generate $100 billion a year.

* Implementing an estate tax reform that taxes inheritances over $2 million at progressive rates.

* Setting an emergency tax rate on extremely high incomes that would generate over $60 billion a year.

* Eliminating the tax preference on capital gains and dividend income, generating $80 billion.

* Closing overseas tax havens for individuals and corporations, generating $100 billion.

* Scrapping $18 billion in tax breaks that subsidize excessive CEO compensation.

"By seriously taxing the top, as we did in the 1950s, we could raise the revenues we need to better invest in infrastructure, education, and retrofitting our energy system," says Chuck Collins, an IPS senior scholar and co-author of the new IPS brief. "Appropriately targeted, higher taxes on the top would also serve to dampen the speculative frenzy that has cratered our economy."

Labels: Chuck Collins, Institute for Policy Studies, John Cavanagh, regressive taxation, taxes, wealth inequality

 

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4/09/2009 01:12:00 PM 0 comments

 

Bailouts Dwarf Spending on Other Crises

by Dollars and Sense

A new report from the Institute for Policy Studies documents how much more money is spent to bail out banks and other financial instutions than to address other global crises, e.g. climate change and poverty. Here's the press release:

Washington, D.C.—A new report finds that the approximately $4.1 trillion the United States and European governments have committed to rescue financial firms is 40 times the money they're spending to fight climate and poverty crises in the developing world.

The report is being released in advance of two summits, where rich country governments are widely expected to use the cost of their financial sector bailouts as an excuse to backtrack on global aid and climate finance commitments.

From November 29 to December 2, representatives of United Nations member states will converge at the Financing for Development conference in Doha, Qatar to review aid obligations made six years ago. From December 1 to 12, international negotiators will convene in Poznań, Poland to hammer out commitments to fighting climate change, including climate-related financial assistance for developing countries.

"The financial crisis is only one of multiple crises that will affect every nation—rich or poor," explains IPS Director John Cavanagh. "Skyrocketing poverty and unemployment in the developing world will mean even more brutal global competition for jobs. Climate change imperils the very future of the planet. And yet thus far, the richest nations in the world appear fixated almost entirely on responding to the financial crisis, and specifically, on propping up their own financial firms."

KEY FINDINGS:

RATIO OF FINANCIAL BAILOUTS TO DEVELOPMENT AID: U.S. and European governments have committed approximately $4.1 trillion to aid struggling banks and other financial institutions. That's more than 45 times the sums they spent on development aid last year.

AIG BAILOUT ALONE TOPS AID: The U.S. government's $152.5 billion rescue plan for one single company—AIG—far exceeds the $90.7 billion U.S. and European governments spent on development aid in 2007.

BEAR STEARNS REAPS MORE THAN U.S. AID RECIPIENTS: The U.S. government spent $23.2 billion in aid to all developing countries in 2007—far less than the $29 billion bailout for investment bank Bear Stearns.

FANNIE/FREDDIE BAILOUT NEARLY 1,000 TIMES U.S HAITI AID: The U.S. government has committed $200 billion to prop up mortgage lenders Fannie Mae and Freddie Mac, a figure that dwarfs the $209 million in economic aid in 2007 to Haiti, the Western Hemisphere's poorest country.

RATIO OF FINANCIAL BAILOUTS TO CLIMATE FINANCE: Although the climate crisis poses catastrophic risks to the global economy, U.S. and Western European governments have committed 313 times more to rescuing financial firms than the $13.1 billion in total new commitments made to help developing countries respond to the climate crisis over the next several years.

UBS BAILOUT FIVE TIMES CLIMATE FINANCE: The Swiss government has committed $60 billion to rescue the ailing investment bank UBS. That's more than five times the amount that all Western European governments have committed, above and beyond development aid, in climate finance for developing countries.

U.S. CONTRIBUTIONS TO CLIMATE FINANCE = $0: The U.S. Congress hasn't approved any contributions to the developing world's climate change efforts, in part because the Bush administration insisted such financing be channeled through the World Bank, an institution with a poor environmental track record.

"Such extremely lopsided priorities will come back to haunt the United States and the rest of the global North in the long run," says IPS Global Economy Project Director Sarah Anderson. "The richer countries not only have an obligation to clean up the messes they've made abroad. It's also in their interest."

The 16-page report "Skewed Priorities: How the Bailouts Dwarf Other Global Crisis Spending" is available online at: http://www.ips-dc.org/reports/#912

Authors include: Sarah Anderson, IPS Global Economy Project Director; John Cavanagh, IPS Director; and Janet Redman, Researcher with the Institute's Sustainable Energy and Economy Network.

Labels: bailout, climate change, financial crisis, Institute for Policy Studies, poverty

 

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11/24/2008 03:25:00 PM 1 comments

 

More Resources on the Bailout--from IPS

by Dollars and Sense

This is from Chuck Collins, of the Institute for Policy Studies, and a D&S Associate:

Handing Wall Street speculators an unconditional check for a $1 trillion should not happen. Any assistance should be tied to placing conditions on runaway CEO pay and on a bailout for Main Street communities. The messed up CEO pay incentive system is one major factor that contributed to the casino economy in the first place.

The Institute for Policy Studies and leaders in the Working Group on Extreme Inequality have been pressing for caps on CEO pay for companies receiving assistance. However, we have strong concerns that Congress may give Treasury Secretary Paulson, a former Wall Street executive, too much power to judge whether executive pay packages at the bailed-out firms are "excessive. See our Talking Points on this subject.

ACTION: STOP THE $700 BILLION BLANK CHECK
Send an Email and Letter to Members of Congress.
Emphasize these points:
1. No deal without clean caps on excessive CEO pay. We cannot leave it up to the Treasury Secretary to decide what is "excessive." Congress needs backbone to stand-up for what is right.
2. "Pay as You Go Bailout" -The speculators who caused the problem should pay the costs, not our children and grandchildren.
Write to your members through Campaign for America's Future email and letter campaign.

For more information, read:

The Bailout and CEO Pay: What's 'Excessive'?
by Sarah Anderson and Sam Pizzigati
Tax the Speculators: A Fair Plan to Pay for Bailout

Chuck Collins suggests that speculators should pay for the bailout, not the next generation. From The Nation.
REPORT: "Executive Excess 2008: How Average Taxpayers Subsidize Executive Pay"
This IPS report describes the five ways that taxpayers subsidize excessive CEO pay to the tune of $20 billion a year.

Progressive Conditions for the Bailout
By Dean Baker.

What Wall Street Should Do To Get Its Blank Check
Robert Reich proposes five key components.

For commentary, analysis and data about extreme inequality, visit www.extremeinequality.org.
To learn more about the Program on Inequality and the Common Good, visit the Institute for Policy Studies.

Labels: bailout, Chuck Collins, financial crisis, Institute for Policy Studies

 

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9/25/2008 08:40:00 AM 0 comments