How to Stop a Tax Plan Rigged for the Rich


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The Earth doesn’t quite shake when lawmakers in Washington, D.C. take one of their periodic votes on tax “reform.” But sometimes history does turn, and this coming week’s expected vote on the Senate version of the GOP tax plan could be one of those rare times that history actually turns for the better.

Indeed, this year’s situation bears a remarkable resemblance to the epic tax battle of 1932, a largely forgotten struggle that set the stage for an entire generation of increasing equality. Could this history repeat? It certainly is already echoing.

Back in 1932, just as today, conservatives had a lockgrip on the White House and both houses of Congress. Then as now, America’s wealthy lusted for fundamental tax changes that would significantly reduce their already reduced tax burden. Then as now, those wealthy — and the pols they subsidized — framed tax breaks for the rich as our only road to prosperity.

That prosperity seemed incredibly distant in early 1932. The nation had sunk into the Great Depression, and the federal government was collecting far too little revenue from a Depression-ravaged economy to function. The government, nearly everyone understood, simply had to raise more revenue. But the new revenue the government so desperately needed, top Republicans and Democrats in Washington agreed, must not come from the rich.

In November 1931, Democratic Senate floor leader Joseph Robinson from Arkansas had driven that consensus home with comments the Washington Post called “so conservative as to sound like a statement from Secretary of the Treasury Andrew Mellon,” the mega-millionaire who spent the 1920s orchestrating tax cuts that sheared the top tax rate on America’s highest incomes from 77 to 25 percent. Robinson warned the American people against any move that might subject the nation’s wealthy to significant new taxation. Serious people all agreed, the Senate’s top Democrat would explain, that the government could only tax the rich so high “without discouraging investment and production.”

Democrat John Nance Garner from Texas, the House speaker, would pound home the same theme the next month. He delivered what the Los Angeles Times Washington correspondent would dub a “mild spanking” to his Democratic Party colleagues who had had the nerve to suggest boosting tax rates on high incomes back near World War I levels.

A few weeks later, another leading Democrat, acting House Ways and Means Committee chairman Charles Crisp of Georgia, would continue the spanking. The nation could never meet its fiscal emergency by “soaking the rich,” Crisp informed his colleagues. Average Americans will have to “gird” themselves for “tremendous sacrifices.” A national sales tax, or some other tax that demanded “stamina” and “backbone” from all Americans, was going to have to be levied.

The Herbert Hoover White House agreed, in part. Administration officials would ask Congress to enact higher federal excise taxes on many everyday purchases, everything from tobacco to telephone calls. But the Republican Hoover administration would not go along with a national sales tax. Undersecretary of the Treasury Ogden Mills, soon to become treasury secretary after Andrew Mellon resigned to become America’s ambassador to Great Britain, asked Congress instead to up the nation’s top income bracket tax rate from 25 to 40 percent.

What explains this White House willingness to contemplate slightly higher tax levies on America’s comfortable? Hoover may have considered a little political discretion here the better part of valor. Better a modest tax increase on the wealthy than risk the unpredictable popular wrath a national sales tax might unleash.

Republican and Democratic leaders in Congress had no such fears. The heat they felt came from newspaper publisher William Randolph Hearst, the powerful media magnate who had emerged as the national sales tax notion’s most fervent advocate.

Hearst had no particular philosophical affection for taxing sales. Neither did any of his fellow wealthy Americans. They simply wanted Congress to put in place an alternative to taxing income. Their income. Americans, Hearst wrote in a nationally circulated March 1932 editorial, must “carry on a sustained crusade Morning, Evening, and Sunday against the present Bolshevist system of income taxation.”

The Democratic Party majority on the House Ways and Means Committee would obediently oblige. Lawmakers on the panel repudiated the Hoover administration and nixed any income tax hike. They passed instead an almost all-encompassing national sales tax, a 2.25 percent manufacturer’s excise levy on everything but food.

What happened next would floor top Democrats and their calculated bid to position the party as a reliable partner for America’s rich and powerful. Powerful Democrats — like the Wall Street financier Jacob Raskob — had simply gone too far. Americans would push back. They would mount the first national political surge against plutocracy since the Great Depression began.

The surge broke out almost as a matter of spontaneous political combustion. From across the nation, average Americans began bombarding congressional offices with angry complaints about the pending new national sales tax. In the face of this surprise bombardment, rank-and-file Democrats in Congress would suddenly rediscover their inner displeasure at America’s staggering concentration of income and wealth. They would join with Representative Fiorello LaGuardia from New York and other progressive House Republicans to kill the national sales tax by a stunning 223-153 margin.

Amid shouts of “soak the rich!” on the House floor, this unexpected majority would go on to raise the top tax rate from 25 percent on income over $ 100,000 to 63 percent on income over $ 1 million. The new higher tax rates, notes tax historian Elliot Brownlee, would double the effective tax burden on America’s richest 1 percent.

House Democratic majority leader Henry Rainey would not be happy about any of this.

“We have made a longer step in the direction of communism,” he told his House colleagues, “than any country in the world ever made except Russia.”

But Rainey remained above all else a savvy politician. He saw clearly that Americans overwhelmingly supported higher taxes on the nation’s wealthy, and now he would make the best of a bad situation. The evening after the crushing defeat of the sales tax proposition, he would go live on national radio and position the new taxes on the rich as a fiscally prudent step toward balancing the federal budget. He would also do his best to convince Americans that the rich had now sacrificed quite enough.

Lawmakers in the House, Rainey told the nation, have raised income taxes on the wealthy “to the very breaking point.” Even “the most violent advocate of ‘soaking the rich’ ought to be satisfied,” the Democratic majority leader would pronounce.

“We have ‘soaked the rich,’ I assure you,” Rainey would repeat for emphasis at the close of his radio address.

In fact, the soaking had been more a quick rinse. Taxes on the nation’s wealthy would remain, even after the increases, substantially lower than top rates in effect during World War I. The bulk of the tax dollars the new revenue legislation would raise would come from new and increased excise taxes, some on luxury items like furs but most on everyday items like chewing gum and lubricating oil.

Even so, the 1932 tax fight did mark a turning point. The rich and their political enablers had reached for the brass ring, a national sales tax. The American people had slapped them down.

In Albany, the state capital of New York, an ambitious governor took notice. Just two weeks after the tax brouhaha in Washington, Franklin D. Roosevelt, a leading candidate for the 1932 Democratic Party nomination, would begin a remarkable series of addresses that aligned his candidacy four-square with America’s grassroots push against plutocracy.

The first of these addresses, broadcast April 7 in NBC’s Lucky Strike Hour, would champion the “forgotten man at the bottom of the economic pyramid” and blast away at political leaders who “can think in terms only of the top of the social and economic structure.”

The next month, at a commencement address at Georgia’s Oglethorpe University, Roosevelt would deliver a stirring call for “bold, persistent experimentation” to aid the “millions who are in want.”

“Do what we may have to do to inject life into our ailing economic order,” the Presidential hopeful would explain, “we cannot make it endure for long unless we can bring about a wiser, more equitable distribution of the national income.”

The New Deal had begun.

Could a defeat of the GOP tax plans of 2017 signal a similar new egalitarian upsurge? Maybe. But first we have to deliver that defeat.

The post How to Stop a Tax Plan Rigged for the Rich appeared first on Institute for Policy Studies.


Stop Talking About ‘Winners and Losers’ from Corporate Tax Cuts

Dollar bill being cut up

(Photo: Tax Credits/Flickr)

Republicans are pushing a huge corporate tax cut bill through Congress. You might’ve seen a lot of coverage trying to sort out “who wins” and “who loses.”

All that misses the point.

The driving motivation behind this bill, rhetoric and packaging aside, is to deliver a whopping $ 1 trillion tax cut for a few hundred badly behaved global corporations — and another half a trillion to expand tax breaks and loopholes for multi-millionaires and billionaires.

All the other features of proposed tax legislation are either bribes (“sweeteners”) to help pass the bill or “pay fors” to offset their cost.

The news media has been talking about “winners and losers” like this were some sort of high-minded tax reform process with legitimate trade-offs, as in 1986.

But this isn’t tax reform. This is a money grab by powerful corporate interests.

The key question isn’t who wins and loses, but whether we should undertake any of these trade-offs to give massive tax breaks to companies like Apple, Nike, Pfizer, and General Electric — companies whose loyalty to U.S. communities and workers is historically abysmal.

These companies have been dodging their taxes for decades while small businesses and ordinary taxpayers pick up their slack to care for our veterans, maintain our infrastructure, and educate the next generation.

Apple alone is holding $ 250 billion in offshore subsidiaries to reduce their taxes.

For wealthy individuals, the proposed House tax bill eliminates the federal estate tax, which is paid exclusively by families with over $ 11 million, mostly residing in coastal states.

It eliminates the Alternative Minimum Tax, a provision that ensures that wealthy taxpayers chip in at least a few dollars after gaming all their possible deductions.

And while the top tax rate on high earners remains roughly the same, Congress is proposing to open up a “pass through loophole” that will enable wealthy people and their tax accountants to convert their income to be taxed at a lower tax rate.

We should avoid distracting debates over whether to reform one provision or another, such as the home mortgage interest deduction. The real estate industry understands the score. “These corporations are getting a major tax cut, and it’s getting paid for by the equity in American homes,” said Jerry Howard, chief executive of the National Association of Home Builders.

Reforming the home mortgage interest deduction makes a lot of sense — the current tax break mostly benefits the already wealthy and fails to expand homeownership. But we shouldn’t restructure housing tax incentives to pay for a massive tax cut for billionaires and badly behaved global corporations.

Nor should we eliminate the deductibility of student debt, eliminate the deduction for state and local taxes, or require families with catastrophic health expenses to pay more to reduce taxes on big drug companies and Jeff Bezos of Amazon. This tax bill would do all of those things.

The good news is people aren’t falling for the marketing baloney that this tax cut will help the middle class. Fewer than 30 percent of voters support these tax cuts, and solid majorities believe that the wealthy and global corporations should pay more taxes, not less.

But this won’t stop Republicans who care more about their campaign contributors than they do about voters.

If the GOP majority in Congress were responsive to voters, they’d invest in updating our aging infrastructure and in skills-based education, as we did after World War Two. Instead of saddling the next generation with tens of thousands in student debt, real leaders would be figuring out how to lift up tomorrow’s workers and entrepreneurs, just as we did in previous generations.

Under this tax plan, small business and ordinary taxpayers will be the big losers. That’s the only score that matters.

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Who Will Stop Stephen Miller, the Man Behind America’s Anti-Refugee Policy?

(Image: Freedom House / Flickr)

President Trump isn’t one to let a little cognitive dissonance get in the way of a nice dinner. So he didn’t miss Thursday’s gala fundraiser at the Kuwaiti embassy for the United Nations Refugee Agency (UNHCR), held at a time when his administration is barring a record number of refugees from entering the US.

Since 1980, presidents have set a ceiling on how many refugees the US may admit each year. That cap ranged from over 100,000 under Bush Sr and Clinton to around 80,000 for most of Bush Jr and Obama’s administrations. Trump recently lowered the ceiling to 45,000, the lowest it’s ever been, over the objections of the Pentagon, joint chiefs of staff, state department, and Vice-President Pence, all of whom wanted it higher. Trump is also seeking to enact new rules designed to block refugees from reuniting with family members and grind the resettlement process to a halt.

Why is the US turning its back on refugees who are fleeing humanitarian disaster and a group we consider a mortal enemy? As a recent New Yorker report details, this is largely the doing of Stephen Miller, Trump’s hardline anti-immigration immigration adviser.

In a White House characterized by organizational chaos, paranoia and general incompetence, a 32-year-old ex-Hill staffer with basic knowledge of the policy process can emerge as a one-eyed king in an administration of the blind.

Thus Miller has usurped the power of the National Security Council, state and defense departments to set refugee policy by himself, beyond the bounds of his formal authority, which is domestic, not foreign policy. Out of his depth as he is, his arguments are also unbounded by things like evidence and reason.

Miller’s, and thus Trump’s, fears are threefold: refugees are an economic, security, and cultural threat to the US.

Read the full article on the Guardian.

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Tenants March to Stop Giveaways to Wall Street Landlords


CEOs Now Make 300 Times More Than Their Workers. This City Is Putting a Stop to That.


(Photo: Flickr/ Democracy Chronicles)

With national policy likely to compound the income and wealth gap in the coming years, states and localities are fighting back.

Across the country, local jurisdictions aren’t waiting for federal action or corporate governance reforms to close the wage gap. In December, for example, the city of Portland, Oregon, passed an ordinance to raise the business tax on companies with CEOs who earn more than 100 times the median pay of their workers. Portland officials said the ordinance is the first of its kind in the country. And now, more cities and states are poised to follow suit.

“The huge divide in income and wealth has real-world implications,” Steve Novick wrote last October in Novick sponsored the ordinance when he was on the Portland City Council. “Too many Americans cannot get a leg up,” he wrote. “Income inequality undermines the American dream.”

Portland city government projects the tax will raise $ 2.5 million to $ 3.5 million a year, which city officials have said will likely help pay for the city’s homeless programs.

Inspired by the living wage movement, Portland’s ordinance comes on the heels of decades of grassroots activism around the issue of wage inequality.

Starting in the 1990s, the failure of Congress to adequately raise the federal minimum wage gave rise to a prairie-fire movement of local activists pressing for local and state living wage ordinances. Living wage ordinances typically cover a segment of workers, such as employees of government contractors, while minimum wage laws cover all workers. By 2010, over 120 jurisdictions had passed local living wage laws, and at present, 41 jurisdictions have passed minimum wage laws.

“I expect this pay gap reform movement to spread like wildfire, just as the living wage movement did,” said Sarah Anderson from the Institute for Policy Studies. “I’ve gotten inquiries from over two dozen states and cities about how to establish a pay gap ordinance.”

Anderson lobbied the Portland City Council in support of the policy and testified at a public hearing. She has since compiled resources for communities interested in instituting a CEO-worker pay gap penalty.

Read the full article on YES! Magazine’s website. 


Calling on the Wealthy to Help Stop Our Racial and Economic Apartheid

When he was 26, IPS’ Chuck Collins gave away all of his wealth after getting a front-row seat into the lives of low-wage workers, he tells Marketplace in an interview about his new book, Born on Third Base.

Collins acquired his wealth as the great-grandson of Oscar Mayer.

“The reality is I still have this mountain of advantage coming from a stable and wealthy family. Social capital. And I’m white, I’m male,  I got a debt-free college education,” Collins said.

Twenty years from now, Collins said, we’ll be in a racial and economic apartheid if we keep on track as we have for the last 30 years “in terms of growing wealth and income inequality, declining social mobility, and the racial wealth divide.”

He said that wealthy people tend to withdraw to their enclaves of private paradises, but in his new book, he’s calling on them to bring their wealth home.

“Take it out of the offshore tax havens and the global finance casino, and actually bring it back to the real economy of goods and services,” he said, because the wealth divide isn’t in anyone’s best interest.

Listen to the full interview on Marketplace’s website.

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Chuck Collins directs the Program on Inequality and the Common Good at the Institute for Policy Studies.


This Baltimore Project Could Help Stop Prison’s Revolving Door


(Photo: Thomas Hawk / Flickr)

Imagine if you had no place to live, no job and no money. What would you do to survive? To get by, would you commit a crime?

Former inmates are faced with these questions far too often. Ex-offenders confront one pressing re-entry challenge after another, everything from finding a place to live and arranging drug abuse treatment to getting a job. A setback in any one of these areas can easily lead to relapse and a return to prison, what public policy analysts call “recidivism.” Researchers measure recidivism by looking at the criminal acts that ex-offenders commit in the three years after prison release. These days, researchers have a huge sample of ex-offenders to track.

Last November, changes to federal sentencing guidelines led to the release from custody of about 140 Maryland inmates, and hundreds more will be eligible for release in future months. Nationwide, the U.S. Sentencing Commission estimates that more than 46,000 inmates could have their sentences reduced by an average of 25 months; over 500 of them are expected to return to Maryland under these revised sentences, most to Baltimore.

These releases are taking place at a time when the city is experiencing an increase in homicides and shootings — and a deadly heroin epidemic. Such crime, many fear, will only increase when so many more inmates start returning to their home communities — a not unrealistic concern. The formerly incarcerated often find themselves facing the exact same pressures and temptations that landed them in prison in the first place. According to 2013 Maryland data, almost a third of Maryland prison admissions went to individuals returning to prison from parole.

So what can be done to keep people from cycling back into the system? Let’s start with jobs, perhaps the single most pressing obstacle that frustrates the formerly incarcerated.

Read the full article on the Baltimore Sun’s website.

The post This Baltimore Project Could Help Stop Prison’s Revolving Door appeared first on Institute for Policy Studies.

Vanessa Bright is a New Economy Maryland fellow at the Institute for Policy Studies.


Death by Traffic Stop

What’s worse than being pulled over nearly 50 times? Believe it or not, quite a few things.

Like racking up over $ 7,000 in fines and fees when you make just $ 30,000 a year. Or bearing the constant stress of being pulled over and fined, finally paying off one fine only to get more piled on. Even worse, there’s getting your license revoked because you had a hard time paying, but still needing to drive your car to get to work to be able to pay off the steady stream of fines, late fees and court fees.

This was Philando Castile’s life even before that final traffic stop, when a police officer shot him dead as he calmly reached for his wallet in compliance with the officer’s instructions. He’d received nearly 90 citations since 2002, according to the Minneapolis Star-Tribune.

Castile paid a dear price for being a black man commuting through affluent white communities on his way to work. And it turns out that he’s hardly alone.

Myron Orfield, a law professor at the University of Minnesota who studies racial profiling, found that black people driving through the white suburbs of St. Paul are seven times more likely to be pulled over than white people and twice as likely to be arrested. In St. Anthony, where Castile was pulled over and killed, nearly half of all arrests are of black people, even though they make up only 7 percent of the local police jurisdiction.

Read the full article on U.S. News and World Report’s website.

The post Death by Traffic Stop appeared first on Institute for Policy Studies.

Karen Dolan directs the Criminalization of Race and Poverty project at the Institute for Policy Studies.


The First Step to Ending the War in Syria is to Stop Killing

“Whatever else you’re trying to do when you’re trying to end a war, don’t kill more people,” Phyllis Bennis told the Real News Network in an interview during the People’s Summit.

Bennis outlined four highlights of a foreign policy doctrine for dealing with Syria.

  1. Stop the killing—Withdraw the troops, get the boots off the ground

“There’s 6,000 troops in Iraq that we know about, at least 350 in Syria. There’s probably others,” Bennis said. “Maybe they don’t wear boots, maybe they wear sneakers. They’re forces and the CIA. Get them out. They’re not helping.”

2. Stop selling, giving, and sending arms to everyone who claims they’re against Assad or ISIS

“Half of those arms still end up in ISIS’s hands and it doesn’t work. You can’t win this militarily,” Bennis said.

3. Stop sending arms to everybody.

“Let’s talk about an arms embargo,” Bennis said. “Let’s really be serious about this.”

4. Get serious about diplomacy

“Put more money into the humanitarian work of the United Nations,” Bennis said. “There is a refugee crisis underway and in the United States we’ve shamefully allowed in barely 2,000 Syrian refugees in five years—that’s about what are arriving in Germany in one day. It’s really shameful.”

If any of the presidential candidates are serious about taking up new positions, these are the ones they should take up, Bennis said.

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Phyllis Bennis directs the New Internationalism project at the Institute for Policy Studies.


They’re Killing Us. Help Us Stop Them.


(Photo: Flickr / Ted Eytan)

The weekend of June 12 sent me on a rollercoaster of emotions I never thought possible.

The previous Friday, I was an invited participant in the first-ever White House Summit for African American LGBTQ Youth. I felt amazingly supported, empowered, and valued — by my school, by my family and friends, by President Obama, and by my LGBTQ community.

I was inspired.

On Saturday, I marched in the Pride Parade in our nation’s capital. I sang and danced with neighbors from every race, ethnicity, sexual orientation, and gender identity. We celebrated ourselves, each other, our allies, and our bright futures.

We were so beautiful and full of promise. I was so proud to be an Afro-Latina-Anglo transgender teen.

Then came Sunday.

I woke up to find that a hatred-filled assassin in Orlando had brutally murdered 49 members of our young, innocent, beautiful, and beloved community, and injured over 50 more.

They say the murderer was a U.S.-born Islamic terrorist. But Omar Mateen’s hatred for my community echoes the headlines I see about right-wing fundamentalists of other faiths who call for discrimination against people like me — and for the erasure of my rights as a human being.

His hatred echoes the oppression, arrests, and killings of my black and Latino brothers and sisters on the streets, in schools, and in our prisons. It reflects the cruelty of those who want to keep Muslims and Latinos away from our country — by force — and who still want to keep LGBTQ people from marrying each other.

They’ll even deny us the right to pee in peace, if that’s what it takes to dehumanize and humiliate us.

I’m not trying to be partisan. But it’s hard not to notice that President Obama held a summit to tell us how valued we are, while Donald Trump and many conservative lawmakers want to erase us.

Many Republicans invoked fears of international terrorism, but most said nothing about the members of our LGBTQ communities, who were the very targets and victims. They vow more Islamophobia, but make no mention of the ease with which the killers get and use assault weapons.

I’m only 15 years old, but I know what it’s like to have deep love and support, and I’ve witnessed and been the object of deep hatred and ignorance. I feel angry and heartbroken by this massacre.

A culture of fear and bigotry is again taking hold of this country. But my generation demands our equality and our human rights. We want to lead, and to determine our own future. We want you not just to love us, but to support us and to listen to us.

So if you don’t understand who we are and what we need, ask us.

To start, you can fight back against laws aimed at hurting us or erasing us, like thosebigoted and ridiculous bathroom bills. Punish politicians who block sensible gun control. Stop supporting lawmakers who want to exploit and exclude immigrants. Stop the people who are expelling and suspending and arresting and incarcerating us.

They’re killing us. Help us stop them.

We’re stronger than you think. We’re Generation Z, and we come of age in 2018. Our future is majority black and brown, and more openly queer than any before us.

We know that many of you are allies. We need you, and you need us. Together we can stop the rollercoaster of fear and terror and start the climb to the mountaintop of love and liberation.

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Grace Dolan-Sandrino is a transgender teen activist and the daughter of the director of IPS’s Criminalization of Poverty Project, Karen Dolan.