AlterNet.org: Chuck Collins http://blogs.alternet.org/authors/chuck-collins en A Commencement Address for the Most Indebted Class Ever http://blogs.alternet.org/economy/commencement-address-most-indebted-class-ever <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The system is trying to squeeze you harder than any generation before you.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/shutterstock_119968390-edited.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>Congratulations, college graduates! As you enter the next phase of life, you and your parents should be proud of your achievements.</p><p>But, I’m sorry to say, they’ve come at a price: The system is trying to squeeze you harder than any previous generation.</p><p>Many baby boomers, perhaps including your parents, benefited from a time when higher education was seen as a shared social responsibility. Between 1945 and 1975, tens of millions of them graduated from college with little or no debt.</p><p>But now, tens of millions of you are graduating with astounding levels of debt.</p><p>This year, seven in 10 graduating seniors borrowed for their educations. Their average debt is now over $37,000—the <a href="http://www.cbsnews.com/news/congrats-class-of-2016-youre-the-most-indebted-yet/" target="_blank">highest figure</a> for any class ever.</p><p><img alt="" src="http://www.alternet.org/files/screen_shot_2016-05-18_at_2.58.51_pm.png" style="height: 271px; width: 400px;" typeof="foaf:Image" /></p><p>Already, <a href="http://www.wsj.com/articles/more-than-40-of-student-borrowers-arent-making-payments-1459971348" target="_blank">some 43 percent</a> of borrowers—together owing $200 billion—have either stopped making payments or are behind on their student loans. Millions are in default.</p><p>This debt casts a long shadow on the finances of graduates. During <a href="http://www.marketwatch.com/story/the-government-just-garnished-176-million-in-wages-because-of-unpaid-student-loans-2016-03-21" target="_blank">the last quarter of 2015 alone</a>, the Education Department moved to garnish $176 million in wages.</p><p>There’s no economic benefit to this system whatsoever. Indebted students delay starting families and buying houses, experience compounding economic distress, and are less inclined to take entrepreneurial risks.</p><p>One driver of the change from your parents’ generation has been tax cuts for the wealthy, which have led to cuts in higher education budgets. Forty-seven states now spend <a href="http://www.cbpp.org/research/state-budget-and-tax/years-of-cuts-threaten-to-put-college-out-of-reach-for-more-students" target="_blank">less per student</a> on higher education than they did before the 2008 economic recession.</p><p>In effect, we’re shifting tax obligations away from multi-millionaires and onto states and middle-income taxpayers. And that’s led colleges to rely on higher tuition costs and fees.</p><p>In 2005, for instance, Congress <a href="http://www.cbpp.org/research/many-states-tax-inherited-wealth" target="_blank">stopped sharing revenue</a> from the estate tax—a levy on inherited wealth exclusively paid by multi-million dollar estates—with the states. Most state legislatures failed to replace it at the state level, costing them billions in revenue over the last decade.</p><p>In fact, the 32 states that let their estate taxes expire are foregoing between $3 to $6 billion a year, the Center on Budget and Policy Priorities <a href="http://www.cbpp.org/research/state-budget-and-tax/state-estate-taxes-a-key-tool-for-broad-prosperity" target="_blank">estimates</a>. The resulting tax benefits have gone entirely to multi-millionaires and billionaires—and contributed to tuition increases.</p><p>For example, California used to raise almost $1 billion a year in revenue from its state-level estate tax. Now that figure is down to zero. And since 2008, average tuition has increased over $3,500 at four-year public colleges and universities in the state.</p><p>Florida, meanwhile, lost $700 million a year—and raised tuition nearly $2,500. Michigan lost $155 million a year and hiked average tuition $2,200.</p><p>But it doesn’t have to be this way. Washington State went the opposite route.</p><p>Washington taxes wealthy estates and dedicates <a href="http://www.cbpp.org/blog/a-state-by-state-look-at-the-estate-tax" target="_blank">the $150 million</a> it raises each year to <a href="http://app.leg.wa.gov/rcw/default.aspx?cite=83.100.230" target="_blank">an education legacy trust account</a>, which supports K-12 education and the state’s community college system. Other states should follow this model, and students and parents should take the lead in demanding it.</p><p>Presidential candidate Bernie Sanders said at a Philadelphia town hall that there’s one thing he’s 100 percent certain about.</p><p>If millions of young people stood up and said they’re “sick and tired of leaving college $30,000, $50,000, $70,000 in debt, that they want public colleges and universities tuition-free,” <a href="http://info.msnbc.com/_news/2016/04/25/35464706-full-transcript-msnbc-town-hall-with-bernie-sanders-moderated-by-chris-hayes?lite" target="_blank">he predicted</a>, “that is exactly what would happen.”</p><p>Sanders is right: Imagine a political movement made up of <a href="http://blogs.wsj.com/economics/2016/05/02/student-debt-is-about-to-set-another-record-but-the-picture-isnt-all-bad/" target="_blank">the 40 million households</a> that currently hold $1.2 trillion in debt.</p><p>If we stood up and pressed for policies to eliminate millionaire tax breaks and dedicate the revenue to debt-free education, it would change the face of America.</p><p>Graduates, let’s get to work.</p> Wed, 18 May 2016 11:51:00 -0700 Chuck Collins, OtherWords 1056760 at http://blogs.alternet.org Economy Economy Education Labor student debt college graduation student loans education paying for college Want the American Dream? Get Rich Parents or Move to Canada http://blogs.alternet.org/corporate-accountability-and-workplace/want-american-dream-get-rich-parents-or-move-canada <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">In a tough economy with dwindling social supports, children of privilege have a bigger head start than ever.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/screen_shot_2013-05-29_at_10.25.07_am.png" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p><em>The following article first appeared in the <a href="http://prospect.org/article/wealthy-kids-are-all-right">American Prospect. </a></em></p><p>Two 21-year-old college students sit down in a coffee shop to study for an upcoming test. Behind the counter, a barista whips up their double-shot lattes. In the back kitchen, another young adult washes the dishes and empties the trash.</p><p>These four young adults have a lot in common. They are the same age and race, each has two parents, and all grew up in the same metropolitan area. They were all strong students in their respective high schools. But as they enter their third decade, their work futures and life trajectories are radically different—and largely determined at this point.</p><p>The culprit is the growing role of inherited advantage, as affluent families make investments that give their children a leg up. Combined with the 2008 economic meltdown and budget cuts in public investments that foster opportunity, we are witnessing accelerating advantages for the wealthy and compounding disadvantages for everyone else.</p><p>One of the college students, Miranda, will graduate without any student-loan debt and will have completed three summers of unpaid internships at businesses that will advance her career path. Her parents stand ready to subsidize her lodging with a security deposit and co-signed apartment lease and will give her a no-interest loan to buy a car. They also have a network of family and professional contacts that can help her. While she waits for a job with benefits, she will remain on her parents’ health insurance.</p><p>Ten years later, Miranda will have a high-paying job, be engaged to another professional, and will buy a home in a neighborhood with other college-educated professionals, a property that will steadily appreciate over time because of its location. The “parental down-payment assistance program” will subsidize the purchase.</p><p>The other collegiate, Marcus, will graduate with more than $55,000 in college debt, a maxed-out credit card, and an extensive résumé of part-time food-service jobs that he has taken to pay for school, both during summers and while in college, reducing the hours he can study. Though he will obtain a degree, he will graduate with almost no work experience in his field of study, lose his health insurance, and begin working two part-time jobs to pay back his student loans and to afford rent in a shared apartment.</p><p>Ten years later, Marcus will still be working in low-paying jobs and renting an apartment. He will feel occupationally stuck and frustrated in his attempts to network in the area of his degree. He will take on additional debt—to deal with various health and financial problems—and watch his hope of buying a home slip away, in large part because of a credit history damaged during his early twenties.</p><p>Tony, the barista, has the benefit of not taking on mega-debt from college. He will eventually enroll in some classes at a local public university. But his income and employment opportunities will be constrained by not having a college degree. He will make several attempts to learn a building trade and start his own business, eventually landing a job with a steady but low income.</p><p>The good news for Tony is that his parents, while not college educated or wealthy, are stable middle-class with modest retirement pensions and a debt-free house, acquired by Tony’s grandfather with a low-interest Veterans Administration mortgage. They are able to provide a bedroom to their son. That home will prove to be a significant factor in Tony’s future economic stability, as he will eventually inherit it.</p><p>Cordelia, working in the kitchen, has even less opportunity than Tony for mobility and advancement. Neither of her parents went to college nor have significant assets, as they rent their housing. Though she was academically in the top of her urban high-school class, she did not consider applying to a selective college. The costs seemed daunting, and she didn’t know anyone who went away to college. There were no adults or guidance professionals to help her explore other options, including financial aid available at private colleges, some of which would have paid her full tuition and expenses to attend. Instead, she takes courses at the local community college where she sees many familiar faces. Cordelia will struggle with health issues, as lack of adequate health care and insurance means she will delay treatment of several problems. Over time, she will have a steady and low-wage job, but she will also begin to take more responsibility for supporting members of her family who are less fortunate.</p><p><strong>The Born-on-Third-Base Factor</strong></p><p>These four coming-of-age adults in no way represent the entire spectrum of young adult experience, which also includes ex-offenders, mediocre students, and people with disabilities. Young adults in rural communities and small towns, for example, face their own education and economic challenges, such as limited employment options. They will disproportionately populate our volunteer military, fill the growing ranks of disability-pension recipients, or migrate to communities where they have few social supports.</p><p>A key determinant in these diverging prospects is the role of family wealth, a factor that plays an oversize role in sorting today’s coming-of-age generation onto different opportunity trajectories. The initial sort begins much earlier. A growing mountain of research chronicles what sociologists call the “intergenerational transmission of advantage,” including the myriad mechanisms by which affluent families boost their children’s prospects starting at birth. The mechanisms include financial investments in their children’s enrichment, school readiness, formal schooling, college access, and aiding the transition to work. Meanwhile, the children in families unable to make these investments fall further behind.</p><p>Imagine a ten-mile race in which contestants have different starting lines based on parental education, income, and wealth. The economically privileged athletes start several hundred yards ahead of the disadvantaged runners. Each contestant begins with ten one-pound leg weights. The race begins, and the advantaged competitors pull ahead quickly. At each half-mile mark, according to the rules, the first twenty runners shed two pounds of weights while those in the last half of the field take on two additional pounds. After several miles, lead racers have no weights, while the slower runners carry twenty additional pounds. By midrace, an alarming gap has opened up in the field, and by the finish line, the last half of the field finishes more than two miles behind the winners.</p><p>This race of accelerating advantages and compounding disadvantages is a disturbingly accurate metaphor for inherited privilege. As in life, there are well-publicized stories of exceptional runners starting far back in the pack and breaking to the front of the field, therefore able to shed weights and remain competitive. There are also front-runners who perform poorly, squandering their initial advantages and falling back. But the overall picture is one of steadily growing class-based inequality. Consistent with emerging sociological research about children and opportunity, once inequalities open up, they rarely decrease over time.</p><p>A healthy democratic society could rise to this challenge, resolving to make robust public investments in time-tested interventions that equalize the conditions of the race. But in our increasingly plutocratic political system, the very wealthy have less stake in the opportunity-building mechanisms in our communities, as their own children and grandchildren advance through privatized systems. These same wealthy families maintain disproportionate influence in shaping our national priorities, such as whether to cut taxes on the wealthy or maintain investments in public education. We are snagged in a cycle of declining opportunity driven by the new politics of inherited advantage.</p><p><strong>A Growing Family Welfare State and a Shrinking Public One</strong></p><p>The United States prides itself on being a socially mobile society where what one does is more important than the racial and class circumstances of one’s birth. Indeed, in the three decades after World War II, between 1947 and 1977, social mobility increased, particularly for the white working class. This imprinted a national self-identity as a meritocratic society, especially juxtaposed with the old “caste societies” of Europe, with their static class systems and calcified social mobility.</p><p>That story of European versus U.S. social mobility has now been turned on its head. European nations and Canada, with their social safety nets and investments in early childhood education, are experiencing greater social mobility. Canada now has three times the social mobility of the U.S. Budget cuts at all levels of government have dismantled post–World War II public investments that had begun to create greater opportunities for economically and racially disadvantaged families. Higher education has taken one of the biggest hits. Meanwhile, the relative advantage of wealthy families, in terms of social capital and civic engagement, has accelerated over the past 30 years.</p><p>The idea that people’s futures might be economically determined deeply offends U.S. sensibilities. We want to believe that individual moxie matters, that a person’s creativity, effort, and intelligence will lead to economic success. Stories of exceptional strivers, heroically overcoming a stacked deck of obstacles, divert our attention from the data. But the large mega-trends are now indisputable. If you fail to pick wealthy parents and want to experience the American dream today, move to Canada.</p><p><strong>Parental Investments from Birth</strong></p><p>Long before our four 21-year-olds considered college, they were on different glide paths. Debt-free Miranda was the beneficiary of parental investments that prepared her for school and high achievement. She grew up in a book-filled and conversation-rich home environment with college-educated parents that had more leisure and vacation time to spend with her. She spent more time in ecologically pristine environments and had access to recreation, health care, and nutritious food. Her parents, knowledgeable about brain development, talked to her, using vastly more vocabulary words than children of other classes hear. When she was away from her parents, they paid for comparably stimulating child-care settings.</p><p>Researcher Meredith Phillips found that by age six, wealthier children spent as many as 1,300 more hours a year than poor children on enrichment activities such as travel, music lessons, visits to museums, and summer camp. All this results in much higher math and reading skills and other attainments later in life.</p><p>Success-bound Miranda had more opportunities than her non-wealthy peers to develop the important social capital that results from more time with parents and time spent in social institutions such as religious congregations, civic organizations, and extracurricular activities. Working-class youth, often with parents holding down multiple jobs to make up for several decades of stagnant wages, are more socially disconnected or connected in dysfunctional ways. As a result, they develop fewer “soft skills” useful in job networking and workplaces.</p><div id="in-article-ad">As our foursome enter K-12 school, once considered the great avenue to equal opportunity, disparities widen. The early literacy and reading support conferred by the more advantaged families leads their children to pull away from others, not just those with low incomes. Class-based disparities in the cognitive skills of reading and math test scores have grown since the 1970s, corresponding with the national income and wealth gap. According to researcher Sean Reardon, the income-achievement gap between children from high- and low-income families is roughly 30 percent to 40 percent larger among children born in 2001 than among those born in 1976.</div><p>Among “high achievers,” the top 4 percent of students nationwide, 34 percent come from the top quartile, households with incomes of more than $120,776. Only 17 percent come from the bottom quartile, with incomes of less than $41,472. The income-achievement gap is now bigger than the race gap, a reverse from 50 years earlier. The main explanation is that high-income parents of all races are investing more in children’s cognitive development.</p><p><strong>Family Advantage and College Success</strong></p><p>All four of our young adults graduated from their high schools in the top fifth of their classes. But their high-school experience was quite divergent, based on their community and neighborhood. The key decision point—as to whether to attend college and where—was largely driven by disparities in income and wealth in the form of parental investment, K-12 education systems, and college-preparatory supports.</p><p>In the 70 years since World War II, college attendance has played a significant role in employment opportunity and lifetime earnings. Over these 70 years, college entry has increased by more than 50 percent, and the rate of college completion by age 25 has more than quadrupled. But since 1980, an income-based gap has grown up in terms of college completion.</p><p>Low-income students born around 1980 only increased their college-graduation rates by 4 percent—whereas higher-income cohorts saw their graduation rates go up by 18 percent. The greatest inequality has been among women, driven by increases in college completion by the daughters of higher-income households—and the lack of opportunities for non-wealthy women.</p><p>Marcus’s family, like Miranda’s, placed a strong emphasis on attending college and college preparation. He went to a suburban public school that provided college-bound students with Advanced Placement classes, college counseling, and seminars for parents. While not as wealthy as Miranda’s family, Marcus’s family, also like Miranda’s, paid for the services of the burgeoning college-preparation industry to boost their child’s SAT scores. But in terms of family wealth, Marcus was on his own after high school, venturing into higher education and work without family resources and a financial safety net. As a consequence, in his thirties and forties, he will have more debts than assets.</p><p>Miranda and barista Tony share an important parental boost that college student Marcus didn’t have: Their parents passed on financial-preparation and money-literacy skills. Both children learned about money from parents who gave them allowances to manage and encouraged them to open bank accounts and save. Initial research suggests that financial literacy may be a more important factor than schooling in lifetime wealth accumulation and retirement savings. Tony learned thrift and debt avoidance. These skills are much more important in the current environment, with unregulated predatory lenders and a bewildering variety of student-loan products to choose from.</p><p>Tony will benefit from modest family-wealth transfers, thanks to a previous generation of social investments, which include his grandfather’s government-subsidized home mortgage. Tony will tap into what Sally Koslow, in her bookSlouching toward Adulthood, calls the “middle class trust fund”: free room and board and cable and Internet access. Tony’s parents don’t consider their support for him a legacy advantage. They understand that the deck is stacked against their son, who will most likely never be rich without a winning lottery ticket or marrying into money. Their temporary housing and modest gifts—the purchase of a truck and money to get a trade license—are hedges against his downward mobility and destitution.</p><p>Cordelia’s parents did what they could to better her prospects, ensuring she was in a good elementary school and steered to engaging teachers. They found her affordable summer day camps and other enrichment experiences. But when it came time for her to consider college, Cordelia was flying solo. Like many talented low-income students, she didn’t apply to one of the nation’s selective schools. Only 5 percent of the total enrollment at the 28 most selective private colleges is from families in the bottom fifth of income distribution. But 70 percent of the enrollment consists of students in the highest-income distribution. Like the majority of low-income college students, Cordelia did not complete college. A key missing ingredient for Cordelia was effective college guidance, within her school and at home.</p><p>How young people finance college has its own disparities. Low-income and minority students that get proper guidance can sometimes obtain significant scholarships at private colleges and graduate with less debt than students attending public universities. Miranda’s parents paid full freight for her college. Marcus, navigating the college-financing jungle on his own, got little financial aid and signed up for a loan package that will cost him twice as much over time due to higher interest payments as the cheapest available plan. If Marcus were attending college 40 years earlier, he probably would have graduated debt-free as a result of lower tuition and public financial-aid programs.</p><p>One of the huge breakaway wealth advantages is unpaid internships in one’s career area, an essential leg up in the transition from school to work. Entry-level workers are now expected to show up with work experience. Research shows that half of college-graduate hires had previously interned at the firm where they were hired. While Miranda received family support to take unpaid internships, other college students like Marcus used every non-school hour to earn money in jobs outside their career area.</p><p>Family wealth also serves as a form of adversity insurance, as young adults face potential setbacks including prolonged unemployment, bad credit, health or addiction problems, criminal arrests, car breakdowns or accidents, or early parenthood. Young adults may make poor decisions or face unforeseen circumstances, but in almost every case, family wealth will help keep young people on track, whether it comes in legal assistance, treatment, or regular cash infusions.</p><p><strong>Closing the Advantage Gap</strong></p><p>What, if anything, can be done to offset the torrent of perks and advantages that wealthy parents confer to their progeny as they compete for slots in educational institutions, internships in their field of interest, entry-level jobs, affordable housing, and other resources?</p><p>The first step is to acknowledge the depth of the declining mobility and opportunity problem, a story that is just beginning to be understood after three decades of extreme inequality. The image of post–World War II white mobility still reverberates and dominates our national mythology, especially for our political class and whites over the age of 50. But the present inequalities of wealth have fundamentally altered the playing field for the next two generations.</p><p>Even ideological critics of social investment have begun to acknowledge the intergenerational class disparities. Conservative Reihan Salam acknowledges the “incumbent-protection story” of wealthy families, observing that “it is possible that non-black families in the top three-fifths of the income distribution are giving their children advantages that protect them from scrappy upstarts in ways that might damage our growth prospects.” Let alone principles of fairness, opportunity, and equity!</p><p>Sustained public investments in opportunity are critical to level a playing field that is constantly being upended by wealth advantage. We can’t remove the capacity of well-off families to help advantage their offspring, but we can give others more of a shot.</p><p>Other industrialized countries have demonstrated that public investments in health, education, and family well-being can offset the private advantages of wealth and improve social mobility. Initiatives like the “Baby College” of the Harlem Children’s Zone, Head Start, the U.S.’s Nurse-Family Partnership program, and universal preschool programs, such as those in France and Denmark, partially close the gaps in school achievement and subsequent wages. Several of these initiatives coach new parents on childhood health and wellness, discipline, brain development, and games and enrichment resources available to their children.</p><p>High-quality pre-kindergarten education, access to health care and nutrition, good K-12 public education, and early diagnosis of learning disabilities and special needs are key interventions that help people equalize life chances. The fact that inequalities of opportunity now accelerate as schooling begins is testament to the need to defend and expand funding for public education at all levels. More than three-fourths of undergraduate college students attend public universities and colleges, which are facing the worst state cuts.</p><p>There are also private-sector and personal interventions that could reduce runaway unequal opportunity. Community foundations can partner with business and cultural institutions to ensure that public and private funding for youth enrichment, arts and sports programs, summer camps, and stimulating after-school programs survive budget cutting. This must include resources for outreach to the most socially disconnected families to ensure their children have access to these opportunities.</p><p>The U.S. Department of Labor should police the unpaid and underpaid internship marketplace, cracking down on companies that replace paid positions with unpaid ones. Certain sectors that disproportionately offer unpaid internships as a stepping-stone to career networks—journalism, politics, and entertainment—should do deep soul-searching about the implications for the widespread exclusion of working- and middle-class youth. Private-sector and government agencies that offer internships should create stipend and compensation pools to ensure that non-wealthy young people have an equal shot at internships. Donors should fund internship positions at nonprofit organizations they care about, expanding the pool of young people that can intern there.</p><p> Privileged families will always seek to extend their own advantages to their children, but restoring greater progressivity to the tax system would ensure that wealthy families still contribute to the opportunities of others. Another intervention would be to eliminate or reduce the tax deductibility of contributions to private schools and colleges, except if directly used for scholarships for disadvantaged youth.</p><p>One elegant solution would be to tax wealth to broaden opportunity. Revenue from a steeply progressive estate or inheritance tax could capitalize an “education-opportunity trust fund” to provide debt-free college educations for first-generation college students.</p><p>Wealthy families concerned about declining social mobility should use their special privileges to stop the advantage arms race. They should match any family subsidies with tax dollars and donations to organizations that promote mobility. Without such interventions, the U.S. will further drift toward being a caste society, where opportunity, occupation, and social status are based on inherited advantage, fractured along class lines.</p> Wed, 29 May 2013 07:02:00 -0700 Chuck Collins, The American Prospect 847156 at http://blogs.alternet.org Corporate Accountability and WorkPlace Corporate Accountability and WorkPlace wealth children college 10 Steps to Break Up the Wealth of the Super Rich http://blogs.alternet.org/books/10-steps-break-wealth-super-rich <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Here&#039;s what it&#039;s going to take to have a society where everybody prospers and get a fair shake, as this excerpt from Collins&#039; book 99 to 1 explains.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/photo_-__2012-10-10_at_11.28.08_am.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p><em>The following is an excerpt from <em><a href="http://www.bkconnection.com/ProdDetails.asp?ID=9781609945923">99 to 1: How Wealth Inequality Is Wrecking the World and What We Can Do About It </a>,</em> by Chuck Collins (Berrett-Koehler, 2012).</em></p><p>We must change the rules of the economy so that they serve and lift up the 100 percent, not just the 1 percent. Starting in the mid-1970s, the rules were changed to reorient the economy toward the short-term interests of the 1 percent. We can shift and reverse the rules to work for everyone.</p><p>Three Types of Rule Changes</p><p>There are three categories of policy changes that we need: rules and policies that raise the floor, those that level the playing field, and those that break up overconcentrations of wealth and corporate power. These are not hard-and-fast categories, but a useful framework for grouping different rule changes.</p><p>1.Rule changes that raise the floor</p><p>• Ensure the minimum wage is a living wage<br />• Provide universal health care<br />• Enforce basic labor standards and protections</p><p>2. Rule changes that level the playing field</p><p>• Invest in eduction<br />• Reduce the influence of money in politics<br />• Implement fair trade rules</p><p>3. Rule changes that break up wealth and power</p><p>• Tax the 1 percent<br />• Rein in CEO pay<br />• Stop corporate tax dodging<br />• Reclaim our financial system<br />• Reengineer the corporation<br />• Redesign the tax revenue system<br /><br />Rule Changes That Raise the Floor</p><p>Policies that raise the floor reduce poverty and establish a fundamental minimum standard of decency that no one will fall below. The Nordic countries—Norway, Sweden, Denmark, and Finland—have very low levels of inequality, and they are also societies with strong social safety nets and policies that raise the floor.</p><p>One-third of people in the United States have no paid sick days, and one-half have no paid vacation days. Everyone deserves the right to take time off when sick and have a few weeks of vacation each year. In the rest of the developed world, these are considered basic human rights.</p><p>Examples of rule changes include:</p><p>Ensure the Minimum Wage Is a Living Wage. The minimum wage has lagged behind rising basic living expenses in housing, health care, transportation, and child care.</p><p>Provide Universal Health Care. Expand health coverage so that every child and adult has a minimum level of decent health care. No one should become sick or destitute because of lack of access to health care.</p><p>Enforce Basic Labor Standards and Protections. Ensuring basic worker rights and standards can lift up the bottom 20 percent of workers who are particularly exploited and disadvantaged in the current system. These rule changes include the forty-hour workweek, minimum vacation and family medical leave, sick leave, and protections against wage theft. Such rules contribute to a more humane society for everyone.</p>Rule Changes That Level the Playing Field<p>Policies and rule changes that level the playing field eliminate the unfair wealth and power advantages that flow to the 1 percent. Examples include:</p><p>Invest in Education. In the current global economy, disparities in education reinforce and contribute to inequality trends. Public investment in education is one of the most important interventions we can make to reduce inequality over time. “Widespread education has become the secret to growth,” writes World Bank economist Branko Milanovic. “And broadly accessible education is difficult to achieve unless a society has a relatively even income distribution.”</p><p>Reduce the Influence of Money in Politics. Through various campaign finance reforms—including public financing of elections—we can reduce the nexus between gigantic wealth and political influence. Reforms include limits to campaign contributions, a ban on corporate contributions and influence, and a requirement for timely disclosure of donations.</p><p>Implement Fair Trade Rules. Most international free trade treaties have boosted the wealth of the 1 percent, whose members are the largest shareholders of global companies. Free trade rules often pit countries against one another in a race to lower standards addressing child labor, environmental protection, workers’ rights to organize, and corporate regulation. Countries with the weakest standards are rewarded in this system. Fair trade rules would raise environmental and labor standards, so companies compete on the basis of other efficiencies.</p>Rule Changes That Break Up Wealth and Power<p>We can raise the floor and work toward a level playing field, but we cannot stop the perverse effects of extreme inequality without boldly advocating for policies that break up excessive concentrations of wealth and corporate power.</p><p>For example, we cannot pass campaign finance laws that seek clever ways to limit the influence of the 1 percent, as they will always find ways to subvert the law. Concentrated wealth is like water flowing downhill: it cannot stop itself from influencing the political system. The only way to fix the system is to not have such high levels of concentrated wealth. We need to level the hill!</p><p>This section examines several far-reaching policy initiatives, the tough changes that have to be considered if we’re going to reverse extreme inequality. Some of these proposals have been off the public agenda for decades or have never been seriously considered.</p><p>Tax the 1 Percent. Historically, taxing the 1 percent is one of the most important rule changes that have reduced the concentration of wealth. In 1915, Congress passed laws instituting federal income taxes and inheritance taxes (estate taxes). Over the subsequent decades, these taxes helped reduce the concentrations of income and wealth and even encouraged Gilded Age mansions to be turned over to civic groups and charities.</p><p>Taxes on higher income and wealth reached their zenith in the mid-1950s. At the time, the incomes of millionaires were taxed at rates over 91 percent. Today, the percentage of income paid by millionaires in taxes has plummeted to 21 percent. Back then, corporations contributed a third of the nation’s revenue. Today, corporations pay less than one-tenth of the nation’s revenue. The corporate 1 percent pays an average of 11.1 percent of income in taxes, down from 47.4 percent in 1961.</p><p>Taxes on the wealthy have steadily declined over the last fifty years. If the 1 percent paid taxes at the same actual effective rate as they did in 1961, the U.S. Treasury would receive an additional $231 billion a year. In 2009, the most recent year for which data are available, 1,500 millionaires paid no income taxes, largely because they dodged taxes through offshore tax schemes, according to the IRS.</p><p>As with inequality, the higher up the income ladder people are, the lower the percentage of income they pay in taxes. This is why Warren Buffett’s disclosure about his own low taxes was so important. Buffett revealed that in 2010, he paid only 14 percent of his income in federal taxes, lower than the 25 or 30 percent rate that his co-workers paid. Buffett wrote:</p><p><em>While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.</em></p><p><br /><em>These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.</em></p><p><br />The richest 400 taxpayers have seen their effective rate decline from over 40 percent in 1961 to 18.1 percent in 2010.<br />Between 2001 and 2010, the United States borrowed almost $1 trillion to give tax breaks to the 1 percent. The 2001 and 2003 tax cuts passed under President George W. Bush were highly targeted to the top 1 and 2 percent of taxpayers. They included reducing the top income tax rate, cutting capital gains and dividend taxes, and eliminating the estate tax, our nation’s only levy on inherited wealth.</p><p><br />Are we focusing too much on taxing millionaires, given the magnitude of our fiscal and inequality problems? Won’t we have to raise taxes more broadly? It is true that taxing the 1 percent won’t entirely solve our nation’s short-term deficit problems or dramatically reduce inequality in the short run. But it will have a meaningful impact on both problems over time. Thirty years of tax cuts for the 1 percent have shifted taxes onto middle- income taxpayers; they have also added to the national debt, which simply postpones additional tax increases on the middle class. Progressive taxes, as were seen in the United States after World War I and during the Great Depression, do chip away at inequalities. These extreme inequalities weren’t built in a day, and the process of reversing them will not be instant, either. But when there is less concentrated income and wealth, there will be less money available for the 1 percent to use to undermine the political rule-making process.</p><p><br />Rein in CEO Pay. The CEOs of the corporate 1 percent are among the main drivers of the Wall Street inequality machine. They both push for rule changes to enrich the 1 percent and extract huge amounts of money for themselves in the process. But they are responding to a framework of rules that provide incentives to such short-term thinking. An early generation of CEOs operated within different rules and values—and they had a longer-term orientation.</p><p>There is a wide range of policies and rule changes that could address the skewed incentive system that results in reckless corporate behavior and excessive executive pay. What follows are several principles and examples of reforms that will reduce concentrated wealth among the 1 percent and also reform corporate practices:</p><p>• Encourage narrower CEO-worker pay gaps. Extreme pay gaps—situations where top executives regularly take home hundreds of times more in compensation than average employees—run counter to basic principles of fairness. These gaps also endanger enterprise effectiveness. Management guru Peter Drucker, echoing the view of Gilded Age financier J. P. Morgan, believed that the ratio of pay between worker and executive could run no higher than twenty to one without damaging company morale and productivity. Researchers have documented that Information Age enterprises operate more effectively when they tap into and reward the creative contributions of employees at all levels.</p><p>An effective policy would mandate reporting on CEO-worker pay gaps. The 2010 Dodd-Frank financial reform legislation included a provision that would require companies to report the ratio between CEO pay and the median pay for the rest of their employees. This simple reporting provision is under attack, but should be defended, and the pay ratio should become a key benchmark for evaluating corporate performance.</p><p>• Eliminate taxpayer subsidies for excessive executive pay. Ordinary taxpayers should not have to foot the bill for excessive executive compensation. And yet they do—through a variety of tax and accounting loopholes that encourage executive pay excess. These perverse incentives add up to more than $20 billion per year in forgone revenue. One example: no meaningful regulations currently limit how much companies can deduct from their taxes for the expense of executive compensation. Therefore, the more firms pay their CEO, the more they can deduct off their federal taxes.</p><p>An effective policy would limit the deductibility of excessive compensation. The Income-Equity Act (HR 382) would deny all firms tax deductions on any executive pay that runs over twenty-five times the pay of the firm’s lowest-paid employee or $500,000, whichever is higher. Companies can pay whatever they want, but over a certain amount, taxpayers shouldn’t have to subsidize it. Such deductibility caps were applied to financial bailout recipient firms and will be applied to health insurance companies under the health care reform legislation.</p><p>• Encourage reasonable limits on total compensation. The greater the annual reward an executive can receive, the greater the temptation to make reckless executive decisions that generate short-term earnings at the expense of long-term corporate health. Outsized CEO paychecks have also become a major drain on corporate revenues, amounting, in one recent period, to nearly 10 percent of total corporate earnings. Government can encourage more reasonable compensation levels without having to micromanage pay levels at individual firms.</p><p>An effective policy would raise top marginal tax rates. As discussed earlier, taxing high incomes at higher rates might be the most effective way to deflate bloated pay levels. In the 1950s and 1960s, compensation stayed within more reasonable bounds, in part because of the progressive tax system.</p><p>• Force accountability to shareholders. On paper, the corporate boards that determine executive pay levels must answer to shareholders. In practice, shareholders have had virtually no say in corporate executive pay decisions. Recent reforms have made some progress toward forcing corporate boards to defend before shareholders the rewards they extend to corporate officials.<br />An effective policy would give shareholders a binding voice on compensation packages. The Dodd-Frank reform includes a provision for a nonbinding resolution on compensation and retirement packages.</p><p>• Accountability to broader stakeholders. Executive pay practices, we have learned from the run-up to the 2008 financial crisis, impact far more than just shareholders. Effective pay reforms need to encourage management decisions that take into account the interests of all corporate stakeholders, not just shareholders but also consumers, employees, and the communities where corporations operate.</p><p>An effective policy would ensure wider disclosure by government contractors. If a company is doing business with the government, it should be held to a higher standard of disclosure. Taxpayers, workers, and consumers should know the extent to which our tax dollars subsidize top management pay. One policy change would be to pass the Patriot Corporations Act to extend tax incentives and federal contracting preferences to companies that meet good-behavior benchmarks that include not compensating any executive at more than 100 times the income of the company’s lowest-paid worker.</p><p>Stop corporate tax dodging.There are hundreds of large transnational corporations that pay no or very low corporate income taxes. These include Verizon, General Electric, Boeing, and Amazon. A common gimmick of the corporate 1 percent is to shift profits to subsidiaries in low-tax or no-tax countries such as the Cayman Islands. They pretend corporate profits pile up offshore while their losses accrue in the United States, reducing or eliminating their company’s obligation to Uncle Sam.</p><p>These same companies, however, use our public infrastructure—they hire workers trained in our schools, they depend on the U.S. court system to protect their property, and our military defends their assets around the world—yet they’re not paying their share of the bill. In a time of war, the unequal sacrifice and tax shenanigans of these companies are even more unseemly.</p><p>Corporate tax dodging hurts Main Street businesses, the 99 percent that are forced to compete on a playing field that isn’t level. “Small businesses are the lifeblood of local economies,” said Frank Knapp, CEO of the South Carolina Small Business Chamber of Commerce. “We pay our fair share of taxes and generate most of the new jobs. Why should we be subsidizing U.S. transnationals that use offshore tax havens to avoid paying taxes?”</p><p>This same offshore system facilitates criminal activity, from the laundering of drug money to the financing of terrorist networks. Smugglers, drug cartels, and even terrorist networks such as al-Qaeda thrive in secret offshore jurisdictions where individuals can hide or obscure the ownership of bank accounts and corporations to avoid any reporting or government oversight.</p><p>The offshore system has spawned a massive tax-dodging industry. Teams of tax lawyers and accountants add nothing to the efficiency of markets or products. Instead of making a better widget, companies invest in designing a better tax scam. Reports about General Electric’s storied tax dodging dramatize how modern trans-nationals view their tax accounting departments as profit centers.</p><p>The combination of federal budget concerns and a growing public awareness of corporate tax avoidance will lead to greater focus on legislative solutions. One strategic rule change would be for Congress to pass the Stop Tax Haven Abuse Act, which would end costly tax games that are harmful to domestic U.S. businesses and workers and blatantly unfair to those who pay their fair share of taxes.</p><p>One provision of the act would treat foreign subsidiaries of U.S. corporations whose management and control are primarily in the United States as U.S. domestic corporations for income tax purposes. Another provision would require country-by-country reporting so that transnational corporations would have to disclose tax payments in all jurisdictions and not easily be able to pit countries against one another.</p><p>The act would generate an estimated $100 billion in revenues a year, or $1 trillion over the next decade.</p><p>Reclaim Our Financial System.Wall Street and the top 1 percent have conducted a dangerous experiment on our lives. They have destroyed the livelihoods of billions of people around the planet in a bid to control the financial flows of the world and funnel money to the global 1 percent.</p><p>We sometimes forget that our financial sector is a human-created system that should serve the public interest and be subordinate to the credit needs of the real economy. Instead, we have a system where the planet is ruled by a tiny 1 percent of financial capital.<br />As quoted earlier, David Korten writes in “How to Liberate America from Wall Street Rule” that the “priority of the money system shifted from funding real investment for building community wealth to funding financial games designed solely to enrich Wall Street without the burden of producing anything of value.”</p><p>Communities across the country, as discussed earlier, are shifting funds out of the speculative banking sector and into community banks and lending institutions that are constructive lenders in the real economy.</p><p>More than 650,000 individuals have closed accounts at institutions such as Bank of America and moved their money. A number of religious congregations, unions, and civic organizations have followed suit. Now local governments are beginning to shift their funds. In the City of Boston, the City Council has voted to link deposits of public funds to institutions with strong commitments to community investments.</p><p>Here are some interventions to break Wall Street’s hold on our banking and money system:</p><p>• Break up the big banks. Reverse the thirty-year process of banking concentration and support a system of decentralized, community-accountable financial institutions committed to meeting the real credit needs of local communities. Limit the size of financial institutions to several billion dollars, and eliminate government preferences and subsidies to Wall Street’s too-big-to-fail banks in favor of the 15,000 community banks and credit unions that are already serving local markets.</p><p>• Create a network of state-level banks. Each state should have a partnership bank, similar to what’s been in place in North Dakota since 1919. These banks would hold government funds and private deposits and partner with community-based banks and other financial institutions to provide credit to enterprises and projects that contribute to the health of the local economy. The North Dakota experience has shown how a state bank can provide stability and curb speculative trends. North Dakota has more local banks than any other state and the lowest bank default rate in the nation.</p><p>• Create a national infrastructure and reconstruction bank. Instead of channeling Federal Reserve funds into private Wall Street banks, Congress should establish a federal bank to invest in public infrastructure and partner with other financial institutions to invest in reconstruction projects. The focus should be on investments that help make a transition to a green, sustainable economy.</p><p>• Provide rigorous oversight of the financial sector. The 2010 reforms to the financial sector failed to curtail some of the most destructive, gambling-oriented practices in the economy. The shadow banking system—including unregulated hedge funds—should be brought under greater oversight, like other utilities, and Congress should levy a financial speculation tax on transactions to pay for the oversight system.</p><p>• Restructure the federal reserve. The Federal Reserve has been creating money and channeling it to beneficiaries within the economy with no public accountability. The Fed contributed to the economic meltdown by failing to provide proper oversight for financial institutions under its jurisdiction, keeping easy credit flowing during an asset bubble, ignoring community banks, and then propping up bad financial actors. The Fed must be reorganized to be an independent federal agency with proper oversight and accountability. Its regulatory functions should be separated from its central bank functions, the new regulator given teeth to enforce rules, and individuals who work for the regulatory agency prevented from subsequently going to work for banks.</p><p>• Re-engineer the Corporation. The concentration of power in the corporate 1 percent has endangered our economy, our democracy, and the health of our planet. There is no alternative but to end corporate rule. This will require not only reining in and regulating the excesses of the corporate 1 percent but also rewiring the corporation as we know it.</p><p>Unfortunately, the Supreme Court’s<em>Citizens United</em>(2010) decision moves things in the wrong direction, giving corporations greater “free speech” rights to use their wealth and power to change the rules of the economy. An essential first step in shifting the balance back to the 99 percent is reversing the Citizens United decision through congressional action.</p><p>There are good and ethical human beings working in corporations and in the 1 percent. But the hardwiring of these companies is toward the maximization of profits for absentee shareholders and toward reducing and shifting the cost of employees, taxes, and environmental rules that shrink profits. The current design of large global corporations enables them to dodge responsibilities and obligations to stakeholders, including employees, localities, and the ecological commons. The corporate 1 percent may pledge loyalty to the rule of law, but they spend an inordinate amount of resources lobbying to reshape or circumvent these laws, often by moving operations to other countries and to secrecy jurisdictions.</p><p>At the root of the problem is a power imbalance. Concentrated corporate power is unaccountable—and there is little countervailing force in the form of government oversight or organized consumer power.</p><p>Looking at corporate scandals such as those of Enron and AIG, or at the roots of the 2008 economic meltdown, we find case studies of the rule riggers within the corporate 1 percent using political clout to rewrite government rules, dilute accounting standards, intimidate or co-opt government regulators, or outright lie, cheat, and steal.</p><p>Changing the rules for the corporate 1 percent is not anti-business and, by creating a level playing field and a framework of fair rules, will actually strengthen the 99 percent of businesses that most contribute to our healthy economy. A new alignment of business organizations reflects this. The American Sustainable Business Council is an alternative to the U.S. Chamber of Commerce and advocates for high-road policies that will build a durable economy with broad prosperity.</p><p>Communities have used a wide range of strategies to assert rights and power in relation to corporations. In 2007, the Strategic Corporate Initiative published an overview of these strategies in a report called “Toward a Global Citizens Movement to Bring Corporations Back Under Control.” Many strategies are incremental, but worth understanding as part of the lay of the land in rule changes.</p><p>• Engage in consumer action. As stakeholders, consumers have leverage to change corporate behavior. Examples include consumer boycotts that changed Nestlé’s unethical infant formula marketing campaigns around the world and softened the hardball anti-worker tactics of companies such as textile giant J. P. Stevens. New technologies are enabling consumers to be more sophisticated in leveraging their power to force companies to treat employees and the environment better.</p><p>• Promote socially responsible investing. Shareholders can also exercise power by avoiding investments in socially injurious corporations. In 2010, over $3 trillion in investments were managed with ethical criteria. Companies do change some behaviors when concerned about their reputations.</p><p>• Use shareholder power for the common good. For more than forty years, socially concerned religious and secular organizations have utilized the shareholder process to change corporate behavior and management practices. Shareholder resolutions, in conjunction with educational and consumer campaigns, have altered corporate behavior, such as the movement to pressure U.S. companies to stop doing business in South Africa during the apartheid era.</p><p>• Change rules inside corporations to foster accountability. There are internal changes in corporate governance that potentially could broaden accountability and corporate responsibility. </p><p>These include:<br />• Shareholder power reforms. Presently, there are many barriers to the exercise of real shareholder ownership power and oversight. Corporations should have real governance elections, not hand-picked slates that rubber-stamp management decisions.<br />• Board independence. Public corporations should have independent boards free of cozy insider connections. This will enable them to hold management properly accountable.<br />• Community rights. Communities should have greater power to require corporate disclosure about taxes, subsidies, treatment of workers, and environmental practices, including use of toxic chemicals.<br />• Require federal corporate charters. Most U.S. corporations are chartered at the state level, and a number of states, including Delaware, have such low accountability requirements that they are home to thousands of global companies. But corporations above a certain size that operate across state and international boundaries should be subject to a federal charter.<br />• Define stakeholder governance. A federal charter could define the governing board of a corporation to include representation of all major stakeholders, including consumers, employees, localities where the company operates, and organizations representing environmental interests. The German experience with co-determination includes boards with community and employee representation.<br />• Ban corporate influence in our democracy. Corporations should be prohibited from any participation in our democratic systems, including elections, funding of candidates, political parties, party conventions, and advertising aimed at influencing the outcome of elections and legislation. This would require legislation to reverse the impact of the Supreme Court’s <em>Citizens United</em>decision.</p><p><br />Citizens United and Corporate Power</p><p>In January 2010, the U.S. Supreme Court decided the case known as <em>Citizens United v. Federal Election Commission</em>. It gave new rights of free speech to corporations by saying that governments could not restrict independent spending by corporations and unions for political purposes. This opened the door for new election-related campaign spending and has given birth to super PACs that further erode the power of the 99 percent to influence national politics.</p><p>Senator Charles Schumer (D-N.Y.) sponsored legislation called the DISCLOSE Act to force better disclosure of campaign financiers, but it has been opposed by the U.S. Chamber of Commerce and other big business lobbies.</p><p>Other potential remedies include a push for an amendment to the Constitution to remove the free speech rights for corporations that Citizens United provides. Move to Amend is a coalition organizing such an amendment.</p><p>The reeingineered corporation will still employ thousands of people and be innovative and productive. But it will be much more accountable to shareholders, to the communities in which it operates, and to customers, employees, and the common good.</p><p>Redesign the Tax Revenue System. This final section of rule changes examines how farsighted tax and revenue policies can aid in the transition to a new and sustainable economy. Present tax rules do not reflect the widely held values and priorities of the 99 percent. Rather, they reflect the designs and worldview of the powerful 1 percent of global corporations and wealthy individuals. The 1 percent devotes considerable lobbying clout to shaping and distorting our tax laws, which is one of the reasons those laws are so complex and porous.</p><p>Our tax revenue system should be simple, treat all fairly, and raise adequate revenue for the services we need. Tax rules and budgets are moral documents; we should not pretend they are value neutral.</p><p>We’ve already discussed two ways that the tax code has been distorted. The first is how it privileges income from wealth over income from work by taxing capital gains at absurdly low rates. Second, the offshore system gives advantages to the global tax dodgers in the corporate 1 percent who force domestic businesses in the 99 percent to compete on an uneven playing field.<br />Another example is the way our tax code offers larger incentives to mature extractive industries such as oil and natural gas instead of directing resources to communities and corporations that conserve resources, care for the Earth, and catalyze new green enterprises.<br />The present tax system not only fails to raise adequate revenue from those most capable of paying but also serves as a huge impediment to progress. Current tax rules lock us into the economy of the past, rather than encouraging a transition to a new economy rooted in ecological sustainability, good jobs, and greater equality.</p><p>Conventional tax wisdom asserts that we should “tax the bads” by placing a higher price on harmful activities. Hence the notion of “sin taxes” levied on liquor, tobacco, and now, with increasing ferocity, junk food. Taxing these items raises revenue to offset the societal costs of alcoholism, cancer, and obesity. But sin taxes, like any sales tax, are regressive, requiring lower-income households to pay a higher percentage of their income than the wealthy pay.</p><p>There are three major “bads” that our tax code should be revised to address:<br />1. Extreme concentrations of income, wealth, and power that undermine social cohesion and a healthy democracy<br />2. Financial speculation, such as the activities that destabilized our economy in 2008<br />3. Pollution and profligate consumption that deplete our ecosystems</p><p>There are several bold interventions that focus on “taxing the bads” of our contemporary era and reversing two generations of tax shifts away from the 1 percent. They cluster around three foci: taxing concentrated wealth, taxing financial speculation, and taxing the destruction of nature.</p><p>• Tax inheritances. Levy a progressive estate tax on the fortunes of the 1 percent. At the end of 2010, Congress reinstated the estate tax on estates over $5 million ($10 million for a couple) at a 35 percent rate. Congress could close loopholes and raise additional revenue from the 1 percent with the greatest capacity to pay. The Responsible Estate Tax Act establishes graduated tax rates, with no tax on estates worth under $3.5 million, or $7 million for a couple, and includes a 10 percent surtax on the value of an estate above $500 million, or $1 billion for a couple. Estimated annual revenue: $35 billion.</p><p>• Institute a wealth tax on the 1 percent. A “net worth tax” should be levied on individual or household assets, including real estate, cash, investment funds, savings in insurance and pension plans, and personal trusts. The law can be structured to tax wealth only above a certain threshold. For example, France’s solidarity tax on wealth is for those who have assets in excess of $1.1 million.</p><p>• Establish new tax brackets for the 1 percent. Under our current tax rate structure, households with incomes over $350,000 pay the same top income tax rate as households with incomes over $10 million. In the 1950s, there were sixteen additional tax rates over the highest rate (35 percent) that we have today. A 50 percent rate on incomes over $2 million would generate an additional $60 billion a year.</p><p>• Eliminate the cap on social security withholding taxes. Extend the payroll tax to cover all wages, not just wage income up to $110,100. Today, some in the 1 percent are done paying their withholding taxes in January, while people in the 99 percent pay all year.</p><p>• Institute a financial speculation tax. A tax on financial transactions could generate significant funds for reinvesting in the transition to a financial system that works for everyone. Speculative trading now accounts for up to 70 percent of the trades in some markets. Commodity speculation unnecessarily bids up the cost of food, gasoline, and other basic necessities for the 99 percent. A modest federal tax on every transaction that involves the buying and selling of stocks and other financial products would both generate substantial revenue and dampen reckless risk taking. For ordinary investors, the cost would be negligible, like a tiny insurance fee to protect against financial instability. Estimated revenue: $150 billion a year.</p><p>• Tax income from wealth at higher rates. Giving tax advantages to income from wealth also encourages speculation. As described by Warren Buffett and others, we can end this preferential treatment for capital gains and dividends and at the same time encourage average families to engage in long-term investing. Estimated revenue: $88 billion per year.</p><p>• Tax carbon. Instead of taxpayers paying indirectly for the expensive social costs associated with climate change, taxes could build some of these real costs into purchases and products. Perhaps the most critical tax intervention to slow climate change would be to put a price on dumping carbon into the atmosphere from the transportation, energy, and other sectors. For example, the real ecological and societal costs of private jet travel would greatly increase the cost of owning or using private jets. A gradually phased-in tax on carbon would create tremendous incentives to invest in energy conservation and regional green infrastructure. Proposals include a straight carbon tax or a cap-and-dividend proposal that would rebate 50 percent of revenue to consumers to offset the increased costs of some products and still generate $75–100 billion per year. We could also explore similar taxes on other pollutants, such as nitrates that are destroying our water supplies.</p><p>• Tax excessive consumption. Consumption of unnecessary stuff, especially by the 1 percent, is filling our landfills and destroying our environment. A tax on certain nonessential goods, such as expensive jewelry and technological gadgets, would reflect the real ecological cost of such items. It could apply only to purchases that exceed a certain amount, such as cars that cost more than $100,000. Some states currently charge a luxury tax on high-end real estate transactions.</p><p>Objections by some in the 1 percent to these proposals will be strong, along with howls of “class warfare” and “job killing.” Some will argue that government shouldn’t be in the business of picking winners in the economy. But the reality is that our current tax policy is picking winners every day, and they’re usually in the 1 percent.</p><p>For several generations after the introduction of a federal income tax at the end of the nineteenth century, our progressive federal tax system was moderately effective in reducing concentrations of wealth. As we briefly described, during the 1950s wealthy individuals paid significantly more taxes than they do today. Since 1980, however, we’ve lived through a great tax shift as lawmakers moved tax obligations off the wealthy and onto low- and middle-income taxpayers, off corporations and onto individuals, and off today’s taxpayers and onto our children and grandchildren.</p><p>This program would reverse these tax shifts and set up signposts to help with the transition to the new economy.</p><p>Published with permission from Berrett Koehler, copyright 2012. From the new book <a href="http://www.bkconnection.com/ProdDetails.asp?ID=9781609945923"><em>99 to 1: How Wealth Inequality Is Wrecking the World and What We Can Do About It.</em></a></p> Wed, 10 Oct 2012 11:26:00 -0700 Chuck Collins, Berrett-Koehler Publishers 724832 at http://blogs.alternet.org Books Books Economy 99 to 1 economy wealth super rich inequality Most of Us Will Not Have a Better Life Unless We Turn the Tables on the Super Rich http://blogs.alternet.org/books/most-us-will-not-have-better-life-unless-we-turn-tables-super-rich <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Chuck Collins&#039; new book &#039;99 to 1&#039; reveals how wealth inequality is wrecking everything. </div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/images/managed/topstories_wealthcounselpic.jpg" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--> <p>The following is an excerpt from <em><a href="http://www.bkconnection.com/ProdDetails.asp?ID=9781609945923">99 to 1: How Wealth Inequality Is Wrecking the World and What We Can Do About It</a>,</em> by Chuck Collins (Berrett-Koehler, 2012).</p><p><em>An economy so dependent on the spending of a few is also prone to great booms and busts. The rich splurge and speculate when their savings are doing well. But when the values of their assets tumble, they pull back. That can lead to wild gyrations. Sound familiar? It’s no mere coincidence that over the last century the top earners’ share of the nation’s total income peaked in 1928 and 2007—the two years just preceding the biggest downturns. —Robert Reich (b. 1946)</em></p><p>There are many theories about what triggered the 2008 economic meltdown. These explanations focus on bad actors such as the large banks and financial firms, the unregulated “shadow” financial sector, and unethical subprime mortgage pushers.</p><p>But there is a missing lens to the story, one that shows how the economic meltdown was caused by excessive income and wealth inequality. The two triggers were consumption by the 99 percent based on borrowing rather than real wage growth, and reckless financial speculation by the 1 percent.</p><p>Ingredient 1: Consumption Based on Borrowing, Not Real Wage Growth</p><p>Real wages for the bottom 80 percent of households have remained relatively stagnant since the late 1970s. People survived these stagnant wages by working more hours, bringing more family members into the paid labor force, and borrowing more, thanks to easy access to credit. This put enormous stresses on many working families as they got caught on a work-consume-borrow treadmill. But for many, this was the only way to attain or maintain a middle-class standard of living.</p><p>Most households stopped being able to save. In 1980, the savings rate—the share of people’s income saved after expenses—was 11 percent. By 2007, the U.S. savings rate had plummeted to less than 2 percent, meaning people were earning only slightly more than they were spending.</p><p>Did things appear different? With a median income of roughly $50,000, many people in the United States were living with little surplus. That said, the parking lots at the mall and the Applebee’s restaurant were full. The rising middle class bought new cars, teenagers got smartphones, and families took expensive vacations. These feats of consumption were not a reflection of rising wages. In some cases, increased spending was the result of two or three incomes. But most purchasing was made possible by families taking on more debt. Consumer debt—both credit card and home equity loans—escalated during the decade prior to 2008. The total amount of credit card debt exploded, thanks in part to aggressive “debt pushing.” In 2006, there were 6 billion credit card solicitations sent out.The majority of home financing was for second mortgages, not new home acquisitions. Access to easy credit was the drug that enabled millions to live beyond their means.</p><p>Exploding consumer debt was worsened by a shift in the culture, as extensive borrowing became more socially sanctioned. The debt pushers contributed to this, advertising cheap credit and peddling home equity loans as the new normal.</p><p>Overwork and debt masked the reality of falling and stagnant wages. If you and your neighbors could still acquire a flat-screen TV and take a Caribbean vacation, then it was hard to feel constrained. But these trends were fundamentally unstable. Underlying these indicators was a growing credit card and housing mortgage bubble. Think of the sound track from the movie Jaws as a shark creeps up on the unsuspecting swimmer.</p><p>The entire economy was humming, but it wasn’t based on healthy wage growth and shared prosperity. The consumption engine driving the economic boom between 2000 and 2008 was based on borrowing, not real wage increases.</p><p>So when the economy seized up in 2008 and access to easy credit ground to a halt, so did the consumption engine. Millions of people lost their jobs or a significant household income. But they also lost the borrowing lifeline that had eased the gap between inadequate income and spending. Without debt-driven consumer demand, the entire economy froze.</p><p>Extremely unequal wages and income contributed to the collapse of consumer buying power. If consumption had been based on a foundation of healthy wage growth, the situation would have been considerably less volatile.</p>Ingredient Two: Financial Speculation<p>The dynamic of debt-based consumption was bad enough. But there was another way that inequality contributed to crashing the economy. At the top of the economic pyramid, those in the top 1 percent were doing their part by taking part in risky gambling. Unfortunately, the gambling was not confined to a casino, where the losses could be contained, but took place at the heart of our whole economy.</p><p>In 2007, the richest 1 percent owned 36.5 percent of all the private wealth in the United States and over 42.4 percent of all financial assets. Part of this estimated $20 trillion in wealth was in the form of land, houses, artwork, jewelry, private jets, and other private property. But an enormous fraction of it was in the form of stocks, bonds, and ownership stakes in the world’s corporations.</p><p>The 99 percent, when they have money to invest, look to banks, bonds, and mutual funds. But almost everyone in the 1 percent has investment professionals who advise them about allocating their invested wealth. So imagine for a moment that you’re a member of the 1 percent, with $200 million in wealth, and I’m your trusted investment advisor. It’s sometime between 2000 and 2007.</p><p>I explain that a typical asset allocation strategy is to park a portion of your wealth in stable investments that are a bulwark against serious market downturns. These include insured deposits in banks and credit unions and bonds backed by local, state, or federal governments. This guarantees that you will always be rich, even in tough times. The problem, I explain, is that these have relatively low rates of return. In fact, in 2005, we’re talking 2–3 percent returns. In other words, real snoozers.<br />I suggest taking another portion of your $200 million and investing in some long-term growth equities—companies that have been around for a long time. These include Ford, General Motors, and General Electric, the “blue chip” or seemingly stable companies. But it’s the same problem again: very boring and modest returns on investment, maybe 5–6 percent.</p><p>With another portion of your funds, we’ll start to increase risk and return, looking for a diversified mixture of small- and large-capitalization new companies outside the stock market. These are more interesting and have the potential for higher returns, in the 7–10 percent range.</p><p>Now we pause and take a deep breath. Our hearts start to beat a little faster in anticipation of what comes next. Up until now, we’ve pursued the investment strategy that the super-rich have employed for decades—diversified, sensible, a nice blend of risk and return. We will tweak it based on your age and special needs, but it’s a tried-and-true approach.</p><p>There is, however, a new class of investments that are generating very high returns. You’re smiling because this is what brought you in my door. These new investment vehicles are complicated but highly lucrative—dazzling returns of 10 or 15 percent. Some funds have even had 20 percent returns for five years in a row.</p><p>To get those returns, however, we have to make speculative, high-risk investments. These include investments in hedge funds, derivatives, and credit default swaps—some of the financial innovations that some very smart young fellows on Wall Street have designed. These are not investments in the “real economy,” in which firms make actual things or provide services that people use. Rather, these are ways to place financial bets on the movement of money and markets. The question for you is, how much are you willing to risk?</p><p>Think about your $200 million. If all you had was $20 million, you would be able to live a very wonderful life, meet all your material needs, and guard against most possible problems. You might not be able to buy genuine love or eternal life, though you’ll probably live longer. You’ll be able to go to the Mayo Clinic for whatever medical need you have and enjoy every luxury the planet has to offer. With another $20 million, you will be able to provide the same to your progeny.</p><p>So, setting aside that $40 million, you have $160 million you’re willing to gamble with. Wouldn’t it be fun to keep score and watch it multiply? It is, after all, mostly just numbers on a page or screen. So we allocate a large portion—let’s say $80 million—to the new financial instruments.</p><p>Now imagine this same conversation playing out in the wood-paneled offices of the 1 percent all across the planet between 1998 and 2007. As a result, huge amounts of wealth shifted into the speculative market.</p><p>The speculative funds of the top 1 percent are merged with additional trillions of dollars in sovereign wealth funds—the colossal piles of wealth generated by Middle Eastern oil profits and Chinese exports and held by central governments. Add to this the trillions in cash accumulated by the world’s corporate 1 percent—banks, insurance companies such as AIG, and the finance arms of corporations such as General Electric. That totals trillions of dollars of wealth looking for a home—not in sleepy investments in the real economy, which are incapable of generating such large returns, but in the casino-like speculative economy.</p><p>Wall Street drove this process by seeking more and more high-risk deals. One of their favorites was high-interest mortgage debt, known as subprime mortgages. Investment banks and brokers such as Morgan Stanley, Citigroup, and Bank of America called up mortgage lenders and people who bundled mortgages together and said, “Bring us more of those high-return, high-risk deals!” So trillions of dollars flowed into the shadow financial sector—and the deals became more and more delinked from the fundamentals of the real economy.</p><p>By 2007, the speculative bubbles had grown, not just in the housing market but also in other sectors of the economy. Commodity futures rose, pushing up the cost of foodstuffs and triggering food riots across the world. Speculation in oil futures drove up the cost of oil, and a gallon of gas during the summer of 2008 topped $4 a gallon. Americans spent hundreds of billions of dollars more on gas in 2008 than they did the previous year.<a href="blank">4</a> Funds that could have financed a transition to a green economy went to the oil industry, which enjoyed unprecedented profits—in 2008, ExxonMobil set records with profits of $45.2 billion.</p><p>Tick, tick, tick. Kaboom!</p><p>The extreme inequalities of wealth—stagnant wages and speculative activity—brought the economy to its knees. And here’s the bad news: it hasn’t stopped. As long as the 1 percent has excess money to bet with, they will continue seeking speculative investments.</p><p>Too bad it’s not a game in a casino. Unfortunately, it’s a very costly game. And the people paying the price with ruined lives are not in the 1 percent.</p><p>Published with permission from Berrett Koehler, copyright 2012. From the new book <a href="http://www.bkconnection.com/ProdDetails.asp?ID=9781609945923"><em>99 to 1: How Wealth Inequality Is Wrecking the World and What We Can Do About It.</em></a></p> Thu, 04 Oct 2012 16:11:00 -0700 Chuck Collins, Berrett-Koehler Publishers 721949 at http://blogs.alternet.org Books Books Economy 99 to 1 economy excerpt chuck collins inequality iHate Corporate Tax Dodgers: How Apple Avoids Paying Its Fair Share http://blogs.alternet.org/story/151140/ihate_corporate_tax_dodgers%3A_how_apple_avoids_paying_its_fair_share <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Apple looks downright patriotic next to master tax dodgers like General Electric and Boeing, but it still pays far less than it should.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>I’m an Apple fan. I’m writing on my third Mac laptop in a decade. I’ve purchased over $100,000 of Apple products for my staff over the same period. Plus all those iTunes gift cards for my teenage daughter.<br />  <br /> So I was disappointed to learn that Apple is a tax dodger.<br />  <br /> Sure, Apple pays some U.S. corporate income taxes. It looks downright patriotic next to master tax dodgers like General Electric and Boeing that have paid zero U.S. taxes for years. But Apple pays far less than it should.<br />  <br /> Here's how: Apple shifts patents and intellectual property, which are among its biggest assets, to subsidiaries in other countries that are low- and no-tax havens. These include Ireland and the Netherlands, which have especially favorable tax rates on royalties from intellectual property.<br />  <br /> When Apple sells an iPad or a MacBook, it allocates a portion of the profits to the offshore subsidiary that owns the patent. This tax dodge is sometimes referred to as the “Irish Two Step” or the “Dutch Sandwich.” But for Apple, we should call it the “Offshore Tax Haven Shuffle.”<br />  <br /> Last year, Apple claimed that just 13.9 percent of its profits came from U.S. operations. This is a fantastic fib. Consider all those Americans walking around with iPhones, iPods, iPads, and MacBooks. Think of all those folks buying music on iTunes, sending a buck to Apple for each song. Think of customers lined up at those glitzy Apple stores, like the three-story iPlex down the street from me in Boston.<br />  <br /> How is it possible that less than 14 percent of this company's profits come from the United States? Is it because Europeans and the expanding middle-classes of India and China are snatching up Apple products by the boatload?<br />  <br /> Nope. That low percentage is an accounting fiction that goes to the heart of the tax dodge. Apple methodically shifts its U.S. profits off shore.<br />  <br /> Another clue that Apple is ethically rotten is that it's spearheading a national coalition to lobby Congress for a “tax holiday” for offshore profits.<br />  <br /> Apple has teamed up with other technology companies like Google, Oracle, Cisco, Microsoft and Adobe, drug giant Pfizer, and utility leaders including Duke Energy to form “WinAmerica,” a slickly messaged campaign to press Congress for an $80 billion tax cut.<br />  <br /> U.S. firms have stashed over $1.2 trillion in profits offshore. They want Congress to allow them to “repatriate” these profits at a 5 percent tax rate rather than the 35 percent rate that's legally due when foreign earnings are brought back stateside. If Congress approves this “tax holiday,” Apple alone will dodge an estimated $4 billion in taxes.<br />  <br /> Given the budget cuts our communities are facing, it seems reckless for Congress to even consider another tax giveaway to companies playing offshore games. It’s unfair to individual taxpayers and small businesses that have to pick up the slack for tax shufflers like Apple.<br />  <br /> In 2004, Congress passed a similar tax holiday — with Apple dodging $255 million at the time. These tax dodgers argue they will create jobs if they’re allowed to bring their profits home lightly taxed. But independent studies show that the 2004 tax holiday did little to create jobs. In fact, profits mostly went to boost stock prices and CEO pay, and enable companies to buy back stock.<br />  <br /> Apple should disclose more information to its shareholders, customers and the public. At a time of huge public service cuts and fiscal austerity, why should we the taxpayers give Apple a $4 billion tax break?<br />  <br /> Congress should reject the corporate tax holiday for the obvious reason that it encourages bad behavior. If these global companies know that every six years Congress will bail them out with a tax holiday, they’ll continue their offshore games.<br />  <br /> Apple may be cool, but until it stops gaming the system and pays its fair share, the company is just another lowly tax dodger.<br />  </p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies and chair of the <a href="”http://www.ips-dc.org/projects/commongood.htm”">Working Group on Extreme Inequality</a>, an emerging coalition of religious, business, labor and civic groups concerned about the wealth gap. He is coauthor with Bill Gates Sr. of <a href="”" http:="">Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes</a>. </div></div></div> Tue, 31 May 2011 07:00:01 -0700 Chuck Collins, AlterNet 666500 at http://blogs.alternet.org Economy News & Politics Economy taxes apple usuncut We Don't Need to Shut Down the Government: Tax the Wealthy and Deadbeat Corporations to Close Budget Gaps http://blogs.alternet.org/story/150550/we_don%27t_need_to_shut_down_the_government%3A_tax_the_wealthy_and_deadbeat_corporations_to_close_budget_gaps <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">If corporations and households with $1 million income paid at the same levels they did in 1961, the Treasury would collect an additional $716 billion a year.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->Before any government shutdown–or drastic state and federal budget cuts –we should reverse huge tax cuts for the wealthy and deadbeat corporations.<br /><br />When you hear politicians lament that “we’re broke,” consider this fact: If corporations and households with $1 million income paid at the same levels they did in 1961, the Treasury would collect an additional $716 billion a year – or $7 trillion over a decade.<br /><br />Our communities are facing mammoth state and federal budget cuts because Congress has, in large part, failed to sufficiently tax America's millionaires and billionaires or prevent aggressive tax avoidance by multinational companies. The rest of us are paying to pick up the slack in budget cuts and future taxes.<br /><br />There are two primary explanations behind our current budget “squeeze.” First, income and wealth have become extremely concentrated in the hands of the super-rich. The richest 1 percent of households own over 35.6 percent of all private wealth, approximately $20 trillion. The number of households with incomes exceeding $1 million has grown from 15,753 in 1961 to 361,000 today, adjusted for inflation. Meanwhile the middle-class standard of living is collapsing and poverty rates are at a 15-year high.<br /><br />Second, we’ve dramatically reduced taxes on the super-rich and global corporations. A new report by the Institute for Policy Studies, “<a href="http://www.ips-dc.org/reports/unnecessary_austerity_unnecessary_government_shutdown">Unnecessary Austerity, Unnecessary Shutdown</a>” (which I coauthored), chronicles 50 years of tax shifts off of the wealthy and multinational corporations onto middle-class taxpayers and small businesses. The report’s finding include:<br /><br /><ul><li>Households with incomes over $1 million in 1961 paid an average 43.1 percent of their incomes in federal income taxes. Today, households with $1 million income pay 23.1 percent, almost half as much, adjusting for inflation.</li><li>If households with income over $1 million today paid their federal income taxes at the same rate that comparable households paid taxes in 1961, we would this year raise an additional $231 billion.</li><li>If U.S. corporations paid at the same effective tax rate that they paid in 1961, the additional tax revenue would total $485 billion.</li><li>In 1961, small business owners and individuals paid twice as much in federal income taxes as large corporations. By 2011, small business owners and individuals will be paying nearly five times in taxes what corporations pay.</li></ul><br /><br />Congress and special interest lobbyists have made mincemeat of our tax code, losing hundreds of billions in revenue. Worse, lawmakers have averted their eyes as corporate lobbyists drill new tax loopholes and extract new corporate welfare subsidies.<br /><br />That’s how a profitable company like General Electric aggressively avoids taxes. Since 2006, General Electric has reported over $26 billion in profits, yet paid not one penny in U.S. taxes.<br /><br />Other huge global companies such as Verizon, Boeing, ExxonMobil, and Federal Express also pay no or very low taxes. These artful tax dodgers use accounting gymnastics to move money to overseas tax havens like the Cayman Islands or Ireland. They pretend to earn their profits offshore and then report their paper losses here in the United States—reducing their responsibility to Uncle Sam.<br /><br />The “Unnecessary Austerity” <a href="http://www.ips-dc.org/reports/unnecessary_austerity_unnecessary_government_shutdown">report</a> identifies over $4 trillion in potential revenue over the next decade. Closing offshore tax havens could generate an estimated $100 billion a year. Adding new top tax brackets for millionaires could generate another $60-80 billion. Instituting a financial transaction tax could generate $150 billion a year.<br /><br />This month is the first salvo in a multi-year battle over the role of government and the quality of our lives. At each step, we’ll need to remind lawmakers to reverse irresponsible tax breaks before budget cuts and shutdown theatrics.<br /><br />Before we lay off another worker, we should heed the message from <a href="http://www.usuncut.org/">US Uncut</a>, the feisty direct action movement emerging in different communities around the country: “Before you cut, make the tax dodgers pay up.”<br /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies and chair of the <a href="”http://www.ips-dc.org/projects/commongood.htm”">Working Group on Extreme Inequality</a>, an emerging coalition of religious, business, labor and civic groups concerned about the wealth gap. He is coauthor with Bill Gates Sr. of <a href="”" http:="">Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes</a>. </div></div></div> Thu, 07 Apr 2011 15:00:01 -0700 Chuck Collins, AlterNet 665899 at http://blogs.alternet.org Economy News & Politics Economy The Right Wing congress budget Shutdown paul ryan Vision: In it Together -- How Banding into Groups Can Help Us Face the Next Catastrophe http://blogs.alternet.org/story/149752/vision%3A_in_it_together_--_how_banding_into_groups_can_help_us_face_the_next_catastrophe <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">This isn&#039;t a future you can, or should, face alone. How to make sure you don&#039;t have to.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>“I don’t believe the economy is getting better,” says Billy R., a member of a mutual aid group in Oregon that he jokingly calls “my reality support group.” “All around me I’m surrounded by media and advertising urging me to keep borrowing, buying, and sleepwalking. I love meeting with others who are staring down the potential risks and challenges of the future.”</p> <p>Maybe more of us could use a reality support group.</p> <p>Even with the announcement that the official unemployment rate fell to 9.4 percent, millions of people remain in dismal economic straits. The pace of <a title="Making Sense of the Foreclosure Mess" class="internal-link" href="http://www.yesmagazine.org/new-economy/making-sense-of-the-foreclosure-mess">home foreclosures</a> has barely slowed and millions remain out of work. Even upbeat scenarios still assume protracted unemployment and economic stagnation for much of the decade ahead. The unspoken scenario is that things could get worse.</p> <p>So here’s the point: you must not face the future alone. Find your own “reality support group” (we’ll tell you how below). This year, make a resolution to deepen your relationships with people around you with whom you can face what’s coming down the pike.</p> <p>Sometime during the next couple of years, there will likely be a fundamental shift. It might be another economic meltdown along the lines of 2008, or a shock to the economy thanks to a rapid spike in energy costs. It could be a series of extreme weather events that result in flooding, drought, or unprecedented heat waves. Think Hurricane Katrina on a larger scale. These changes could lead to food and water shortages—and test <a title="A Resilient Community" class="internal-link" href="http://www.yesmagazine.org/issues/a-resilient-community">our personal and community preparedness</a> in ways that we have not experienced in our lifetimes.</p> <p>You should know that we, the authors of this piece, are not apocalyptic, bunker-building, pessimistic people. We’re both parents, gardeners, and active in our neighborhoods. We like a good football party—though we root for different teams (Patriots v. Steelers).</p> <p>We believe our society has almost everything we need to <a title="Building Community: An Economic Approach" class="internal-link" href="http://www.yesmagazine.org/new-economy/building-community-an-economic-approach">build stronger communities</a>, <a title="Want the Good Life? Your Neighbors Need It, Too" class="internal-link" href="http://www.yesmagazine.org/happiness/want-the-good-life-your-neighbors-need-it-too">reduce inequality</a>, live in harmony with the earth, and make a graceful transition to <a title="New Economy Home" class="internal-link" href="http://www.yesmagazine.org/new-economy/new-economy-home">a new sustainable economy</a>. But we won’t get there ignoring the data, and we won’t get there disconnected from one another.</p> <p>We’re not talking about yet another issue campaign. We certainly need to remain engaged in the good fights around economic justice, peace, democracy, the environment. But there is something huge missing right now in our approach to social change. Our social movements are weak and, with some inspiring exceptions, not changing the political dynamics. The “Net Roots”—online organizing and social media—are creative ways to aggregate money and power in specific situations, but <a title="Organizing in the Internet Age" class="internal-link" href="http://www.yesmagazine.org/people-power/organizing-in-the-internet-age">online activism</a> is not a substitute for a movement based on durable and trusting face-to-face relationships. In some religious and labor traditions, this is called solidarity.</p> <h3>Fearful, Alone, &amp; Ashamed</h3> <p>Presently in the United States we are witnessing the emergence of politics based on fear and the erosion of status. Millions of people saw their livelihoods and dreams collapse in the aftermath of the economic meltdown. People lost their homes, jobs, savings, and sense of a positive future. They’ve had to adjust their expectations—for example, facing the reality that they may never be able to retire or improve their standard of living.</p> <p>Some people respond to these circumstances by blaming themselves and feeling ashamed about their difficulties. Many are hunkering down, feeling depressed and withdrawn. In the U.S., we tend to think everything is about the individual—even blaming ourselves for things that are largely beyond our control.</p> <p>Others of us respond by scapegoating others, often those more disadvantaged. These responses often come from a place of fear, isolation, and shame.</p> <p>There is good reason to be angry and focus on powerful financial and political actors who are responsible. But, as in the grieving process, we must move from anger to a place where we can boldly face today’s difficult realities and also initiate pro-active responses. We can start by learning to accept and live within new limits set by economic and ecological reality. Many people are already deliberately moving away from the old economy, and they’re <a title="Crash Course In Resilience" class="internal-link" href="http://www.yesmagazine.org/issues/a-resilient-community/crash-course-in-resilience">finding new types of security and abundance</a>. Perhaps unsurprisingly, they often <a title="Homemade Prosperity" class="internal-link" href="http://www.yesmagazine.org/issues/what-happy-families-know/homemade-prosperity">feel much richer</a> than they did in lives defined by the “work-watch-spend” cycle.</p> <p>Rebecca Solnit, in her remarkable book <a class="external-link" href="http://www.powells.com/biblio/1-9780143118077-0"><em>A Paradise Built In Hell</em></a>, reminds us to look for the “shadow governments of kindness,” the deep reservoirs of resilience and compassion that emerge during disasters and troubled times. All over the planet, people are defying the stereotypes of the self-centered “economic man” and instead caring for one another, building alternative economies, and deepening solidarity.</p> <h3>A Movement to Build Economic Security</h3> <p>The good news is people are already coming together in small groups to form and strengthen relationships. Some are called “<a title="Common Security Clubs" class="internal-link" href="http://www.yesmagazine.org/blogs/common-security-clubs">common security clubs</a>,” while others go by names like “mutual aid groups,” “resilience circles,” and “unemployed support groups.”</p> <p>Call it what you want, but the purpose is the same: getting together regularly—8 to 15 adults—to face ecological and economic change. Small group organizing is part of the missing architecture in our social movements ... which may be why it’s catching on so quickly.</p> <p>Such groups are designed to strengthen our personal and community resilience. They typically have three purposes: to learn together, support one another through mutual aid, and engage in social action.</p> <p><strong>Learn together.</strong> It’s hard enough for each of us alone to keep up with news about the ways our changing economy and ecology are impacting our lives. But it’s particularly challenging to face unsettling realities in isolation. In order to move forward, we need a community to help us learn and figure out how to deal with our fear, anger, loss, and feelings of betrayal.</p> <p>Group members watch videos, read articles, talk to each other, and organize forums. Since the “experts” mostly got things wrong two years ago, participants are investigating things for themselves. What’s really happening in the economy? What caused the economic meltdown? What’s changed? What are the ecological risk points? How will the decline of cheap, easy-to-get oil affect the future economy? What will a transition to a new economy look like?</p> <p><strong>Mutual Aid.</strong> Our mutual aid muscles are out of shape. We need to find ways to increase our real economic security and web of support through shared resources, skills, experience, and capacities. Some folks do this through extended families, religious congregations, and ethnic and fraternal associations. But millions of people are disconnected from extended family and the immigrant and civic associations that helped earlier generations survive. And many religious congregations have gotten out of the practice of being centers of mutual aid.</p> <p>Common security clubs often gather around potlucks, sharing food and recipes for healthy, low-cost meals. They support one another to get out of debt, brainstorm about employment options, share tips on saving money. They <a title="6 Ways to Start Sharing" class="internal-link" href="http://www.yesmagazine.org/happiness/6-ways-to-start-sharing">form bartering circles</a> to swap skills, tools, and time. They talk about the challenges of parents moving in with children, children moving in with parents—and adjusting to new norms and limits as a result of the changing economy and future.</p> <p><strong>Social Action.</strong> Many of us want to make meaningful change at the local and national level. We want to find ways to constructively channel our anger and fear to resist further Wall Street destruction of our local economies. We want to act together in ways that go beyond online petitions or phone calls to our member of Congress. Think “affinity group” or “social action group”—a place to deepen our effectiveness as a small unit, but be part of larger movements.</p> <p>Common security clubs in particular have worked for national policy changes, from universal health care and Wall Street financial reform to the extension of unemployment benefits. Many clubs, animated by the “break up with your bank” and “<a class="external-link" href="http://moveyourmoneyproject.org/">move your money</a>” efforts, relocated personal, congregational, and other funds out of Wall Street, and into community banks and credit unions.</p> <p>Other clubs have connected with community-wide “transition” efforts, inspired by the <a title="Support Groups for Hard Times" class="internal-link" href="http://www.yesmagazine.org/blogs/common-security-clubs/building-resilient-congregations-and-communities">Transition Town</a> movement sweeping England and <a title="In U.S. Transition Towns, the Big Challenge is Bringing People Together" class="internal-link" href="http://www.yesmagazine.org/issues/a-resilient-community/in-u.s.-transition-towns-the-big-challenge-is-bringing-people-together">now moving U.S. communities into action</a>. Transition neighborhoods and towns proactively prepare themselves for climate change, economic hardship, and the decline in easy-to-get oil and cheap energy—with its huge implications for transportation, food security, building design, and our standard of living. Within the broader initiatives, small personal groups like common security clubs provide a place where people can meet to practice mutual aid and reciprocity. Both transition towns and common security clubs are integral components of building needed personal and community resilience.</p> <h3>A Few Stories</h3> <p>Encouraging stories are emerging from common security clubs and other mutual aid groups.</p> <p>A group of unemployed workers in Maine created a <a title="Learning to Live on Less" class="internal-link" href="http://www.yesmagazine.org/blogs/common-security-clubs/learning-to-live-on-less">resource sharing exchange</a>. They met regularly at the library and laughed so much the librarian didn’t believe they were economically struggling.</p> <p>A group in Greenfield, Massachusetts calls themselves “<a title="Neighbors for a New Economy" class="internal-link" href="http://www.yesmagazine.org/blogs/common-security-clubs/neighbors-for-a-new-economy">the neighbors</a>” and meets monthly to check in, sing together, and practice mutual aid. On another night they meet for a monthly game night—what one member called “fun and affordable entertainment.”</p> <p>In Fort Wayne, Indiana, a network of <a title="Sticking Together in Tough Times" class="internal-link" href="http://www.yesmagazine.org/blogs/common-security-clubs/sticking-together-in-tough-times">Unemployed and Anxiously Employed Workers</a> meets weekly and has formed committees to help educate one another about computer use, unemployment insurance, stress management in tough times, and green job opportunities. “Part of our work is to help face the unemployment bureaucracy so people get their benefits,” said Tom Lewandowski, a founder of the group. They invite people leaving unemployment offices to join the group. Members volunteer at libraries on Sunday afternoons to help unemployed workers file claims online.</p> <h3>Small Groups in Social Movements</h3> <p>Can forming a small group like this really make a difference, when the problems we face seem so overwhelming? History tells us they can. At many crucial moments in our past, small groups have played an essential role in incubating the seeds of great change.</p> <p>During the Great Depression of the 1930s, more than 27,000 “Share Our Wealth” clubs formed to discuss the causes of the Depression and advocate for a radical program of wealth redistribution.</p> <p>Also in the 1930s, seniors organized “<a class="external-link" href="http://theamericanscene.com/2010/09/14/dr-francis-everett-townsend-citizen-wonk">Townsend Clubs</a>” to advocate for old age pensions—a formidable social movement that added to the pressure to establish Social Security. By 1936, more than 8,000 Townsend Clubs had been formed with over 2 million members. In ten states—including Oregon, Colorado, California, Florida, South Dakota—there were more than 50 clubs per congressional district.</p> <p>In the civil rights movement of the 1950s and 1960s, people formed nonviolent direct action groups to engage in sit-ins and keep up morale. Activists rooted in faith-based congregations and tight-knit communities were able to take greater risks knowing that if they should be jailed (or worse), there were others to care for their children and elders.</p> <p>The women’s movement was built upon small consciousness-raising groups, which enabled millions of women to reflect on their identity. “The personal is political” was experienced in thousands of face-to-face gatherings, ultimately shifting gender attitudes throughout the society. The anti-nuclear movement in the late 1970s formed “affinity groups” as part of direct action efforts to prevent power plants from being built.</p> <p>In the labor movement, the success of organizing female clerical workers into trade unions depended upon an organizing approach that included small support groups. Large mega-churches have grown upon a foundation of “small group ministry” in which members connect through smaller, face-to-face groups. A growing number of organizers today are examining the “power of networks” in social movements.</p> <p>Given the challenges we’re collectively facing in the present, where are such movements today? It appears that without a lived experience of “solidarity” in our personal lives, it can be difficult to respond to an abstract call for the common good. It may be that <a title="Can Small Group Organizing Save the Country?" class="internal-link" href="http://www.yesmagazine.org/blogs/common-security-clubs/can-small-group-organizing-save-the-country">small group organizing is central</a> to our hopes for broad-based change.</p> <h3>Potential Shock Points</h3> <p>There is good reason to believe that the next 10 years are going to be very different than the 10 years prior to the 2008 economic meltdown. Persistent unemployment means that millions of people may live out the decade in an economic depression.</p> <p>Moreover, the underlying economic structures that brought on the collapse <a title="Taking Financial Reform into Our Own Hands" class="internal-link" href="http://www.yesmagazine.org/new-economy/taking-financial-reform-into-our-own-hands">have not been addressed</a>. We remain at risk for more financial nosedives. As a result, new Wall Street economic bubbles and busts may emerge. The “danger” light on the dashboard is still flashing…</p> <p>In fact, the future could bring any number of “shock points”: another economic meltdown along the lines of 2008; a further increase in unemployment, even to 20 percent; more extreme weather events (hurricanes, floods, droughts, heat waves); new spikes in the cost of energy; rapid deflation as the value of money falls; a dramatic increase in the cost of food; and/or shortages of fresh water.</p> <p>Because of the extreme inequalities of income and wealth that have opened up over the last generation, the brunt of these changes is falling, and will continue to fall, most intensely on lower and middle income and disadvantaged folks. But these changes will touch everyone in various ways, even those who believe they have built a wall of economic security around their families.</p> <p>These are some of the reasons people need to face the future together and strengthen the social fabric of our communities. This is not a future you can, or should, face alone.</p> <h3>The Transition to the New Economy</h3> <p>Eight million jobs in the old economy are not coming back. But new jobs, enterprises, and livelihoods are emerging. We are seeing vibrant new kinds of enterprises in the local food sector, green building, and alternative transportation, as well as locally rooted cooperatives and producers. These are the pieces of a new economy that is emerging piecemeal around the country—an economy based upon entirely different models of economic growth and <a title="What is Real Wealth?" class="internal-link" href="http://www.yesmagazine.org/new-economy/what-is-real-wealth">indicators of community health</a>, and also new conceptions of wealth, community, and governance.</p> <p>This new economy includes financial institutions invested in the real economy, like community banks and credit unions walled off from the Wall Street speculation that adds no real value to our economy. It includes respect for “<a title="All That We Share" class="internal-link" href="http://www.yesmagazine.org/happiness/all-that-we-share">all that we share</a>”—our commons of public and private institutions such as libraries, schools, or agricultural knowledge. It is based on sound management and protection of the gifts of nature including water systems, seed banks, and land conservancies.</p> <p>In the current political moment, leadership for large-scale transition to this new economy will not come from Washington, D.C., but from movements around green jobs, local manufacturing, alternative transportation, regional food, and more. This is a moment for each of us to reflect on our own power and agency. We each have a role to play, but perhaps we aren’t sure what it is yet. This is where your small group is important. Small groups help disconnected individuals find their roles, turning them into community players who contribute to the movements toward the new economy.</p> <p>If we are <a title="3 Big Ideas for a Resilient Future" class="internal-link" href="http://www.yesmagazine.org/issues/a-resilient-community/3-ideas-to-build-resilience">prepared for a transition</a>, we will be in much better shape than if we simply hope life will somehow return to normal. If we have our “core group,” we can face changes with less fear and more sense of our personal agency. Together, we will be able to work toward an economy that works for everyone.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies and chair of the <a href="”http://www.ips-dc.org/projects/commongood.htm”">Working Group on Extreme Inequality</a>, an emerging coalition of religious, business, labor and civic groups concerned about the wealth gap. He is coauthor with Bill Gates Sr. of <a href="”" http:="">Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes</a>. </div></div></div> Mon, 31 Jan 2011 15:00:01 -0800 Chuck Collins, Sarah Byrnes, YES! Magazine 665119 at http://blogs.alternet.org News & Politics economy community unemployment Stephen King Meets the Estate Tax http://blogs.alternet.org/story/144699/stephen_king_meets_the_estate_tax <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">What horrors will befall our nation&#039;s wealthy when one of the most bizarre twists in tax legislation in history comes to pass?</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>Imagine a story about tax policy created by horror writer Stephen King. A fictional Congress, divided between anti-tax ideology and fiscal responsibility, amends the inheritance tax on the very wealthy so that it disappears entirely one year and then returns at steeper rates the following year.</p> <p>Over the zero year, death rates skyrocket in the nation's most affluent zip codes. Seemingly robust and healthy billionaires perish in mysterious accidents. Lexus wheels fall off from Bloomfield Hills to Scarsdale to Beverly Hills. Sailboats and yachts inexplicably crash in calm coastal and Caribbean waters. Tainted champagne wipes out clusters of prosperous alumni at class reunions from dozens of elite prep schools from Groton to Choate.</p> <p>Meanwhile, thousands of infirmed elders take their own lives in organized rituals called "legacy sacrifices." Pledging unlimited inheritances to their heirs, these multi-millionaires die with smiles on their faces knowing they've outfoxed Uncle Sam one last time.</p> <p>If only this were a fiction.</p> <p>We could actually see these scenarios play next year, unless the real U.S. Congress takes action and prevents one of the more bizarre twists in tax legislation in history from coming to pass.</p> <p>In 2010, the estate tax, our nation's only levy on inherited wealth, is set to disappear completely. Then in 2011 the tax returns to 2001 levels, with substantially lower wealth exemptions and higher rates. Talk about perverse incentives.</p> <p>The stage was set for this scene in 2001, when President Bush and conservative tax cutters tried to abolish the estate tax. They didn't have the Senate votes, however, for permanent repeal, nor could they afford to lose the hundreds of billions of dollars the estate tax would generate over the subsequent decade.</p> <p>Congress structured the law to gradually phase out the tax, allowing it to expire in 2010. Then, in a gimmick to mask the real cost of the tax cut, the law sunsets in 2011, reverting back to its 2001 levels.</p> <p>Tax cutters in 2001 were confident they would return in subsequent years to finish off the estate tax. But the nation's fiscal situation immediately began to deteriorate and Republicans lost their majority in Congress. In October of this year, the organized wealthy families that spent millions in lobbying Congress to save billions finally conceded they lacked the votes to get rid of the estate tax forever.</p> <p>You have to remember that the estate tax ‹ at its 2009 level ‹ only effects one in 500 estates. Over the last eight years, the law has been revised so the wealth exemption level rose from $1 million to where it is today, at a generous $3.5 million or $7 million for a couple. Rates declined from 55 percent in 2001 to 45 percent today. This exclusive tax cut for multi-millionaires and billionaires cost hundreds of billions of dollars in lost revenue, a cost added directly to our national debt.</p> <p>Two weeks ago, the U.S. House of Representatives voted to freeze the federal estate tax at this current level. This is a positive and responsible step. Now the Senate must act.</p> <p>The Senate could pass legislation that mirrors the House version and settle the issue for years to come. Or they could freeze the tax at its current level for one year ‹ and take it up next year. What they shouldn't do is further weaken the estate tax by passing proposals such as those introduced by Sens. Jon Kyl (R-AZ) and Blanche Lincoln (D-AR).</p> <p>Without the estate tax, we could lose almost $1 trillion in revenue over the next two decades. There are only three ways to fill that gap: cut spending, raise taxes on the middle class, or, our current favorite: pile it onto the national debt.Instead of leaving prodigious amounts of debt for the next generation, we should retain a meaningful estate tax.</p> <p>During a time of war and economic crisis, the idea of further tax breaks for multi-millionaires and billionaires is unseemly and unfair. </p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies and chair of the <a href="”http://www.ips-dc.org/projects/commongood.htm”">Working Group on Extreme Inequality</a>, an emerging coalition of religious, business, labor and civic groups concerned about the wealth gap. He is coauthor with Bill Gates Sr. of <a href="”" http:="">Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes</a>. </div></div></div> Sun, 20 Dec 2009 21:00:01 -0800 Chuck Collins, Bill Gates, Sr., AlterNet 660043 at http://blogs.alternet.org Economy Economy estate tax wealthy Victory: Taxing Wealth Dynasties Will Continue http://blogs.alternet.org/story/143086/victory%3A_taxing_wealth_dynasties_will_continue <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Last Monday, a coalition of lobbyists and families finally gave up on trying to abolish the federal estate tax, the only tax on inherited wealth.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>Sometimes you can’t declare victory until the other side concedes defeat. That’s what happened Monday in the decade long struggle over the future of the federal estate tax, our nation’s only levy on inherited wealth.</p> <p>The coalition of corporate lobbyists and wealthy families, including the U.S Chamber of Commerce and the National Federation of Independent Businesses, <a href="http://www.bloomberg.com/apps/news?pid=newsarchive&amp;sid=anRl31ZY7Lsg &lt;http://www.bloomberg.com/apps/news?pid=newsarchive&amp;amp;sid=anRl31ZY7Lsg&gt; ">dropped their long standing call</a> for complete abolition of the tax, shifting their lobby resources into weakening the law.</p> <p>Wealthy families, including 18 dynastic families such as heirs to the Mars candy family fortune, had <a href="http://www.citizen.org/pressroom/release.cfm?ID=2182">spent millions</a> in lobbying funds to save billions in future taxes.</p> <p>For over a decade, opponents of the estate tax attempted to confuse the public about who really paid the tax. They called it a “death tax” on everyone, when it applied to only a small sliver of multi-millionaires and billionaires, less than two percent of taxpayers</p> <p>In the late 1990s, they ran advertisements and a media campaign claiming the estate tax was the death of the family farm. In 2001, Pulitzer Prize winning journalist, David Cay Johnston, exposed this as a sham. His <a href="http://www.nytimes.com/2001/04/08/us/talk-of-lost-farms-reflects-muddle-of-estate-tax-debate.html?scp=1&amp;sq=David%20Cay%20Johnston,%20farms,%20estate%20tax,%20April%202001&amp;st=cse">investigative reporting</a> found not a single case of a farm having been lost because of the estate tax.</p> <p>Proponents of repeal found a friend in President Bush who included a phase out of the estate tax in his 2001 tax plan. Over the ensuing decade, the amount of wealth exempted by the tax rose from $1 million to $3.5 million ($7 million for a couple) and the rate was cut from 55 percent to 45 percent. At this current level, only one in 200 taxpayers will owe any estate tax.</p> <p>Advocates for retaining the estate tax have pointed out that it raises significant revenue (a $1 trillion over the next 15 years) from those most able to pay. It provides an incentive for the wealthy to give to charity and places a brake on the concentration of wealth and power --which corrodes democracy.</p> <p>Bill Gates Sr., the father of the founder of Microsoft, called the estate tax "a fair tax" and a "mechanism for wealthy people to pay back the society that created the fertile ground for wealth creation." Warren Buffett <a href="http://www.alternet.org/story/68145/">testified</a> before Congress that "dynastic wealth, the enemy of meritocracy, is on the rise. Equality of opportunity has been on the decline. A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy."</p> <p>If Congress takes no action this year, an unlikely scenario, the estate tax will expire next year, 2010, but only for one year. The entire 2001 tax law sunsets on January 1, 2011, with the estate tax reverting to a $1 million exemption and 55 percent rate. This gives advocates of keeping the tax enormous leverage in holding the line against gutting the law.</p> <p><strong>Celebrate and Get Back to Work</strong></p> <p>The anti-estate tax lobby is now shifting its considerable resources toward raising the wealth exemption to $10 million and reducing the rate to 35 percent. This additional tax break for multi-millionaires would cost over $100 billion over the next ten years.</p> <p>President Obama has signaled his support for retaining the estate tax at its current $3.5 million level, while indexing it for inflation. Congress will likely act this fall to continue the existing law for one year, taking up permanent estate tax reform in 2010.</p> <p>There is a real risk, however, that anti-tax forces will rapidly coalesce around a proposal to permanently raise the wealth exemption and gut the law. The same wobbly Democrats who axed the public option out of health care reform--Senators Max Baucus (D-MT), Blanche Lincoln (D-AR) and Ben Nelson (D-FL) – are all likely votes for a bad estate tax bill.</p> <p>Progressives are pressing to ensure the House of Representatives holds the line to a reasonable reform of the estate tax. Some members, like Rep. Jim McDermott (D-WA) have introduced legislation to lower the wealth exemption to $2 million and establish a graduated rate structure, with higher rates on inheritances over $10 million. "Those Americans who have reaped huge fortunes as a result of their enterprise in America’s free-enterprise system owe their country something in return," <a href="http://www.house.gov/mcdermott/pr090422.shtml">said McDermott</a>. "This legislation provides for a modest and reasonable return on the investment America made in these people through the system we all work hard to support and advance." </p> <p>In 2003, anti-tax activist Grover Norquist confidently predicted the demise of the estate tax. He characterized the movement to retain the law a "dead fish."</p> <p>"They’re embarrassing," he told the Washington Post. "They’re flipping around like that stupid fish in the boat." Yesterday he told Bloomberg News that his coalition, Americans for Tax Reform, was working to get the best possible deal because "this Congress is not going to abolish the death tax."</p> <p>The dead fish swims again.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies and chair of the <a href="”http://www.ips-dc.org/projects/commongood.htm”">Working Group on Extreme Inequality</a>, an emerging coalition of religious, business, labor and civic groups concerned about the wealth gap. He is coauthor with Bill Gates Sr. of <a href="”" http:="">Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes</a>. </div></div></div> Mon, 05 Oct 2009 12:00:01 -0700 Chuck Collins, AlterNet 658501 at http://blogs.alternet.org Economy Economy estate tax federal estate tax wealthy families david cay johnston Billionaires Thank Tea-Baggers at Glenn Beck's March on Washington http://blogs.alternet.org/story/142621/billionaires_thank_tea-baggers_at_glenn_beck%27s_march_on_washington <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The Billionaires&#039; motto is: &quot;If we’re not broke, don’t fix it.&quot;</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>“Health Care for Profit, Not for People!” “Let Them Eat Advil.” "Fear, Lies, Sedition! Pre-Existing-Condition!"</p> <p>Echoing through the streets of Washington on Saturday, the chants of a new political formation are sweeping the nation: The Billionaires for Wealthcare!</p> <p>On Saturday 9/12, tens of thousands of conservative activists marched in Washington in opposition to big government and the Obama health care plan. Inspired by right-wing Fox News pundit Glenn Beck and funded and organized by Freedom Works, the organization directed by former congressman Dick Armey, the march was a much-hyped follow-up to anti-tax rallies on April 15th.</p> <p><em>Watch the video to the right of the Billionaires for WealthCare at the 9/12 march in DC, featured on Rachel Maddow's Monday night show.</em></p> <p>Among the marchers were the satirical <a href="http://www.billionairesforwealthcare.com">Billionaires for Wealthcare</a>, a self-described “grassroots network of health insurance CEOs, HMO lobbyists, talk-show hosts, and others profiting off our broken health care system.” They joined the march to “thank the teabaggers for protecting health-care industry profits.”</p> <p>The Billionaires motto is: “If we’re not broke, don’t fix it.”</p> <p>“For the last decade, health-care costs have been moving in the right direction: up!” said Phil T. Rich, one of the Billionaires. “And with no competition, we raise raises as often and as high as we like – 29 percent in some case – simply because, well, we can.”</p> <p>Tea-baggers eagerly joined in on Billionaire chants of "Bring Back Bush!" and “Fight Socialism! Abolish Medicare Now!”, but the greatest crowd pleaser (and provoker) of the day, was a stirring rendition of their original song "Let's Save the Status Quo" sung to the tune of <i>Battle Hymn of the Republic</i>, and memorably captured in this music video:</p> <object width="392" height="238"><param name="movie" value="http://www.youtube.com/v/x1I9xsV-g9Y&amp;hl=en&amp;fs=1&amp;" /><param name="allowFullScreen" value="true" /><param name="allowscriptaccess" value="always" /><embed width="392" height="238" src="http://www.youtube.com/v/x1I9xsV-g9Y&amp;hl=en&amp;fs=1&amp;" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true"></embed></object> <p>The Billionaires'<a href="http://www.billionairesforwealthcare.com/signs">comically over-the-top signs</a> -- including: “Do No Harm ... to Our Bottom Line” and “CIGNA / PALIN IN 2012!” -- blended in easily with genuine <a href="http://www.mediaite.com/tv/the-spirit-of-912/">wing-nut signs</a> such as “Bury Obamacare with Kennedy,” distributed by the anti-abortion American Life League.</p> <p>Starting over the summer, Billionaires chapters began springing up around the country. Billionaires showed up at several health care Town Hall meetings in Phoenix, Reno, Raleigh-Durham, St. Louis and other cities to cheer on the Tea Baggers and Glen Beck supporters in preserving the health care status quo.</p> <p>San Diego billionaires <a href="http://www.huffingtonpost.com/doug-porter/billionares-for-wealth-ca_b_273117.html">arrived in a limousine</a> to "join" protests against Democratic Congresswoman Susan Davis at her town hall meeting on health care reform.</p> <p>There are now over 40 Billionaires for Wealthcare chapters across the country and more starting up everyday. Join the one in your city, or download everything you need to start your own at <a href="http://www.billionairesforwealthcare.com/" target="_blank">www.BillionairesForWealthcare.<wbr></wbr>com</a>.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies and chair of the <a href="”http://www.ips-dc.org/projects/commongood.htm”">Working Group on Extreme Inequality</a>, an emerging coalition of religious, business, labor and civic groups concerned about the wealth gap. He is coauthor with Bill Gates Sr. of <a href="”" http:="">Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes</a>. </div></div></div> Mon, 14 Sep 2009 11:00:01 -0700 Chuck Collins, AlterNet 658058 at http://blogs.alternet.org Personal Health News & Politics Personal Health Economy beck tea-baggers 9/12 So What Happened to That Talk About Reining in CEO Pay? http://blogs.alternet.org/story/140875/so_what_happened_to_that_talk_about_reining_in_ceo_pay <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The Obama administration has watered down the rules on executive pay into mushy prescriptions that pose no real threat to the Big Boys&#039; windfalls.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>Last February, amid public anger over millions in bonuses at bailed-out insurance giant <a class="taxInlineTagLink" href="http://www.baltimoresun.com/topic/economy-business-finance/financial-business-services/insurance/american-international-group-ORCRP000791.topic" title="American International Group" id="ORCRP000791">AIG</a>, our top national political leaders rushed to express their outrage - and even took some steps to place a lid on over-the-top executive pay.</p><p>That lid has now come off.</p><p>Treasury Secretary <a class="taxInlineTagLink" href="http://www.baltimoresun.com/topic/economy-business-finance/economy/timothy-geithner-PEPLT0000017540.topic" title="Timothy Geithner" id="PEPLT0000017540">Timothy Geithner</a>, with his just-released rules and proposals on executive pay, has essentially turned the specific executive pay limits that <a class="taxInlineTagLink" href="http://www.baltimoresun.com/topic/politics/government/barack-obama-PEPLT007408.topic" title="Barack Obama" id="PEPLT007408">President Barack Obama</a> announced and Congress legislated this past winter into mushy prescriptions that pose no real threat to the windfalls to which CEOs have so thoroughly become accustomed.</p><p>Remember that $500,000 "cap" on executive compensation that the <a class="taxInlineTagLink" href="http://www.baltimoresun.com/topic/politics/government/executive-branch/the-white-house-PLCUL000110.topic" title="The White House" id="PLCUL000110">White House</a> announced back in February? That maximum has now become a minimum. Under the new Treasury rules, a new federal pay czar will "automatically approve" any paycheck from a troubled enterprise like AIG that doesn't top half a million - and even allow with that paycheck "additional compensation paid in the form of long-term restricted stock."</p><p>None of this backpedaling on executive pay reform should surprise us. Ever since the early 1980s, the years when pay for power suits first started pirouetting up, up and away, the pattern has become depressingly familiar. A CEO walks off with a windfall. A Wall Street highflyer hits an unimaginably massive jackpot. Editorial writers tut-tut. News magazines run cover stories about corporate greed. Lawmakers hold hearings and earnestly insist on "pay for performance."</p><p>And nothing changes. The outrages just keep getting more outrageous.</p><p>Two decades ago, a commentator labeled Warner Communications CEO Steve Ross the "prince of pay." Mr. Ross was averaging, in the 1980s, all of $16 million a year.</p><p>In 1993, <a class="taxInlineTagLink" href="http://www.baltimoresun.com/topic/entertainment/animation/walt-disney-PEHST002298.topic" title="Walt Disney" id="PEHST002298">Walt Disney</a> CEO Michael Eisner took home $203 million. An outraged <span class="i">Business Week </span>called that sum the most any CEO "has made in a single year - or probably in an entire career in the history of American business."</p><p>Four years later, Mr. Eisner took home even more. He cashed out a stash of stock options and cleared $565 million, the "biggest payday for an executive in history," <span class="i">The Washington Post </span>exclaimed.</p><p>These days, that $565 million payday almost seems ordinary. In 2007, the financial world's top 50 hedge fund managers averaged $581 million each.</p><p>We need to end, and soon, this endless escalation of what our power suits get to stuff in their pockets. We simply can't afford to continue down the economic road we've been traveling.</p><p>Outrageously huge rewards, the economic meltdown of the past year has made perfectly plain, have no redeeming social value. They serve only to create incentives for outrageous behavior. We need to start discouraging that behavior - and we can. The best place to start: the federal tax code.</p><p>Right now, our tax code actually encourages excessive executive pay. The more companies shell out in executive bonuses and stock awards, for instance, the more they can deduct off their taxes.</p><p>Consider, for instance, Lockheed Martin, a company that feeds almost exclusively off government contracts. Lockheed recently announced that its CEO took home $26.5 million in 2008. Under current law, almost all of that $26.5 million qualifies as a tax deduction for the company.</p><p>One member of Congress, Rep. <a class="taxInlineTagLink" href="http://www.baltimoresun.com/topic/politics/barbara-lee-PEPLT003836.topic" title="Barbara Lee" id="PEPLT003836">Barbara Lee</a> from California, is moving to end taxpayer subsidies for excessive executive pay. Ms. Lee has introduced legislation, the Income Equity Act, which denies corporations tax deductions on any executive compensation that runs over $500,000 or 25 times the pay of a company's lowest-wage worker.</p><p>Enacting this legislation, says Ms. Lee, "would discourage skyrocketing pay at the top and encourage companies to raise the pay of workers at the bottom."</p><p>That pay at the bottom desperately needs raising. Average Americans today, after adjusting for inflation, are making less in weekly wages than they made back in the 1970s.</p><p>And that's no accident. For three decades now, America's corporate aristocrats have "performed" - and pocketed personal fortunes - by attacking the well-being of average Americans. Over those years, they've downsized workers and outsourced jobs. They've gutted pensions and benefits. They've hollowed out our middle class.</p><p>We need to start heading in a different direction. And quick.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies in its Boston office, where he directs the Program on Inequality and the Common Good. Sam Pizzigati, an Institute associate fellow who lives in <a id="PLGEO100100802013900" title="Kensington" href="http://www.baltimoresun.com/topic/us/new-york/new-york-city/brooklyn-%28new-york-city%29/kensington-PLGEO100100802013900.topic" class="taxInlineTagLink">Kensington</a>, edits "Too Much," an online weekly on excess and inequality. They are co-authors of "Executive Excess," a yearly report on CEO pay. This column originally appeared in the Baltimore Sun and is reprinted here with the permission of the authors. </div></div></div> Wed, 24 Jun 2009 21:00:01 -0700 Chuck Collins, Sam Pizzigati, AlterNet 656362 at http://blogs.alternet.org Economy Economy executive pay Tax Day: You Pay Your Taxes -- Why Don't the Rich Pay Their Share? http://blogs.alternet.org/story/136592/tax_day%3A_you_pay_your_taxes_--_why_don%27t_the_rich_pay_their_share <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Few Americans realize just how incredibly little our nation&#039;s wealthy now pay in taxes. Our grandparents seriously taxed the rich. Why can&#039;t we?</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>Our nation needs a plan to pay for long-overdue investments in education, health and retrofitting our energy infrastructure. Nothing could be more obvious. But, just as obviously, we need a plan to pay for those investments.</p><p>Short-term borrowing, during an economic downturn, certainly makes sense. Long term, we need to do much more than borrow. We need to totally reverse 30 years worth of federal tax and budget policy.</p><p>George W. Bush, over his eight years, took tax and budget policy to the crony-capitalist limit. His White House racked up $5 trillion in national debt by waging reckless wars, shoveling lush contracts and bailouts to corporate and Wall Street insiders, and, perhaps most arrogantly of all, slashing already-low tax rates on the incomes of the super rich.</p><p>Few Americans realize just how incredibly little, historically speaking, our nation's wealthy now pay in taxes.</p><p>In 1955, the year April 15 became the IRS tax-filing deadline, America's top 400 taxpayers paid three times more of their income in taxes than the top 400 of 2006, the most recent year with IRS data available. </p><p>According to a new Tax Day report that we co-authored, if the top 400 of 2006 had paid taxes at 1955 rates, the federal treasury would have collected -- from these 400 taxpayers alone -- an additional $35.9 billion more in revenue in 2006.</p><p>The 139,000 U.S. taxpayers who made over $2 million in 2006, our report also notes, averaged $5.9 million in income. They paid 23.2 percent of their total incomes in federal income tax. The comparable rate for equivalent high-income Americans in 1955: 49 percent.</p><p>If the over-$2 million set in 2006 had paid taxes at the same rate as their 1955 counterparts, the federal treasury would have collected $202 billion.</p><p>We've now lived through 30 years of "shrink, shift and shaft" federal budget and tax policies. Right-wing pols, aided by Democrats who should have known better, have shrunk government and the share of taxes paid by the wealthiest 1 percent. The tax burden, consequently, has shifted off wealth and onto wages, off the federal tax system and onto the regressive tax systems of states and localities.</p><p>The direct result: States and localities have gotten the budget shaft -- and that has forced years of chronic underfunding for mass transit, education and myriad public services.</p><p>So what can we do, as a nation, to start turning this situation around? Our Institute for Policy Studies report -- <a href="http://www.ips-dc.org/reports/#1207 ">"Reversing the Great Tax Shift"</a> advances a set of specific steps that would generate over $450 billion in annual revenue, dollars that would help finance our recovery fairly.</p><p> We recommend that lawmakers:</p><p><b>Tax income from capital gains and dividends at the same rates as wage income</b>. Under current law, income from investments gets taxed at 15 percent. Income from work gets taxed at up to 35 percent. No coherent moral justification exists for such an enormous tax preference for income from wealth. According to Citizens for Tax Justice, taxing all forms of income the same would generate $80 billion a year.</p><p><b>Create a new top tax rate for incomes over $2 million.</b>Presently, a person with an income of $300,000 faces the same tax rates as a person with an income of $3 million. Instituting a top tax rate of 50 percent on incomes over $2 million would generate more than $60 billion a year.</p><p><b>Levy a progressive estate tax on large fortunes.</b>The federal estate tax, our nation's only levy on grand accumulations of private wealth, will expire in 2010 and revert to the 2000 status quo. Lawmakers aren't going to let that happen -- if, for no other reason, to take inflation into account -- and that reality creates an opportunity to make the estate tax more progressive.</p><p> One reform would be to institute graduated tax rates on large estates, while exempting estates worth less than $2 million, $4 million for a couple. Such an approach would generate over $100 billion a year a decade from now -- while taxing no more than 1 of every 200 estates.</p><p>All these steps, we believe, would enjoy widespread public support.</p><p> Our grandparents seriously taxed the rich. Why can't we? </p><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies and chairman of the <a href="http://www.ips-dc.org/projects/commongood.htm">Working Group on Extreme Inequality</a>, an emerging coalition of religious, business, labor and civic groups concerned about the wealth gap. He is co-author, with Bill Gates Sr., of <a href="http://bookswelike.net/isbn/0807047198">Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes</a>. Sam Pizzigati is the editor of the online weekly Too Much and an associate fellow at the Institute for Policy Studies. </div></div></div> Tue, 14 Apr 2009 21:00:01 -0700 Chuck Collins, Sam Pizzigati, AlterNet 654955 at http://blogs.alternet.org Economy Economy taxes estate tax rich progressive tax capital gains dividends Executive Pay and the Obscene Culture of Wall Street http://blogs.alternet.org/story/134772/executive_pay_and_the_obscene_culture_of_wall_street <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Some expert talking points on an economy in crisis.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p><b>What’s happening with the AIG bonus scandal?</b></p><p>Congressional action to recoup the $165 million in bonuses already handed out to AIG employees has been derailed.  On March 19, the House responded to public outrage by voting 328-93 to approve a bill that would impose a 90% tax on any bonuses given to employees at AIG and other firms that received more than $5 billion in bailout money.  However, when the White House expressed concerns about the bonus tax, the Senate punted the issue until after the April recess. Sensing the loss of momentum behind bonus taxes, the House voted on April 1 to approve a substantially weaker approach.  The new bill, which passed by a 247-171 margin, would place some limits on future bonuses, but would otherwise allow Treasury Secretary Timothy Geithner to determine whether employee compensation at the bailed out firms was "unreasonable" or "excessive." </p><p><b>Who is to blame for the bailout bonus scandal?</b></p><p>There is plenty of blame to go around.  Executives of AIG and other Wall Street firms have acted like modernday Marie Antoinettes, so disconnected in their own little bubbles that they can’t respond to the crisis with human decency.  But we can’t let Congress off the hook.  They had ample opportunity to prevent this from happening by putting strict, measurable limits on compensation in the original bailout plans.  Instead they backed down to pressure from Treasury officials, first in the Bush administration and then in the Obama administration.  Congress’s inaction on excessive compensation over the past two decades has led to an increase in the gap between CEO and average worker pay from 41-to-1 in 1980 to 344-to-1 in 2007.</p><p><b>Should Congress tax back the bailout bonuses? </b></p><p>The House proposal to tax bonuses at 90 percent was a better late than never option in response to their failure to protect taxpayers from such bailout profiteering.  Congress should also begin a debate about how to restore greater progressivity to the federal tax system, with steeper rates on higher incomes across the board and rolling back some of the Bush and Reagan era tax cuts at the top. At some point, there needs to be a clear plan on how to pay for the substantial investments our nation is making to address the recession and improve health care, education and energy systems.  We had high income taxes between the late 1930s and the early 1960s that accompanied a period of middle class prosperity and stability. Progressive taxes are one of the ways we can discourage speculation.</p><p><b>Is the public acting like crazed pitchfork populists? </b></p><p>The public is waking up to the unaccountable and reckless practices and culture of Wall Street.  And they are furious at the ways in which politicians from both major parties have accepted this Wall Street mindset (along with millions in campaign contributions).  The American people don’t resent fair compensation for hard work or innovative achievements.  But for decades, we’ve watched a powerful elite rig the rules of the game in their own favor.   We should channel this anger into long-lasting reforms to ensure such abuses never happen again – and that the economy works for everyone, not just the superrich.</p><p><b>Isn’t the problem of executive compensation just symbolic? </b></p><p>Runaway excessive pay is both a contributing cause of the economic crisis and a symptom of what is deeply off kilter with Wall Street culture.  Our executive pay system contributes to what President Obama has called the “quarter by quarter mentality” that has infected corporate American for several decades.  When top managers are rewarded for short-term gains –- and not long-term stewardship –- they are more likely to pursue fast gains through stock price manipulation, outsourcing, speculative investments, and other actions that have jeopardized the stability of our economy.</p><p><b>What are immediate reforms Congress should implement?</b></p><p>There are several immediate actions Congress could take today to remove the perverse incentives in the executive compensation system.</p><p>First, Congress should eliminate incentives in the tax code that encourage excessive pay.  They should pass the Income Equity Act, which would cap the amount of pay a company can deduct off their income taxes at either 25 times the pay of the lowest paid worker at a firm or $500,000.</p><p>Second, Congress could allow shareholders at publicly traded companies to vote on executive compensation.  While “Say on Pay” won’t solve this systemic problem, giving shareholders this authority might stop some of the most obscene pay packages.</p><p>Thirdly, Congress should pass corporate governance reforms that require democratic elections at corporations, truly independent compensation committees, and prohibitions on compensation consultants that have other business with the firm.</p><p><b>How can we address this problem over the long term?</b></p><p>Ultimately we need to radically change the culture of Wall Street and transform the economy.  Too much of the activity on Wall Street has been about speculation and gambling, not productive economic investment. With all the focus on Wall Street greed we forget a fundamental truth:  Wall Street is NOT the economy; people are the economy – local and regional businesses are the economy.</p><p><b>Should we be bailing out big banks like Citigroup and insurance companies like AIG?</b></p><p>Not the way we are.  The problem with these “too big to fail” companies is when they make money it goes to private shareholders –- but when they mess up –- we taxpayers are on the hook. Right now, the timid approach of Bush/Obama Treasury officials has given us the worst of two worlds.  Taxpayers cover all or most of the losses but have insufficient management power.  U.S. taxpayers now own 80 percent of A.I.G., yet we don’t have the power to dictate compensation?  The answer is for our government to aggressively step in as receivers and break up these companies into smaller units. Big banks should be broken up and assets allocated to regional and local banks. Or we should create quasi-public authorities to manage these entities for public purposes.</p><p><b>What is the alternative to Wall Street?</b></p><p>It is very important to make a distinction between the casino economy of Wall Street and the real economy of Main Street. The real economy includes the millions of small- and medium-sized regional businesses that produce and provide useful life-sustaining goods and services.  These businesses are rooted in communities and concerned with livelihoods.  Local banks and credit institutions -–a key part of the real economy -- are for the most part healthy because they are subject to state-level regulation and were not engaged in the Wall Street casino binge.</p><p>The casino economy has been focused on betting on the movement of money and expropriating value out of the real economy.  Wall Street has been focused on phantom wealth creation.   The Main Street real economy is about creating real wealth, livelihoods, and useful products and services.</p><p><b>What is the role of government in fixing the economy?</b></p><p>Government must create a firewall between the parasitical casino economy and the healthy real economy.  It must do this by confining such activities to regulated casinos and providing aggressive oversight to the rest of financial marketplace. Examples:</p><ul><li>Strict reserve requirements for all financial institutions and instruments</li> <li>A financial transaction tax on purchase and sale of financial instruments</li></ul><p><b>Won’t the recession be over within a year and everything be back to normal? </b></p><p>The economy has suffered a system failure and needs to be transformed into a new and hopefully sustainable economic system.  The forces of Wall Street, however, and the politicians, media and think tanks that serve them (and who got us into this mess) want to quickly bring back the old system.  They want to restore the bubble economy and start funneling wealth to the top one percent again.  They hope to goose the system with taxpayer dollars and extract more phantom wealth for themselves and a small elite.  The challenge is to make sure a replay of the events that led to the current crash never reoccur by reengineering the economy to ensure broader prosperity and ecological sustainability. </p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Sarah Anderson and Chuck Collins of the Institute for Policy Studies (IPS) are also members of the <a target="_blank" href="http://www.neweconomyworkinggroup.org/">New Economy Working Group</a>, an initiative to stimulate bold thinking about a New Economy that serves the long-term needs of all our children, families, communities, and natural systems. IPS is also helping to form <a target="_blank" href="http://www.commonsecurityclub.org/">Common Security Clubs</a> to help people come together to study the changing economy and help one another take action.  For more information on actions you can take, see IPS’s web site on <a target="_blank" href="http://www.neweconomyworkinggroup.org/">extreme inequality</a>. </div></div></div> Thu, 02 Apr 2009 10:00:01 -0700 Sarah Anderson, Chuck Collins, AlterNet 654696 at http://blogs.alternet.org Economy Economy wall street economic crisis executive compensation What Would the Man Who Got Us Out of the Last Depression Do About Wall Street's Greed? http://blogs.alternet.org/story/132353/what_would_the_man_who_got_us_out_of_the_last_depression_do_about_wall_street%27s_greed <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">What would FDR do if he were around to see AIG&#039;s bonus bozos spit in the face of the American taxpayer?</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>What would Franklin D. Roosevelt do if he were around today to see the bonus bozos of AIG's fast-and-loose Financial Products Unit spit in the face of the American taxpayer?</p><p>That's an enormously relevant question. During the current economic meltdown, various pundits have evoked memories of Roosevelt and the Great Depression. If we look back at that time, maybe we can learn something from how FDR handled the rich and powerful rip-off artists of his troubled time.</p><p>So far, President Barack Obama has found no magic antidote to corporate looting. He's hoping that some moral suasion from the White House will undo the latest $165 million in bonuses paid out at AIG -- bonuses that have become a blot on his recovery plans.</p><p>He's also asking his Treasury people to find some maneuver, any maneuver, that would enable an end-run around the AIG contracts that prompted those bonus millions.</p><p>On Capitol Hill, meanwhile, angry members of Congress are talking about taking more direct steps to get those bonus windfalls back. Rep. Steve Israel, D-N.Y., has proposed a 100 percent tax, effective this year, on bonuses over $100,000 that go to employees at companies that receive federal-bailout funds.</p><p>"If we can't kill the bonuses," <a target="_blank" href="http://www.northshoreoflongisland.com/Articles-i-2009-03-12-78833.112114-sub_Rep_Israel_100_tax_on_AIG_bonuses.html">says Israel</a>, "we'll tax the bonuses."</p><p>Israel's bill has already won support from key members of the Democratic leadership in the House. If the bill passes, taxpayers would get the latest AIG bonus millions back.</p><p>But the bill, as admirable as it may be, won't touch the fortunes that Wall Street's movers and shakers -- at AIG and elsewhere -- so gleefully amassed while they were devastating our economy.</p><p>Take Joseph Cassano. He ran the AIG division that wheeled and dealed the company into $99 billion in 2008 losses. Cassano <a target="_blank" href="http://www.nydailynews.com/money/2009/03/17/2009-03-17_pin_aig_woes_on_brooklyn_boy_joseph_cass-1.html">left AIG</a> last March, just before the insurance giant went toxic, after having collected over $300 million in salary and bonus. He'll get to keep all that stash, and the ongoing income that stash generates, even if Israel's tax bill passes. (Cassano <a href="http://tpmmuckraker.talkingpointsmemo.com/2009/03/did_cassano_and_aig_commit_fraud.php">is reportedly</a> under investigation for fraud during his time at AIG.)</p><p>So how would Roosevelt have handled all this? Actually, we have a fairly good idea about what FDR would have done, because he faced a situation with noteworthy similarities.</p><p>In 1940, with the nation facing hard times at home and the Nazis on the march in Europe, Roosevelt announced that no American would be allowed to profit off the nation's escalating crisis.</p><p>"Not a single war millionaire," the president flatly pledged in 1940, "will be created in this country as a result of the war disaster."</p><p>Key corporate leaders had other ideas. They mobilized to stop FDR's proposal for a stiff excess profits tax on corporate earnings. These corporate heavies actually refused to enter into defense contracts until Congress gave them a more business-friendly tax bill.</p><p>The war profiteers won that round against FDR's excess-profits tax. But the attack on Pearl Harbor would soon give FDR the upper hand. In April 1942, just a few months into the war, Roosevelt proposed a 100 percent "supertax" on all income over $110,000 — the equivalent of about $1.4 million in today's dollars — for married couples filing jointly.</p><p>The nation's "discrepancies between low personal incomes and very high personal incomes," FDR explained to Americans, "should be lessened."</p><p>Congress, in the end, didn't go along with FDR's 100 percent tax rate, but lawmakers did eventually agree to a 94 percent top rate on income over $200,000, around $2.5 million in today's dollars, and the nation's top tax rate would go on to hover around 90 percent for the next two decades, under Democratic and Republican presidents alike.</p><p>Over the course of these years of high taxes on America's very rich, the Great Depression would end, World War II would be won, and the United States would usher in the first prosperous, mass middle-class nation in economic history.</p><p>FDR's boldness -- his willingness to take on the rich and powerful -- opened the door to all this success. Do the White House and Congress have it within them to be as bold today?</p><p>Or will they be content to rap the knuckles of the bonus-happy knuckleheads at AIG and let the rest of our nation's executive-suite gang off the hook?</p><p>The Institute for Policy Studies, the think tank where we do our work, has proposed a 70 percent tax rate on all annual income over $10 million. That would essentially double the top tax rate our super rich face today, but still leave them paying less in taxes than rich people paid under Republican President Dwight D. Eisenhower back in the 1950s.</p><p>FDR, we're quite sure, would heartily approve.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins directs the Institute for Policy Studies Program on Inequality and the Common Good. He was a co-founder of United for a Fair Economy. Sam Pizzigati, an IPS associate fellow, edits <i>Too Much</i>, on online weekly on excess and inequality. </div></div></div> Sun, 22 Mar 2009 21:00:01 -0700 Chuck Collins, Sam Pizzigati, AlterNet 654443 at http://blogs.alternet.org Economy Economy taxes depression executive pay fdr aig Looking for Support in Hard Economic Times? http://blogs.alternet.org/story/132861/looking_for_support_in_hard_economic_times <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Part mutual aid association and part social action group, common security clubs offer a great way to take action.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><i>This is part of a special AlterNet series on Obama's latest plans for a rescue of the bankers and Wall Street's toxic assets.</i><br /><a href="http://www.alternet.org/workplace/132862">Read our editorial on the big picture</a>.<br /><br /><p>The <a href="http://forumorganizing.org/">common security club</a>model was born out of work done in the last few years by people struggling with overwhelming indebtedness. Participants spend some time discussing the root causes of the economic crisis, drawing on readings and materials provided by the network. But they mostly focus on what they can do together to increase their economic security and press for policy changes.</p><p>“What becomes clear to participants is we are facing some major economic and ecological changes,” said Andree Zaleska from the Boston office of Institute for Policy Studies, who is coordinating clubs in the Northeast. “We are not going back to some golden age of economic growth based on empire, unfettered capitalism, and cheap energy -- nor do we want to! We have to prepare ourselves and our communities for transformation.”</p><p>As theologian Walter Brueggemann writes we need to shift from “autonomy to covenantal existence, from anxiety to divine abundance, and from acquisitive greed to neighborly generosity.” Common security club participants are experimenting with ways to make the practical, political, and spiritual changes this entails.</p><p>The three main functions of the clubs are:</p><p>1) Learn and reflect<br />Through popular education tools, videos, Bible study, and shared readings, participants increase their understanding of the larger economic forces on our lives. Why is the economy in distress? How did these changes happen? What are the historical factors? How does this connect to the global economy? What are the ecological factors contributing to the changes? What is our vision for a healthy, sustainable economy? What are the sources of real security in my life?</p><p>2) Mutual aid and local action<br />Through stories, examples, Web-based resources, a workbook, and mutual support, participants reflect on what makes them secure. What can we do together to increase our economic security at the local level? What would it mean to respond to my economic challenges in community? How can I reduce my economic vulnerability in conjunction with others? How can I get out of debt? How can I help my neighbor facing foreclosure or economic insecurity? Can I downscale and reduce my consumption and ecological footprint and save money?</p><p>3) Social action<br />The economic crisis is in part the result of an unengaged citizenry and government. What can we do together to build an economy based on building healthy communities rather than shoring up the casino economy? What public policies would make our communities more secure? Through discussion and education, participants might find ways to engage in a larger program of change around the financial system, economic development, tax policy, and other elements of our shared economic life.</p><p>Clubs can be autonomous or affiliated with an existing institution, secular or religious. The ideal size is 10 to 20 adults who make a commitment to an initial five meetings with a facilitator. Clubs then decide whether to continue meeting and self-manage. Starter sessions have been developed and include “The Roots of the Economic Crisis,” “Personal Re sponses to Economic and Ecological Change,” “Things We Can Do Together,” and “Actions to Transform the Economy.”</p><p>Among the things “we can do together,” the clubs examine stories and examples of various economic and mutual aid activities. These have included teaming up to help each other weatherize their homes, helping each other rework their personal budgets and reduce debt, and forming food-buying clubs. Faith-based groups weave together reflection, prayer, and action.</p><p>“We can’t be a bank for each other,” said club participant Paul Monroe of Boston. “But there are so many things we can do to support one another and increase our economic security.”</p><p>One group, convened by a group of Haitian women in the Boston neighborhood of Dorchester, decided to push back against their credit card companies. “Everyone was paying really high fees,” observed Charlotte Desire, who coordinated the group. “One of our best moments was when everyone in our group called their credit card company and threatened to cut up their cards unless fees were waived and interest rates were cut.” Almost everyone in the group was able to save hundreds of dollars in interest payments and fees.</p><p>Gerald Taylor, a veteran congregation-based organizer in Charlotte, North Carolina, has led discussions with several groups about what a healthy and democratic debt system would require. “All our religious traditions have prohibitions on usury for a reason,” said Taylor. “So what would a fair and transparent credit system look like?”</p><p>“We are piloting about a dozen common security clubs in different places and with very different groups,” said Zaleska, describing the efforts in her region. “We’re testing out several different curricula. Some clubs are pressing members of Congress to reform the casino economy, stop foreclosures, and pass an economic stimulus package.”</p><p>Whatever shape or focus members choose to take, common security clubs are pushing against the social isolation that may accompany a recession or depression. “I see the hurt and anxiety in my congregation—and how people privatize their pain,” says Cecilia Kingman. “This is a chance for us to be real with each other.”</p><p>These clubs are also one of many building blocks that can move us toward a “solidarity economy” that affirms our true interconnection with one another. Coming together is a way to remind ourselves of the abundance we have, the wealth of our relationships and networks, and the mutuality of our economic security.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is an On the Commons Fellow and senior scholar at the Institute for Policy Studies, where he directs the <a href="www.extremeinequality.org">Program on Inequality and the Common Good</a>. He is co-author with Mary Wright of The Moral Measure of the Economy (Orbis, 2007). This is an excerpt of an article that originally appeared in Sojourners magazine, February 2009. For information on how to start or join a common security club, see: <a href="http://forumorganizing.org/">hforumorganizing.org</a> </div></div></div> Sun, 22 Mar 2009 21:00:01 -0700 Chuck Collins, OnTheCommons.org 654449 at http://blogs.alternet.org Economy Economy common security clubs Obama Is Right to Take on the Very Rich http://blogs.alternet.org/story/128745/obama_is_right_to_take_on_the_very_rich <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">They&#039;re paying far less of their incomes in taxes than average Americans.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>We've seen, in recent weeks, an outpouring of public outrage over the mega millions that keep flowing – despite the escalating economic meltdown – into the pockets of America's top bankers and corporate executives.</p><p>"I'm angry," Sen. Claire McCaskill (D) of Missouri told her Senate colleagues late last month, as she introduced a bill to cap pay for bailed-out CEOs at $400,000 a year. "Wall Street [is] kicking sand in the face of the American taxpayer."</p><p>"I will not tolerate it," President Obama added a few days later, as he announced a $500,000 executive pay cap at firms getting substantial bailout dollars.</p><p>The amount of money that goes into executive pockets is staggering. So is the amount that comes out of those pockets in taxes: precious little. America's super-rich are paying far less of their incomes in taxes than average Americans who punch time clocks. This is grossly unfair. The good news: Under Mr. Obama's new plan to cut the deficit in half, the very richest Americans will start paying something closer to their fair tax share.</p><p>It's been a while since they've done that. 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.</p><p>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.</p><p>Uncle Sam taxes income from those assets – whether that income be capital gains or dividends – at a much lower rate than income from work.</p><p>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.</p><p>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.</p><p>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.</p><p>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.</p><p>We can fix this. Obama just announced his plan to end the Bush administration's high-income tax cuts. This is an important step. We can insist, also, that lawmakers end the preferential treatment of dividends and capital gains. And we can raise the tax rate that kicks in when taxpayers start collecting more than $10 million and $20 million a year.</p><p>Steps like these would help get our future in order. But what about the past – and all those windfalls the super-rich have been pocketing as our economy veered into the ditch? Are we going to have to watch these billions multiply, generation after generation, into a new American aristocracy of wealth?</p><p>Not if we save the estate tax, the only federal levy on grand accumulations of private wealth. The rich and their retainers have been trying to repeal the estate tax for 20 years now. They haven't succeeded, but they have slashed the tax rate on the fortunes the ultrawealthy leave their heirs.</p><p>Congress is about to begin debating legislation that would freeze the estate tax at the current bargain-basement rate set by President Bush. We can't let that happen. More than ever, America needs its ultrarich to chip in more.</p><p><em>Copyright © 2009 The Christian Science Monitor</em></p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies and chair of the <a href="”http://www.ips-dc.org/projects/commongood.htm”">Working Group on Extreme Inequality</a>, an emerging coalition of religious, business, labor and civic groups concerned about the wealth gap. He is coauthor with Bill Gates Sr. of <a href="”" http:="">Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes</a>. Sam Pizzigati is the editor of the online weekly Too Much, and an associate fellow at the Institute for Policy Studies. </div></div></div> Tue, 24 Feb 2009 19:00:01 -0800 Chuck Collins, Sam Pizzigati, Christian Science Monitor 653842 at http://blogs.alternet.org Economy Economy taxes middle class wealthy executive pay Corporate America, Ground Your Jets http://blogs.alternet.org/story/128057/corporate_america%2C_ground_your_jets <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The American taxpayer, reeling from the economic meltdown, doesn&#039;t feel like subsidizing lavish jets and bonuses any more.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter--><p>If anything symbolizes the excesses and inequalities of the last few years, it's the private Learjet or Gulfstream. While the masses take off their shoes and line up for security screening, high-fliers inhabit a parallel transportation universe characterized by cozy private terminals, flexible departures and nonexistent security. In flight, the sky is the limit, with some private jet owners spending $10 million to $40 million on interior decorating, which could include gold bathroom fixtures and rare-wood paneling, as well as flight staffs, including chefs and masseuses.</p><p>But corporate America is finally waking up and smelling the jet fuel. The American taxpayer, reeling from the economic meltdown, doesn't feel like subsidizing lavish jets and bonuses any more. First there was the spectacle of the Big Three auto-industry CEOs flying in their separate private jets to beg for taxpayer bailout funds. Humbled by the blowback, they each drove energy-efficient cars on their subsequent visit to Washington.</p><p>Then it was revealed that Citigroup, recipient of $50 billion in federal bailout funds, was purchasing a $50 million French-made, 12-seat, Dassault Falcon private jet. Sen. Carl Levin, D-Mich., was livid: "To permit Citigroup to purchase a plush plane -- foreign-built no less -- while domestic auto companies are being required to sell off their jets is a ridiculous double standard." President Barack Obama weighed in, pressing Citigroup CEO Richard Parsons to forgo the jet. Yet, six other financial companies that received billions in bailout funds, including AIG, Morgan Stanley, JPMorgan Chase and Bank of America continue to operate fleets of private jets.</p><p>A ban on private jet ownership for recipients of funds from the Trouble Assets Relief Program passed the U.S. House of Representatives and awaits action in the Senate.</p><p>But now is the time for all of America's corporate titans to surrender their private jets -- and not just as symbols of greed. Private jet travel imposes heavy costs on to the rest of us, first by straining air traffic control systems. Although commercial airlines are mostly to blame for airport delays, private jets add to the congestion, particularly in the New York City airspace where commercial flights only account for 53 percent of the air traffic. The Big Apple's delays compound through the air system, triggering a third of all delayed flights nationwide.</p><p>Private jets also contribute disproportionately to global warming. A private jet passenger, with his or her Godzilla-size carbon footprint, puts five times more carbon into the atmosphere than a commercial jet passenger. An hour aloft in a private jet burns as much fuel as a year of driving. Furthermore, as Britain's anti-terror chief has warned, private jets pose an unacceptable security risk, since there's nothing to stop passengers from carrying weapons aboard, never mind 4-ounce containers of lotion. The U.S. Homeland Security department agrees, but eight years after 9/11, it still hasn't adopted security rules for private jets.</p><p>Meanwhile, the rest of us, as taxpayers and commercial travelers, subsidize private jet travel through fees, infrastructure funds and tax breaks. Private jets use 16 percent of air traffic control system services, but pay only 3 percent of the costs, according to the Federal Aviation Administration. And a third of airport improvement funds over the last couple years have gone to fix up small, remote airports serving primarily private jets, such as Oregon's North Bend airport, where 5,000 wealthy golfers a year are able to land their private jets before playing at the world-class Brandon Dunes course.</p><p>If it's too painful for the super-rich to abandon their stratospheric sybaritism, Congress should at least impose a luxury tax on private jets to offset their environmental impact. They should also fix the FAA's funding structure to require private jets to pay their fair share of the air traffic control system costs and impose a few security requirements. But ideally, the high fliers should come down to earth with the rest of us. Maybe if more powerful CEOs had to endure the delays, indignities and discomforts of commercial air travel, they would throw their tremendous clout behind a transportation policy that works for everyone.</p> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Barbara Ehrenreich is the author of 13 books, including the New York Times best-seller Nickel and Dimed. A frequent contributor to the New York Times, Harper's and the Progressive, she is a contributing writer to Time magazine. She lives in Florida. Chuck Collins is a senior scholar at the Institute for Policy Studies and chairman of the <a href="http://www.ips-dc.org/projects/commongood.htm">Working Group on Extreme Inequality</a>, an emerging coalition of religious, business, labor and civic groups concerned about the wealth gap. He is coauthor with Bill Gates Sr. of <a href=" http://bookswelike.net/isbn/0807047198">Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes</a>. </div></div></div> Fri, 20 Feb 2009 21:00:01 -0800 Barbara Ehrenreich, Chuck Collins, AlterNet 653767 at http://blogs.alternet.org Economy Economy corporate america jets financial crisis bonuses 10 Ways to Bail Out Wall Street (and Main Street) Without Soaking Taxpayers in Debt http://blogs.alternet.org/story/100223/10_ways_to_bail_out_wall_street_%28and_main_street%29_without_soaking_taxpayers_in_debt <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Who says we need to borrow a trillion dollars to save Wall Street from its own excesses?</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->As Congress debates the particulars of the Bush-Paulson bailout, one key question has gone largely unexplored: Who will pay for this mess?<br /><br />Lawmakers in Congress appear to have assumed that the federal government will simply borrow more money to foot the bill for the bailout. The national debt ceiling will rise to a whopping $11.3 trillion, up from $8 trillion a year ago.<br /><br />But this rush to borrowing merely shifts the bailout burden onto the backs of future taxpayers. Congress needs to change course -- and develop a "pay as we go" plan that makes Wall Street pay.<br /><br />The lion's share of bailout funding should come from the high-finance gamblers and the wealthy CEOs who have so profited from our casino economy.<br /><br /><b>Funding the Bailout: Basic Principles</b><br /><br /><ul><li>Wall Street and speculators should pay <i>now</i> for the mess they created.</li><br /><li>Instead of borrowing from the super-wealthy beneficiaries of the casino economy, we should tax them.</li><br /><li>Any bailout should stimulate the real economy with investments in Main Street, not just Wall Street.</li></ul><br /><br /><b>Broadening the Bailout Dollars</b><br /><br />The debate over the bailout has so far concentrated on the $700 billion purchase of "troubled assets" proposed by Treasury Secretary Henry Paulson. A real "bailout" would also target the troubled households of working American families. A $200 billion "Main Street Stimulus Package" could bolster the real economy and those left vulnerable by the subprime mortgage meltdown. This package should include:<br /><br /><ul><li>A $130 billion annual investment in renewable energy to stimulate good jobs anchored in local economies and reduce our dependency on oil.</li><br /><li>A $50 billion outlay to help keep people in foreclosed homes through refinancing and creating new homeownership and housing opportunities. These funds could also help those locked out of the American Dream to purchase homes through nonspeculative mortgage programs.</li><br /><li>A $20 billion aid package to states to address the squeeze on state and local government services that declining tax revenues are now forcing.</li></ul><br /><br /><b>A Responsible Plan to Pay for Recovery: $900 Billion in New Revenue</b><br /><br />Below is our 10-point program to pay for this broader bailout. This plan would generate $900 billion a year until the costs of the bailout and stimulus program are paid for.<br /><br /><b>1. A Securities Transaction Tax: $100 Billion</b><br /><br />A fair plan to pay for the bailout should include a modest financial transaction tax on the buying and selling of stock and other financial products. A penny on every $4 invested would generate $100 billion a year. Other European countries already tax stock transactions, and these transaction taxes effectively discourage speculation.<br /><br /><b>2. A Wealth Tax Surcharge on Households with $10 Million: $300 billion</b><br /><br />Congress should institute a modest wealth tax surcharge on households with a net worth of more than $10 million. These households currently own and control more than 20 percent of the nation's private wealth. They have realized huge gains from the manipulation of capital markets and the asset bubbles that created the current crisis. A modest surcharge -- no more than 3 percent -- could generate more than $300 billion.<br /><br /><b>3. A Corporate Minimum Income Tax: $60 Billion</b><br /><br />In August, the Government Accountability Office reported that two-thirds of U.S. corporations paid no income taxes between 1998 and 2005. These corporations paid nothing toward our shared expenses of defense, environmental protection, public health and education. Ordinary taxpayers should not be left holding this bag. A minimum corporate income tax should contribute toward the bailout.<br /><br /><b>4. A "Disgorgement" Recovery From Profligate CEOs: $40 Billion</b><br /><br />Until several weeks ago, top CEOs and managers were collecting massive salaries and fees while they told the rest of us that "everything is fine." These CEOs gorged themselves and have taken the money and run. The four biggest investment banks on Wall Street shelled out $30 billion in bonuses last year. One of them, Lehman Brothers, has just gone under. Another, Bear Stearns, was bailed out earlier this year. To help pay for recovery, the new Treasury authority should seek the payback of executive compensation inappropriately extracted in the years before the Wall Street meltdown.<br /><br /><b>5. An Income Tax Surcharge on Incomes Over $5 Million: $105 Billion</b><br /><br />A portion of the bailout cost should be financed with an emergency income tax surcharge on incomes over $5 million. Wealthy investors have been the big winners in the unregulated bubble economy. They have watched their incomes skyrocket over the last 25 years. Meanwhile, President George W. Bush has cut their taxes for seven years. Instituting a 50 percent tax rate on income over $5 million and a 70 percent rate on income over $10 million would generate $105 billion a year until the bailout is paid for.<br /><br /><b>6. An End to Overseas Corporate Tax Havens: $100 Billion</b><br /><br />Congress should close down corporate tax havens that allow corporations to game the system and cut their taxes, sometimes to zero. This step would generate $100 billion from profitable companies that have paid no taxes over the last decade.<br /><br /><b>7. The Elimination of Subsidies for Excessive CEO Pay: $20 Billion</b><br /><br />As taxpayers, we subsidize excessive CEO pay, through a host of tax loopholes, to the tune of $20 billion a year. Congress should close these loopholes, including the accounting gimmicks that permit companies to report one set of earnings to shareholders and a different, lower number to Uncle Sam.<br /><br /><b>8. The Elimination of the Tax Preference for Capital Gains: $95 Billion</b><br /><br />The mega-windfalls that Wall Street executives have pocketed over recent years will be generating additional income, in the form of dividends and capital games, for years to come. Under current tax law, dividend and capital gains income faces a mere 15 percent tax rate, while income from actual work can be taxed at rates up to 35 percent. Taxing wealth and work at the same rates would generate $95 billion a year in revenue.<br /><br /><b>9. A Progressive Inheritance Tax: $60 Billion</b><br /><br />In the near future, the moguls of the past quarter-century will be passing off the scene and leaving behind dynastic-size fortunes. A portion of this wealth should be taxed. A progressive estate tax on estates over $2 million -- $4 million for a couple -- could generate $60 billion a year in the short term and much more in outlying decades.<br /><br /><b>10. The Elimination of the Mansion Subsidy: $20 Billion</b><br /><br />Wealthy taxpayers can currently deduct their mansion mortgage interest off their taxes. The richest 2 percent of U.S. households do not need to be subsidized by American taxpayers. Capping the home mortgage interest deduction on that portion of mortgage payments that exceeds $200,000 per year would generate $20 billion a year.<br /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies, where he coordinates the <a href="http://www.extremeinequality.org">Working Group on Extreme Inequality</a>. Dedrick Muhammad is a senior organizer and research associate at the Institute for Policy Studies and author of "<a href="http://www.ips-dc.org/reports/#249">40 Years Later: The Unrealized American Dream</a>." Muhammad is also the "Racial Wealth Divide" coordinator at United for a Fair Economy and co-author of UFE's report "The State of the Dream: Enduring Disparities in Black and White." </div></div></div> Wed, 24 Sep 2008 21:00:01 -0700 Chuck Collins, Dedrick Muhammad, AlterNet 650012 at http://blogs.alternet.org Economy Economy bush paulson bailout Tax the Speculators: A Fair Plan for Economic Recovery http://blogs.alternet.org/story/99529/tax_the_speculators%3A_a_fair_plan_for_economic_recovery <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Government action should protect ordinary people, not reward the super-rich and the speculative sectors of the economy.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->With the specter of financial Armageddon raised in headlines everywhere, two questions keep occurring to me. Where will the government find the $85 billon to bail out AIG and other Wall Street giants? And how will we pay for the proposed Main Street recovery, including federal aid to states, relief to homeowners, and public works projects for the unemployed?<br /><br />The Bush administration plans to add to the $400 billion projected deficit and our $9 trillion national debt. But it's irresponsible to shift the bill entirely to the next generation. The corporations that rigged the casino economy and the wealthy CEOs and investors that profited at everyone else's expense should bear the recovery costs, not our kids and grandchildren.<br /><br />We can't recover the money from the companies now. They have extracted the profits and their CEOs have cashed their gilded paychecks. The speculators bought mansions, private jets, and small islands. Lehman Brothers declared bankruptcy on Monday and 25,000 workers are on the brink of unemployment.<br /><br />But Lehman CEO Richard Fuld is sitting pretty, with his $354 million compensation from the last five years and a mega-mansion in Greenwich, Connecticut.<br /><br />When a CEO or employee improperly takes money from a company and is forced to pay it back, it is colorfully referred to as "disgorgement." In 1999, managers of Compaq Computer cooked the books and gorged on bonuses based on misrepresented profits. The government forced them to pay it back.<br /><br />But what happens when a whole sector of the economy has been cooked and billions of dollars have already been stashed in offshore bank accounts? How are the crooks held accountable for robbing our entire economy? Here are six actions that will fairly generate over $400 billion a year to pay for a broad-based economic recovery and reduce the extreme inequalities that fueled speculation at the outset.<br /><br />Institute a Financial Transactions Tax. Congress should levy a tax on financial transactions such as sale and purchase of stock and more exotic transactions such as credit default swaps, options, and futures. The UK has a modest financial transaction tax of 0.25 percent, a penny on every $4 invested. This is negligible for a long-term investor, but imposes a cost on the fast-buck flippers. Estimated annual revenue: $100 billion. Impose an Income Tax Surcharge Rate on Incomes Over $5 Million. The 50,000 households with annual incomes over $5 million are the biggest winners from twenty-five years of Wall Street deregulation. They've also seen their effective tax rates decline under President George W. Bush. Instituting a 50 percent tax rate surcharge on incomes over $5 million and a 70 percent rate on incomes over $10 million would generate $105 billion a year. Eliminate the Tax Preference for Capital Gains. Wealth extracted from Wall Street windfalls will pay out income for years to come. There's no economic reason for taxing income from corporate dividends and capital gains at 15% while taxing income from actual work at 35%. Taxing wealth and work at the same rates would generate $95 billion a year in revenue. Progressive Inheritance Taxes. When great amounts of wealth pass to the next generation a portion of that wealth should be taxed. A progressive estate tax could generate $50 billion a year in the short term, but much more in outlying decades.<br /><br />Eliminate Taxpayer Subsidies for Excessive CEO Pay. Five loopholes that benefit top executives should be abolished. These include eliminating offshore deferred compensation, capping the tax deductibility of excessive pay, and eliminating double standards for stock option accounting. Closing these tax loopholes would generate $20 billion a year. (Read more about this in this recent <a href="http://www.ips-dc.org/reports/#623">report</a> from the <a href="http://www.ips-dc.org/">Institute for Policy Studies</a> and <a href="http://www.faireconomy.org/">United for a Fair Economy</a><br /><br />Close Offshore Corporate Tax Havens. Congress should prevent corporations from playing games by claiming expenses in the United States and profits in countries that don't collect taxes. According to the Government Accountability Office, two-thirds of US corporations paid no corporate income tax between 1998 and 2005. Closing this loophole would generate over $100 billion.<br /><br />Government action should prioritize protecting ordinary people and the real productive economy, not further reward the superrich and the speculative sectors of the economy. A fair plan to the pay for the recovery is a good start. <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies and chair of the <a href="”http://www.ips-dc.org/projects/commongood.htm”">Working Group on Extreme Inequality</a>, an emerging coalition of religious, business, labor and civic groups concerned about the wealth gap. He is coauthor with Bill Gates Sr. of <a href="”" http:="">Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes</a>. </div></div></div> Sun, 21 Sep 2008 21:00:01 -0700 Chuck Collins, The Nation 649916 at http://blogs.alternet.org Economy Economy wall street markets taxpayers government bailout At the Height of an Energy Crisis, Fat-Cat CEOs Still Litter the Skies with Private Jets http://blogs.alternet.org/story/89691/at_the_height_of_an_energy_crisis%2C_fat-cat_ceos_still_litter_the_skies_with_private_jets <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The private-jet perk is -- literally and figuratively -- a high-profile sign of an executive reward system out of control.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->If shareholders, corporate watchdogs and consumer groups would like to know just how weak the oversight of corporate management is in America, they need to check out the abuse of corporate jets.<br /><br />The private jet industry has more than doubled its sales in the past five years, and corporate executives form the backbone of its clientele. In addition to legitimate business trips, many executives and their families have access to the company jet for personal use, an expense picked up by their companies' other stakeholders, including shareholders and employees. And the rest of us pay a price in diminished air quality as a result of these heavily polluting jets.<br /><br />Private jet owners probably have noticed that wholesale fuel prices have increased 418 percent over the past five years, adding $5,000 to a Gulfstream jet flight between New York and Los Angeles. But this is small potatoes for a high-flier who shelled out 10,000 times that amount or more to buy the plane in the first place. At a time when both major-party presidential candidates are vowing to give shareholders greater influence over executive compensation, the private-jet perk deserves special attention.<br /><br />Stakeholders now can get a better look at jet usage among corporate titans, because new rules require the disclosure of all perks valued at more than $10,000. Personal use of corporate jets was the most common perk among 386 of the largest companies on Standard &amp; Poor's 500. A Corporate Library study found that more than half of the 215 companies surveyed allowed or required executives to use company aircraft on personal trips, with a median cost to shareholders of $182,929.<br /><br />The companies with the highest fliers include Abercrombie &amp; Fitch, which gave CEO Mike Jeffries $1.4 million worth of corporate jet time over the past two years, and Starwood Hotels, which spent $866,178 in 2006 flying CEO Steven Heyer back and forth between his Atlanta home and corporate headquarters in New York.<br /><br />Sometimes it's the CEOs' relatives who benefit. Tyson Foods Chairman John Tyson is allotted 120 hours per year of corporate jet time, which he can parcel out to friends and family whether or not he accompanies them on the trip. In 2007, Qwest Communications ponied up several hundred thousand dollars so that new CEO Edward Mueller's wife and stepdaughter could use the corporate jet to commute between Qwest's Denver headquarters and a home in California.<br /><br />It's the norm these days for the largest firms to require CEOs to use private jets for all travel, including personal vacations, citing concerns for their executives' security. New York University School of Business professor David Yermack says this arrangement "is like telling the CEO: 'We insist that you eat at a five-star restaurant for your own nutrition, and we insist that you drink $800 champagne for your health.'"<br /><br />When corporate boards are approving such outrageous perks, you have to wonder what else they might be signing off on. Indeed, in virtually every recent case of corporate corruption, private jets have played a role. Countrywide Financial's Angelo Mozilo, under investigation for his role in the subprime mortgage meltdown, threatened to resign in 2007 unless the company let his wife fly with him and cover his personal taxes for the perk.<br /><br />The private-jet perk is -- literally and figuratively -- a high-profile sign of an executive reward system out of control. It's time for corporate stakeholders, including institutional investors, to intervene to help CEOs break the habit. <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies. Sarah Anderson is a fellow at the institute and director of the Global Economy Program. They are co-authors of the report <a href="http://www.ips-dc.org/reports/#461">"High Flyers: How Private Jet Travel Is Straining the System, Warming the Planet and Costing You Money."</a> </div></div></div> Fri, 27 Jun 2008 21:00:01 -0700 Sarah Anderson, Chuck Collins, The Baltimore Sun 647807 at http://blogs.alternet.org Economy Economy ceo pay private jets ips Want to Stimulate the Economy? Tax the Wealthy http://blogs.alternet.org/story/74736/want_to_stimulate_the_economy_tax_the_wealthy <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Underlying our economic crisis is a polarization of income and wealth.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->Every couple of years, when big investors suffer losses, Congress and their partisan economists launch into a heated debate over how to stimulate the flagging economy. This is mostly a rehash of the "trickle down" versus "bottom up" debate that dates back to the Reagan years.<br /><br />Conservatives argue that the answer to the recession is to cut taxes and interest rates targeted at their über-wealthy and global corporate patrons. This is their program for any season, rain or shine, so it is immediately suspect.<br /><br />Progressives argue, correctly, that we should target tax breaks and rebates to low- and middle-income people; their consumer spending will keep the economy chugging. Give a tax break to big corporations and the rich, and it will go anywhere on the planet in search of maximum returns. Give a tax rebate to a lower-income person or a small business and it is spent in the local economy, thus stimulating bottom up demand.<br /><br />The likely congressional compromise will direct tens of billions in tax breaks to corporations and send ordinary people a check for $300 or $400. The wealthy will be further enriched, and everyone else will have extra cash to spend or pay down their Visa bill.<br /><br />Whatever Congress does, however, it will borrow funds -- adding further to a national debt that now tops $9 trillion. More borrowing will continue to weaken our economy, widen our trade deficit, increase current and future wealth inequality, and postpone the bill payment for another day.<br /><br />Meanwhile, the rest of the world's economists look at the United States like we're profligate fools jumping up and down on a bubble of debt. They're nervously depending on us to remain the "shoppers of the world" by borrowing money and buying imports beyond our means. But they see what we ignore: The gig is up.<br /><br />Underlying our economic crisis is a polarization of income and wealth. Real wages for working people have been stagnant for decades, a horrific fact that has been masked only by increased work hours and vast amounts of private consumer debt in the form of credit cards and second mortgages. On the other end of the wealth spectrum, the superrich have so much money that they are engaging in speculative investments in search of maximum returns. This casino class, with its hedge funds and mortgage gambling schemes, have fueled further economic instability.<br /><br />Congress should pass a "bottom up" stimulus package and pay for it with taxes on the rich. Three progressive tax proposals could pay for additional investments that would broaden prosperity and reduce distortions caused by concentrated wealth.<br /><br /><b>Increase top income tax rates.</b> There are 7,500 households in the United States with annual incomes over $20 million. This private jet crowd has been the big winner of the rigged tax system of the last two and a half decades. Congress should boost the top tax rate to 50 percent on annual incomes over $5 million and to 70 percent on incomes over $10 million. This would generate an additional $105 billion a year and pay for a federal stimulus package.<br /><br /><b>Increase estate taxes.</b> While the Bush administration is using the recession as a pretext for abolishing the estate tax by making the 2001 tax cut permanent, Congress should do just the opposite. The estate tax, our nation's only levy on inherited wealth, should be revamped to tax inheritances over $20 million at higher rates. Revenue should be dedicated to reducing the payroll tax or providing debt-free college educations. As part of reforming the estate tax, Congress should restore the credit that allows states to "piggy back" on the federal estate tax and generate billions in revenue for states. State spending on education, infrastructure and community development are among the most effective intermediate-term economic stimulus.<br /><br /><b>Tax warehouses of wealth.</b> Over the last two decades, the über-rich have funneled billions of dollars -- funds that could have been taxed -- into private foundations and nonprofit organizations like Harvard University. This is the "people's money," forgone tax dollars that should help stimulate the economy. We should increase the annual excise tax on private foundations and nonprofit corporations with assets over $20 million by two percent. Foundations that fail to pay out more than 5 percent a year, excluding their overhead, should be assessed an even higher excise tax.<br /><br />These measures would generate hundreds of billions to pay for immediate economic stimulus as well as meaningful investments in economic opportunity. Borrowing funds to stimulate the economy will just postpone the pain. Paying now, through targeted taxes on the wealthy, makes economic sense. Further, it addresses the root of our current economic distress, the extreme inequality of wealth and power. <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies and chair of the <a href="http://www.ips-dc.org/projects/commongood.htm">Working Group on Extreme Inequality</a>, an emerging coalition of religious, business, labor and civic groups concerned about the wealth gap. He is co-author with Bill Gates Sr. of <a href=" http://bookswelike.net/isbn/0807047198">Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes</a><i>. </i></div></div></div> Thu, 24 Jan 2008 05:00:01 -0800 Chuck Collins, AlterNet 643988 at http://blogs.alternet.org Economy Economy economy taxes inequality recession stimulus package Warren Buffett to Congress: Keep Taxing the Mega-Rich http://blogs.alternet.org/story/68145/warren_buffett_to_congress%3A_keep_taxing_the_mega-rich <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Calls &quot;death tax&quot; rhetoric &quot;intellectually dishonest&quot; and &quot;clever, Orwellian and dead wrong.&quot;</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->Billionaire Warren Buffett <a href="http://www.cnbc.com/id/21791804">testified</a> before the Senate Finance Committee on Wednesday in defense of the federal estate tax, the nation's only tax on inherited wealth.<br /><br />Buffett invoked the historical roots of the estate tax, established in 1916 during the Gilded Age to put a brake on anti-democratic concentrations of wealth and power. "Dynastic wealth, the enemy of meritocracy, is on the rise," Buffett told the panel. "Equality of opportunity has been on the decline. A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy."<br /><br />As a result of the 2001 Bush tax cut, the federal estate tax is being phased out and in 2010 will be completely repealed for one year. But the entire tax bill sunsets in 2011, and unless Congress takes action, the estate tax will return. The votes no longer exist for "permanent repeal," so a compromise lies ahead.<br /><br />Wealthy individuals and tax cutters have always disliked the estate tax, which they labeled the "death tax." In the mid-1990s, a group of superrich families began <a href="http://faireconomy.org/press/2006/pc_and_ufe_expose_campaign.html">funding organizing efforts to abolish the tax</a>, culminating with the passage of the 2001 legislation.<br /><br />For the last decade, conservative tax cutters working to abolish the tax have had the upper hand, beating up Democrats for supporting a tax that they alleged "destroy family farmers and small businesses." They put forward these farmers and small business owners as the public face of their campaign, even though research and investigative reporting have vanquished these charges. Tom Buis, president of the National Farmers Union, representing 250,000 farmers, complained, "Family farmers and ranchers are insulted by those who use farmers as the reason for eliminating estate taxes, when the real beneficiaries are the nation's multimillionaires."<br /><br />After a decade of false accusations and innuendo, Wednesday's hearing was the first opportunity to set the record straight as to who pays the estate tax, how much revenue it generates and why we should retain it. Senate Finance Chair Max Baucus, D-Mont., a supporter of abolishing the tax, conceded that the "99 times out of a hundred, the tale is worse than the tax."<br /><br />Republican Chairman Charles Grassley, R-Iowa, complained that "the death tax" was "fundamentally wrong." Buffett responded that use of the phase "death tax" was "intellectually dishonest" and "clever, Orwellian and dead wrong."<br /><br />Buffett pointed out that tax cuts of the last decade have enabled the superrich, including himself, to get richer. "Tax-law changes have benefited this superrich group, including me, in a huge way. During that time the average American went exactly nowhere on the economic scale: He's been on a treadmill while the superrich have been on a spaceship."<br /><br />Buffett noted that only one in 200 households in the United States pays the tax, and they are exclusively multimillionaires and billionaires. "Leona Helmsley's dog, Trouble, reportedly is inheriting $12 million," Buffett quipped. Without an estate tax, "Trouble could instead receive $22 million."<br /><br />Abolishing the estate tax will cost over a $1 trillion in lost revenue over the next 15 years. This would shift debt further onto future generations and low- and middle-income taxpayers.<br /><br />With massive budget deficits and Democrats in control of Congress, the conversation is changing from "Should we abolish the estate tax?" to "How should we responsibly reform it?"<br /><br />"The estate tax is not going away," acknowledged Sen. Jon Kyl, R-Ariz., who has led the effort to eliminate the tax. Those who have historically voted for repeal, like Kyl and Sen. Blanche Lincoln, D-Ark., are now putting forward "virtual repeal" proposals intended to gut the law. But these proposals cost almost as much as repeal.<br /><br />The fight comes down to how high the wealth exemption will rise and how low the rate will be reduced. Currently estates valued under $2 million pay no estate tax and this amount is scheduled to rise to $3.5 million in 2009. That year, the tax rate comes down to 45 percent.<br /><br />Raising the wealth exemption reduces the number of estates that pay the tax. But this doesn't help the superrich families that have bankrolled the repeal movement. They care about the rate reduction and advocate for dropping the rate down to 35 percent and even 15 percent. But as Bill Gates Sr. <a href="http://www.politico.com/news/stories/1107/6856.html">wrote</a> in <i>Politico</i>, "This would mean handing out hundreds of billions of dollars in tax breaks to the wealthiest five out of every 1,000 citizens."<br /><br />Coalitions working to preserve the estate tax are now coalescing around a "revenue neutral" estate tax reform that retains revenue lost from raising wealth exemptions by instituting progressive rate structures on estates over $10 million and $20 million.<br /><br />Warren Buffett has a few lessons for Congress on tax priorities for the coming years. He supports making the tax system more progressive. To underscore the unfairness of the tax system, he recently offered a $1 million reward to any member of the Forbes 400 who could prove that they pay a higher tax rate than their personal assistants and secretaries. So far, he has had no takers.<br /><br />"Keep the estate tax and its $24 billion," Buffett proposed. "There are 23 million households in the United States with $20,000 or less of income. … Let's give those 23 million households a $1,000 annual credit. ... The cost of this would be less than getting rid of the tax on less than 12,000 estates." <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies and chair of the <a href="http://www.ips-dc.org/projects/commongood.htm">Working Group on Extreme Inequality</a>, an emerging coalition of religious, business, labor and civic groups concerned about the wealth gap. He is co-author with Bill Gates Sr. of <a href="http://bookswelike.net/isbn/0807047198">Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes</a>. </div></div></div> Sun, 18 Nov 2007 21:00:01 -0800 Chuck Collins, AlterNet 642671 at http://blogs.alternet.org Economy Economy inequality estate tax buffet grassley Minimum Wage Increase Is Good for Business http://blogs.alternet.org/story/47375/minimum_wage_increase_is_good_for_business <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">A growing number of business owners are supporting the minimum wage increase, which the Senate may vote on tomorrow.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->The Senate is scheduled to vote as early as Tuesday to raise the minimum wage for the first time since 1997.<br /><br />The usual array of "Chicken Littles" have claimed a hike in the wage floor will be bad for business and hurt low wage-workers. Earlier this month, columnist George Will suggested that the "minimum wage should be the same everywhere: $0. Labor is a commodity."<br /><br />So it's surprising and refreshing when you meet small business owners and CEOs who believe the opposite: that competing on the basis of who pays less is a dead end.<br /><br />"People who tell you that raising the minimum wage will hurt small business are flat out full of it," said Lew Prince, co-owner of Vintage Vinyl, a music retail business in St. Louis. "Small business owners know that keeping workers is easier and cheaper than finding and training new ones."<br /><br />Prince and a growing number of small business owners argue that paying a decent wage lowers employee turnover, improves morale and is the right thing to do. "Our long-term employees are way more likely to establish ongoing relationships with customers," said Prince.<br /><br />Prince has joined several hundred business owners in <a href="http://www.businessforafairminimumwage.org/">signing a public petition</a> of business owners and leaders who support a hike in the federal minimum wage. The effort is coordinated by the interfaith coalition <a href="http://www.letjusticeroll.org/">Let Justice Roll</a> and a network currently in formation called Business for Shared Prosperity.<br /><br />Some of the well-known signers include Jim Sinegal, CEO of Costco; Eileen Fisher, CEO of apparel giant named after her; Margot Dorfman, CEO of the U.S. Women's Chamber of Commerce, and Bill Foster, the cofounder of Electronic Theater Controls.<br /><br />For many business owners, paying their workers well is common sense. "Trying to save money by shortchanging my employees would be like skimping on ingredients," said Kirsten Poole, a petition signer and co-owner of Kirsten's Cafe and Dish Caterers in Silver Spring, Md. "I'd lose more than I saved because of declining quality, service, reputation and customer base. You can't build a healthy business or a healthy economy on a miserly minimum wage."<br /><br />A growing body of evidence shows that successful businesses that are "built to last" don't skimp on wages. "It is a sound business decision to increase the minimum wage," said venture capitalist Adnan Durrani, president of Condor Ventures in Stamford, Conn. "I have found that without exception in the successful ventures we've backed, providing sustainable living wages yielded direct increases in productivity, job satisfaction and brand loyalty from customers, all contributing to higher returns for investors and employers."<br /><br /><a href="http://www.epi.org/content.cfm/bp178">Research by the Economic Policy Institute</a> validates the theory that raising the minimum wage will have a positive effect for low-wage workers without a negative effect on the economy.<br /><br />The measure will eventually pass the Senate. The only question is how much corporate lard will be added to slide it through the Senate and across the President's desk. Small-business owners know that most of these tax breaks aren't for them. "They're trying to add a bunch of pork and so-called tax breaks for the big businesses that are trying to gobble up our customers," observed Lew Prince.<br /><br />On Friday, Republicans in the Senate continued to offer amendments to the minimum wage bill, leading Sen. Edward Kennedy, D-Mass., to finally blow his stack. "When does the greed stop?" he asked on the floor of the Senate, pointing to over 70 amendments costing over $200 billion. "How much more do we have to give to the private sector and to business? How many billion dollars more, are you asking, are you requiring?"<br /><br />Senate Democrats should keep pushing for a minimum wage bill unencumbered by billions in tax breaks. Let's cleanly raise the minimum wage and get on with the people's business. <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies. He is co-author of the forthcoming book, The Moral Measure of the Economy. He can be reached at <a href="mailto:chuck@ips-dc.org">chuck@ips-dc.org</a>. </div></div></div> Mon, 29 Jan 2007 08:00:01 -0800 Chuck Collins, TomPaine.com 637970 at http://blogs.alternet.org News & Politics minimum wage Time to Rein In the Pump Profiteers http://blogs.alternet.org/story/40986/time_to_rein_in_the_pump_profiteers <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Ordinary people may believe that unprecedented global strife is a bad thing. The barons of Big Oil beg to differ.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->Feeling a little squeeze at the gas pump? You are not alone -- U.S. consumers are expected to pay an additional $200 billion this year for oil and gas products.<br /><br />These billions, notes Sen. Byron Dorgan, D-N.D., amount to a "massive transfer of wealth from average Americans who can't afford it to big oil companies who already were experiencing all-time record profits."<br /><br />While ordinary Americans are forking over upwards of $3 for a gallon of gas, 15 distinctly unordinary Americans -- the CEOs of the largest U.S. oil industry companies -- are celebrating their biggest paychecks on record.<br /><br />According to a new report, "Executive Excess," by the Institute for Policy Studies and United for a Fair Economy (<a href="http://www.faireconomy.org/reports/2006/ExecutiveExcess2006.pdf">PDF</a>)], Big Oil CEOs last year took home an average $32.7 million in compensation -- 518 times more than average oil industry workers in 2005. The ratio for all industries in 2005 between average and highest paid worker was 411 to one, while the average globally in advanced countries is 25 to one.<br /><br />The Oil Barons' grab even exceeded their excessively paid counterparts at other leading U.S. firms. Their $32.7 million average pay was almost three times higher than the average bloated paycheck of $11.6 million for CEOs at 350 large corporations surveyed by the <i>Wall Street Journal</i>.<br /><br />The three highest-paid U.S. oil chieftains in 2005: William Greehey of Valero Energy ($95.2 million), Ray R. Irani of Occidental Petroleum ($84 million), and Lee Raymond, outgoing CEO of ExxonMobil ($69.7 million).<br /><br />At the end of July, ExxonMobil reported a quarterly profit of $10.36 billion, the second biggest gain ever. This follows its record-breaking annual profit of $36 billion in 2005.<br /><br />When ExxonMobil's CEO Lee Raymond was called before Congress to explain, he stated that rising prices reflect global supply and demand, nothing more. "We are all," Raymond assured Congress, "in this together, everywhere in the world." Except Raymond. Raymond recently retired from ExxonMobil with a Golden Parachute retirement package worth nearly $400 million, including country club fees and use of the company jet. "He is a porker of the first order," observed executive pay expert Graef Crystal.<br /><br />ConocoPhilips CEO James Mulva explained to ABC News that oil companies only make ten cents on the gallon. High oil prices, not greed, are the cause of skyrocketing prices at the pump, he explained. Big Oil can't control the global marketplace.<br /><br />But if Big Oil CEOs have no power to influence the cost of gas, then they don't deserve any special reward for industry profits. And even if their performance contributed to the company's profitability, shouldn't broader criteria be used to judge their performance, including their record on the environment?<br /><br />With these enormous salaries, Big Oil CEOs should be held to account for their failure to dedicate their mountains of excess cash toward seeking new energy sources that move us beyond fossil fuels. They can run green-looking TV ads claiming they are indeed preparing for the future. But when they throw massive windfall profits at chief executives, they seem to be signaling that the coming lean years will be somebody else's problem.<br /><br />What is good for ExxonMobil and Lee Raymond -- and all the other titans of the contemporary American oil and gas industry -- has <i>not</i> been good for average Americans. According to new wage data <a href="http://www.nytimes.com/2006/08/28/business/28wages.html?ei=5094&amp;en=eae4ab9ab2ce13d5&amp;hp=&amp;ex=1156824000&amp;adxnnl=1&amp;partner=homepage&amp;adxnnlx=1156778759-L7FRMnRzyA3d1UuqCEBpaA">reported</a> in the <i>New York Times</i>, "wages and salaries now make up the lowest share of the nation's gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960's." So what can be done about petrol profiteering?<br /><br />One proposal is to tax oil industry windfall profits and earmark them for public energy conservation projects and efforts to reduce energy costs for the poor. Sen. Byron Dorgan, D-N.D., has proposed that a 50 percent tax be applied to profits earned by major U.S. oil companies on the sale of crude oil above $40 per barrel.<br /><br />Another proposal is to eliminate government tax breaks and massive subsidies for big oil. The independent Taxpayers for Common Sense identified <a href="http://www.taxpayer.net/TCS/fuelsubfact.htm">16 wasteful subsidies</a> for the fossil fuel industry totaling $5 billion a year.<br /><br />Finally, Congress should take up the question of anti-trust laws in the face of oil industry consolidation. Not since the 1911 break-up of Standard Oil Co. has the country witnessed such a concentration of petroleum power, with 23 major mergers in the last decade.<br /><br />Big Oil's grip on U.S. politics is strong. Since 1990, they've given $192 million to federal candidates and parties. They have blocked sane energy policy and investments that move our country beyond dependency on oil.<br /><br />That's why a campaign organized by <a href="http://www.priceofoil.org/">Oil Change International</a> to "separate oil and state," and encourage members of Congress to give up their addiction to Big Oil political contributions is a key leverage point. It's a practical first step in stopping further looting by the pump profiteers. <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies and coauthor of "Economic Apartheid in America: A Primer on Economic Inequality and Insecurity" (New Press, 2005). Eric Benjamin is a research analyst at United for a Fair Economy. </div></div></div> Tue, 29 Aug 2006 21:00:01 -0700 Chuck Collins, Eric Benjamin, AlterNet 636152 at http://blogs.alternet.org News & Politics Evidence of Election Fraud Grows in México http://blogs.alternet.org/story/39763/evidence_of_election_fraud_grows_in_m%C3%83%C2%A9xico <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">As the U.S. media distorts the aftermath of the July 2 election, evidence suggests there may be an attempted theft in progress.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->A month after more than 41 million Mexicans went to the polls to elect their next president, the country is still awaiting a result. A preliminary count of polling station tally sheets put conservative Felipe Calderón of the National Action Party (PAN) ahead with a slight lead over left-populist Andres Manuel López Obrador of the Democratic Revolution Party (PRD). Both candidates have claimed victory, with López Obrador and his supporters holding vigils and protests across the country and calling for a vote-by-vote recount.<br /><br />That hasn't kept a consensus from emerging in the commercial media that Calderón won by a small margin in a squeaky-clean election. In a <a href="http://www.washingtonpost.com/wp-dyn/content/article/2006/07/28/AR2006072801417.html?nav=hcmodule">hyperbolic editorial on July 30</a> -- one that bordered on the ridiculous -- the <i>Washington Post</i> accused López Obrador, known as AMLO to his supporters, of taking "a lesson from Joseph Stalin" and launching an "anti-democracy campaign" by demanding a manual recount and urging his supporters to take to the streets in peaceful protests. Calling the vote "a success story and a model for other nations," the editors concluded that it's "difficult to overstate the irresponsibility of Mr. López Obrador's actions."<br /><br />Days after the election, the <i>New York Times</i> irresponsibly declared candidate Calderón the winner, even though no victor had been declared under Mexican law, and just this week, in <a href="http://www.nytimes.com/2006/07/31/world/americas/31México.html?hp&amp;ex=1154404800&amp;en=d69da5cde88f6d64&amp;ei=5094&amp;partner=homepage">an article about López Obrador's protests</a>, the <i>Times</i> reported that López Obrador had "escalated his campaign to undo official results."<br /><br />But there are no "official" results and probably won't be until after Sept. 1. Under Mexican law, the Federal Electoral Institute (IFE) is charged with running the elections and counting the vote. But only the country's Election Tribunal, known by its Mexican nickname as the "TRIFE," has the power to declare a victor (See <a href="http://www.alternet.org/story/38727/">here</a> for background on the TRIFE). They have until Sept. 6 to rule on the election.<br /><br />It appears that the U.S. media has become so enamored with the construct of the "anti-democratic" left in Latin America -- the ubiquitous "fiery populists" (a term that has described everyone from the centrist Lula da Silva to Hugo Chávez) -- that they are incapable of fulfilling their basic mandate to inform their readers when it comes to the political landscape south of the border. It's nothing short of journalistic malpractice.<br /><br />But back in the real world, a growing body of credible evidence from mainstream Mexican journalists, independent election observers and respected scholars indicates that an attempt was made to deliver the presidency to Calderón. It includes a pattern of irregularities at the polls, interference by the ruling party and some very suspicious statistical patterns in the "official" results.<br /><br />The TRIFE is now sifting through 900 pages of formal complaints lodged by López Obrador. Their ruling on those challenges will indicate how well México's electoral process holds up in a closely fought and highly polarized race.<br /><br /><b>Growing evidence of irregularities and fraud</b><br /><br />México has a history of the party in power's using its clout to tip the election in its favor, and strict laws prohibiting ruling party interference were enacted in the 1990s. Election law prevented Vicente Fox, the outgoing PAN president, from making public statements of a partisan or political nature. But he overstepped this line many times in the 2006 campaign, including dozens of speeches reinforcing candidate Felipe Calderón's basic message that López Obrador was a "danger to México." In a well-publicized speech, candidate López Obrador responded, "With all respect, Mr. President, shut up. You sound like a chattering bird." Fox continued with these speeches until election authorities and public commentators warned Fox he was violating election laws.<br /><br />The Fox administration also ran public service announcements touting government programs and services and promoting the vote. PAN saturated the television airwaves with "swift-boat" style attack ads against López Obrador, comparing him to Venezuela's Hugo Chávez and calling him a "danger to México." Election authorities eventually ordered these commercials off the air on the grounds that they were untrue and maligned the candidate's character, but critics believe they moved too slowly.<br /><br />Under Mexican law, ruling party interference is a serious charge and grounds for annulling an election. In the last ten years, the same Electoral Tribunal judges that are reviewing AMLO's complaints annulled governors' races in Tabasco and Colima, based on ruling party interference. The Institutional Revolution Party (PRI), which ruled México for seven decades before the system was reformed in the 1990s, made vote buying and voter coercion into a high art form, and there is strong evidence that they were up to their old tricks in the 2006 election. With PRI governors in 17 of México's 31 states, election observers documented a significant number of examples of voters being offered money or receiving food or building materials in exchange for their PRI vote. In a country where half the citizens live in poverty and rely on different forms of government assistance, voters are often told that their public assistance is dependent on voting for the party in power. There are examples of PAN using similar practices, especially a well-documented case of funds diverted from a San Luis Potosi building program into PAN electoral races.<br /><br />The Mexican electoral system has come a long way in two decades in implementing anti-fraud systems. But there are still several ways that results can be tampered with on election day. López Obrador's campaign and hundreds of independent election observers documented several hundred cases of "old fashioned" election-day fraud in making their case for a recount.<br /><br />Here's how the system was supposed to work. On July 2, Mexicans voted at over 130,000 different polling stations, casting separate ballots for president, senator and federal deputy. Each political party was encouraged to have registered poll watchers at every polling station to observe the voting process and count at the end of the day. As international and Mexican election observers noted, however, problems emerged when there weren't enough independent and party observers to go around. In regions where one party was dominant, this created opportunities for vote shaving, ballot stuffing, lost ballots and other forms of fraud.<br /><br />The PRD's strongest case for a recount comes from the fact that ballots in almost one-third of the country were not counted in the presence of independent observers. One analysis of IFE results found that there were 2,366 polling places where only a PAN observer was present. In these districts, Calderón beat López Obrador by a whopping 71-21 margin.<br /><br />Other elements of PRD's legal challenge include documentation of several ballot boxes found in dumps in the PRD stronghold of México City. They also point to evidence such as the nonpartisan Civic Alliance's report documenting 17 polling sites in PAN-dominated Nuevo León, Michoacan and Querétaro, where the number of votes cast vastly exceeded the number of registered voters at a site.<br /><br />Reports by international and domestic election observers affiliated with the Civic Alliance and Global Exchange stop short of claiming fraud in the elections. They laud the dedication of most poll workers they monitored and the preparations for the vote in most of the polling places, as well as the orderly and peaceful process overall. But the cumulative evidence is damning in such a closely contested race.<br /><br />In the weeks after the election, PRD observers again sounded the alarm as sealed ballot packets were being illegally opened at IFE district offices in several PAN-dominated regions. PRD officials accused IFE officials of possibly tampering with ballots or attempting to cover up fraud in the event of a recount. The TRIFE ordered these offices to stop opening vote packets.<br /><br />While the López Obrador campaign has not made major charges of "cyber fraud," there is an emerging controversy over the IFE's role in reporting who was ahead in the vote count. For the 2006 election, the IFE had developed a sophisticated system to provide preliminary results called the PREP. Relying on results being phoned in from a sample of precincts, the IFE could compile a credible picture of the vote. If the PREP showed one candidate with a clear majority, the system would have allowed Mexicans to go to sleep on election night knowing who their next president would be. But because of the razor close results, the PREP proved to be an inadequate measure.<br /><br />Now research is emerging to suggest that the PREP results were cooked to create the appearance of a Calderón victory. Physicist Jorge López at the University of Texas, El Paso, conducted a statistical analysis of the PREP results and found that, as the results came in, the differential between the candidates' totals remained almost constant. One would expect that, as results from each party's geographic strongholds were counted, the gap between their totals would rise and would fall. In such a tight election, one would even expect the lead to change back and forth as the count progressed. None of that happened. The results of a third candidate, Roberto Madrazo of the Institutional Revolutionary Party (PRI), fluctuated as expected.<br /><br />He also noted that there was very little deviation between the actual results as they came in and the average results; in a normal, natural distribution, one would expect significant differences between the two (it should look something like a squashed bell-shaped curve). Dr. López concluded the pattern was "a clear indication that the data was manufactured by an algorithm and does not stand a chance at passing as data originated at the actual voting."<br /><br />Luis Mochan, a physicist at the Universidad Nacional Autónoma de México, did similar work. He noted that the PREP data was posted after the first 10,000 reports had been processed, and looked at whether those first 10,000 reports were consistent with the statistical trends for the rest of the day. When he plotted the data backwards, Calderón's vote total originated at zero, as is normal, but López Obrador began the day 126,000 votes in the hole.<br /><br />Mochan and López both point out that the Calderón began the day building a large percentage lead -- seven points -- that decreased steadily throughout the day. The large early lead would have been handy from a psychological and political perspective, allowing Calderón to claim that he led all day long, but the results had to end in a close result given that polls conducted a week before the tally showed a statistical dead heat.<br /><br />Mochan also notes gross discrepancies in the number of votes processed late in the evening: "At the end of the plot, we find intervals with more than 1,200 votes per [voting] booth. I understand that no booth was to receive more than 750 votes. Even more worrisome, some data points indicate a negative number of votes per booth."<br /><br />Mochan notes that these statistical anomalies aren't definitive proof of anything. But economist James Galbraith, reviewing Mochan's data, <a href="http://commentisfree.guardian.co.uk/james_k_galbraith/2006/07/the_mexican_standoff.html">speculated</a> about a likely scenario that would fit the discrepancies seen that night:<blockquote>Felipe Calderón started the night with an advantage in total votes, a gift from the authorities.</blockquote><blockquote>As the count progressed, this advantage was maintained by misreporting of the actual results. This enabled Calderón to claim that he had led through the entire process -- an argument greatly repeated but spurious in any case because it is only the final count that matters.</blockquote><blockquote>Toward the end of the count, further adjustments were made to support the appearance of a victory by Calderón.</blockquote>Critics suggest that the IFE may have aggressively pushed to swiftly declare Calderón a victor, obviating the need for a poll-by-poll vote recount.<br /><br />The U.S. media was also confused on the Wednesday after the vote when the IFE ordered all 300 district offices to review the tally sheets. It was widely reported as a "recount," when in fact very few ballots were actually counted. In some cases, such as when a tally sheet was illegible, the sealed ballot packets where opened and recounted. Almost every time that occurred, observers encountered significant errors in the vote count. In the state of México, one tally sheet recorded 88 votes for López Obrador when the recount of ballots found 188 votes. Whether it was human error or intentional vote shaving, in a tight election race, these examples gain heightened significance.<br /><br />None of these reports in and of themselves constitute a smoking gun. But the questions they raise need to be answered. There is far more evidence pointing to fraud in the Mexican elections in 2006 than was made publicly available about Ukraine's contested vote in 2004. Comparing the media and political establishment's reactions to the two reveals the transparent dishonesty in backing Calderón's claim of victory; in 2004 many of the same voices that are now calling López Obrador "undemocratic" were screaming that the Ukrainian tally had to be annulled and only a new election would assure democracy in the former Soviet satellite. In both instances, the candidate who declared victory was friendly towards a powerful neighboring state; in 2004 that state was Russia, and two years later it's the United States. Forget about threatening México's fragile democratic institutions -- that makes all the difference to the editorial boards of the <i>New York Times</i> and the <i>Washington Post</i>.<br /><br />According to the Mexican daily <i>La Jornada</i>, over two million supporters of López Obrador gathered in México City on Sunday, July 30, the largest public demonstration in México's history. Millions of voices chanted "vote by vote, poll by poll," calling on the Electoral Tribunal to order a recount. A <a href="http://www.angus-reid.com/polls/index.cfm/fuseaction/viewItem/itemID/12703">poll</a> released this week found that Mexicans, by a 20-point margin (48-28), want a vote-by-vote count. López Obrador has said he will call off protests when the Tribunal agrees to a recount and will honor its final decision.<br /><br />As for the charge in the U.S. media that López Obrador is undermining democracy and the rule of law by calling on his supporters to protest, we believe that the rights of peaceful assembly and free speech are important democratic tenets. Public protests have played a historic part in México's three decade-long transition to democracy.<br /><br />President and PAN leader Vicente Fox called for direct action when he believed he was victimized by electoral fraud in his race for the governorship of Guanajuato in 1991. Fox called on thousands of supporters to take to the streets and block highways, and the results were eventually overturned. Asked before the 2000 presidential election if he would do the same thing if he suspected fraud, he didn't hesitate to say "we will be very alert to any irregularities, and we will submit the appropriate legal accusations that are necessary. If there is any instability [as a result of those accusations], it will be due to whatever they have done fraudulently to avoid recognizing our victory."<br /><br />While Calderón has opposed a ballot-by-ballot recount, even some of his staunchest supporters have argued that the process would assure Mexicans' faith in their electoral authorities and strengthen the country's young democracy. In a race where over 64 percent of Mexicans voted against him, Calderón, if he should prove victorious, will need all the legitimacy he can muster.<br /><br />As México awaits the rulings of the electoral tribunal, tensions are high. The campaign -- often dirty -- and the close results have polarized the country. Given the context, the U.S. media's water-carrying for Calderón's campaign is anything but helpful. The fact that there have been no "official" results is not open to dispute, and until AMLO's allegations have been investigated, there is no way that anyone can say who will come out ahead. <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is the co-author of "<a href="http://alternet.bookswelike.net/isbn/1595580158">Economic Apartheid in America: A Primer on Economic Inequality and Insecurity</a>" (New Press). He is a senior scholar at the Institute for Policy Studies and lives in Oaxaca, México. Joshua Holland is an AlterNet staff writer. </div></div></div> Tue, 01 Aug 2006 21:00:01 -0700 Chuck Collins, Joshua Holland, AlterNet 635736 at http://blogs.alternet.org News & Politics U.S. Media Should Butt Out of Mexico's Election http://blogs.alternet.org/story/38559/u.s._media_should_butt_out_of_mexico%27s_election <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">With 2.5 million votes still to be counted, American news outlets have already declared victory for Mexico&#039;s conservative presidential candidate.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->On a morning interview I did on Texas statewide commercial radio, the host started the program by saying: "In a cliffhanger election, the conservative candidate Felipe Calderon has beaten the left-wing firebrand Lopez Obrador by 1 percent. But Lopez Obrador is demanding a recount and threatening street protests."<br /><br />Later, CBS Radio called to set up an interview to discuss the "Calderon victory and Lopez Obrador's street protests."<br /><br />Whoa. Time out! Before we allow Rupert Murdoch to call the Mexican election, let's cover the basics here:<br /><br />Mexico's election is indeed a cliff-hanger, but there are no official results. Mexico's Federal Election Institute (IFE) has indicated that its preliminary computer tallies, which gave Calderon a 1 percent lead, were insufficient. On Tuesday, it admitted that 2.58 million additional ballots still need to be counted. So let's repeat: There are no official results <i>or</i> official count estimates.<br /><br />The Federal Election Institute (IFE) had hoped to announce the winner on Sunday night using a sophisticated system of sampling from around the country, known in Mexico as "PREP." This system of compiling and releasing preliminary, unofficial election results has come under fire for causing confusion and potential unrest.<br /><br />Jonathan Roeder reported Wednesday in Mexico's daily <i>El Universal</i> that "despite repeated reminders that PREP results are unofficial, Calderon has claimed they show he is the clear winner and that Lopez Obrador should step aside, while Lopez Obrador has highlighted the system's inaccuracies to suggest the contest was rigged against him."<br /><br />Lopez Obrador has not yet suggested there is fraud, but expressed concern about uncounted ballots from 16,000 polling areas that were not included in the PREP calculations. The head of the IFE, Luis Ugalde, confirmed that 2.58 million votes were set aside because of "irregularities or inconsistencies" in addition to an estimated 1.5 million uncounted ballots.<br /><br />Here's how things were supposed to work: First, on Sunday, after polls closed at 6:00 p.m., ballots would be counted on location.<br /><br />I <a href="http://alternet.org/story/38461/">witnessed</a> this remarkable event in the city of Miahautlan, Oaxaca, as election officials opened up ballot boxes on the city's central plaza. After separating the ballots into piles for each candidate, election observers from each party and election officials counted the ballots together, <i>out loud</i>. Visualize 20 voices together saying "Treinta y cinco, treinta y seis." Unfortunately, such transparency still doesn't exist in every town in Mexico, especially in regions controlled by the Institutional Revolutionary Party (PRI), which governed Mexico for 71 years prior to the 2000 election.<br /><br />Second, the count from each polling area was put onto a tally sheet that all witnesses signed. IFE staffers in a sample of polling areas called their results into IFE headquarters for the PREP, a scientific sampling could have declared a possible winner. The IFE never released the results of their "quick count" because it was too close to call.<br /><br />Third, the ballots were bundled and sealed in special packets and transported, usually under armed guard, to one of 300 IFE district offices. At this moment, that is where the sealed ballot packets are.<br /><br />Over the ensuing hours, more tally sheets were reported into the central IFE office. But by 11 p.m. Sunday, the election was still too close to call using the PREP system. Both leading candidates, with their own exit polls and results called in by election workers, had numbers showing their lead.<br /><br />The process of counting ballots begins today, Wednesday, at the local district offices. The winner, according to IFE officials, could be announced before Sunday. But the process could require more time, depending on the number of ballots counted by hand.<br /><br />Regional officials will first review tally sheets, computer results and polling data from over 130,000 polling areas. If there are formal complaints about specific areas, they will open sealed ballot packets and do hand counts. The good news is Mexico's next president won't take office until Dec. 1, and the IFE is not required to legally certify the election until Sept. 6. Everyone is counseling calm.<br /><br />The U.S. media, however, have seized upon the Calderon 1 percent lead number and begun coronation proceedings. They've implied that it's all over, except "firebrand" Lopez Obrador and his street mobs won't concede. This is highly irresponsible.<br /><br />The U.S. media should butt out of the Mexican election until it can get its facts straight on the actual process and the historical context of Mexico's evolving democracy.<br /><br />Lopez Obrador has said he will honor the results of a fair election. He has a right to demand the IFE conduct a formal count -- and he has the right to freedom of expression, including protest, if he believes he has been defrauded of the presidency. He is no stranger to being defrauded, including having his 1994 victory stolen in the Tabasco state governor's race. (AlterNet has also posted a bit of the history of Lopez Obrador's <a href="http://www.alternet.org/story/38461">experience with stolen elections</a>.)<br /><br />The Mexican election system has come a long way in two decades. Mexico's systems for tracking votes and thwarting fraud are now more sophisticated that the U.S. system. The system is far from perfect but includes many features the United States would benefit from, such as voter registration cards and voter lists with photos.<br /><br />In the coming days, a number of election observer groups will be issuing reports on the conduct of the election. This will greatly inform the legitimacy of the voting process. In the meantime, the U.S. media should not impose our U.S. model of media-called elections on our southern neighbor. <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is a senior scholar at the Institute for Policy Studies. He lives in Oaxaca, Mexico. </div></div></div> Wed, 05 Jul 2006 10:00:01 -0700 Chuck Collins, AlterNet 635321 at http://blogs.alternet.org News & Politics Mexican Election in Limbo http://blogs.alternet.org/story/38461/mexican_election_in_limbo <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">In an emotional election too close to call, the two leading candidates are each declaring confidence in their victory.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->Election Day started across Mexico on Sunday with thousands of poll workers assembling cardboard ballot boxes at over 130,489 polling stations. But the day ended in uncertainty, as the head of Mexico's Federal Election Institute, Luis Ugalde, went on national television to declare that the presidency was too close to call.<br /><br />President Fox joined Ugalde in calling on all candidates to patiently await the official vote count, which they expect to have by Wednesday.<br /><br />The scenario of a razor-close election is everybody's nightmare. Each campaign had hoped for a decisive victory by Sunday night so that voting irregularities and scattered examples of voter coercion wouldn't become the focus of voting results. One thing is for certain: Roberto Madrazo, the candidate of the Institutional Revolutionary Part (PRI), which ruled Mexico for 71 years until the 2000 election of Vicente Fox, is in third place.<br /><br />The next president of Mexico will either be Felipe Calderon, candidate of the conservative National Action Party (PAN) or Andres Manuel Lopez Obrador, of the leftist Democratic Revolutionary Party (PRD). Both candidates addressed rallies shortly after the electoral commission, each declaring confidence in their victory.<br /><br />Tens of thousands of supporters of Lopez Obrador gathered in a chilly rain on the central plaza in Mexico City. "According to our information, we have won the presidency," Lopez Obrador declared to his supporters. "Smile," he concluded, paraphrasing his campaign bumpersticker. "We have already won."<br /><br />The <i>New York Times</i> reported today that there is an "electoral crisis" in Mexico and rising anxiety, especially if Lopez Obrador and his followers believe they lose the election because of fraud. The <i>Times</i> called Lopez Obrador a "firebrand leftist" and repeated candidate Calderon's characterization of his opponent as having an "authoritarian streak."<br /><br />Lopez Obrador has said he will honor the results of a fair election, even if he loses by one vote. But if history is any lesson, Lopez Obrador is no Al Gore. He won't walk away from a stolen election without a protest. His political rise has been characterized by having to respond to dirty tricks. And if anyone is justified in being a "firebrand" about stolen elections, it is Andres Manuel Lopez Obrador.<br /><br /><b>A mysterious crash</b><br /><br />In 1988, Lopez Obrador was a leading organizer in the presidential campaign of leftist candidate Cuauhtemoc Cardenas. Early on election night, Mexico's own electoral system showed Cardenas with a substantial lead over PRI candidate Carlos Salinas. Then there was a mysterious computer crash, and the country woke up the next morning to an announcement that Salinas was the victor. Lopez Obrador led a voter rights movement in protest, with marches, sit-ins, civil disobedience and road blockades in his home state of Tabasco. He persisted in his protests, and in 1991 led a voter rights protest march from Tabasco to Mexico City.<br /><br />In 1994, Lopez Obrador was inspired by the Cardenas campaign to run for governor of oil-rich coastal Tabasco, where he had grown up as the son of a shopkeeper. His opponent was none other than Roberto Madrazo, whom he is now facing in this presidential bid. Madrazo claimed victory in an election characterized by widespread fraud, including crude examples of PRI vote-buying.<br /><br />Lopez Obrador's followers occupied the governor's mansion, and once again Lopez Obrador took to the streets, again leading a march to Mexico City to have the election annulled. President Ernesto Zedillo, who had just been elected president on a pledge of electoral reform, was embarrassed by his fellow party member Madrazo's fraud. He tried to intervene by offering Madrazo a cushy federal job, clearing the way for Lopez Obrador to assume the governorship. Madrazo rebuffed him, and protests continued for years.<br /><br />In April 2005, the other major parties, PAN and PRI, conspired to knock Lopez Obrador off the presidential ballot, charging that as mayor of Mexico City he had ignored a court order. Only after millions of Mexicans took to the streets did President Fox's prosecutors back down and drop the charges.<br /><br /><b>A clean vote?</b><br /><br />In the coming days, hundreds of civil society organizations and independent vote-monitoring organizations will issue their reports about the cleanliness of the voting process and election. These will influence the emotional climate into which the election results will be announced. But the Mexican electoral system has come a long way since 1988 and even 2000. The independent Federal Election Institute is well-resourced and politically independent, and by all accounts ran a fairly clean election.<br /><br />While the situation could appropriately be characterized as an electoral crisis, there are several positive signs. For two presidential elections, the people of Mexico have rejected the PRI, a party that still holds 17 of the country's 31 governorships and has a powerful infrastructure of supporters in every region of the country. And the fact that there is a close election, the closest in this country's history, reflects progress in Mexico's transition to democracy. If there are protests in the coming days, it's because Mexicans demand nothing less than a fair election.<br /><br /><b>Battling the PRI machine</b><br /><br />In the rural hamlet of San Pedro Mixtepec, located in the southern state of Oaxaca, several men swept the central plaza to tidy up for Election Day. Four women in traditional Zapotec shawls, one with a sleeping baby on her back, unpacked voting supplies sent by federal authorities.<br /><br /><table width="250" align="left" style="margin-right:8px; margin-bottom:5px; margin-top:10px;"><tr><td><img src="/images/managed/Story+Image_crispin-votes.jpg" alt="crispin-votes" width="250" height="188" border="1" style="color#000" /></td> </tr><tr><td class="caption" align="left">Election observer and voting rights activist Crispin Fabian votes in his hometown of San Pedro Mixtepec. Photo by Chuck Collins.</td></tr></table><br /><br />"This is new for us," said Xichel Vasquez, speaking Spanish as her second language after Zapotec. "Little by little, we are protecting our right to a fair election." They were anticipating a large turnout from the village's 600 eligible voters. The polls opened a half hour late, with a ringing of the church bells and an announcement made on the village's public address system.<br /><br />"Our region has voted PRI because there was no alternative, and when there was a choice, they stole the election," said Crispin Fabian who grew up in San Pedro and has watched the impact of local PRI government corruption. "If our village didn't vote PRI, we wouldn't get our road fixed."<br /><br />Fabian now lives in Oaxaca City, but he was back in his village to vote, visit his parents and work as nonpartisan election observer with the Oaxaca Citizen Forum, a civic group that trained 163 election observers around the state. "Many of the safeguards set up here are the result of tricks the PRI used to win elections," said Fabian. Many people voted twice and there were PRI officials standing around making sure they voted the right way."<br /><br />At the beginning of the day, election observers and official party representatives inspected the ballot boxes to ensure they were empty. The ballot boxes are literally transparent, with plastic windows. "In the old days, the ballot boxes would begin the day already pregnant with ballots for the PRI," observed Fabian.<br /><br /><table width="250" align="right" style="margin-right:8px; margin-bottom:5px; margin-top:10px;"><tr><td><img src="/images/managed/Story+Image_pri-name-taker.jpg" width="250" height="188" border="1" style="color#000" /></td> </tr><tr><td class="caption" align="left">An unauthorized PRI activist takes names of voters. Election observers saw him tell illiterate voters to 'mark red,' the colors of the PRI. Photo by Chuck Collins.</td></tr></table><br /><br />Each voter presented a photo identification, which was matched to a voter list with a copy of the ID. "After someone votes, they get their card stamped and a indelible ink stamp on their finger," said Fabian, holding up his purple thumb.<br /><br />There are some tricks, however, that are hard to prevent. After interviewing dozens of people in the village, including several on video, Fabian had disturbing news. "The PRI people were here yesterday," he said with disgust in his voice. "They were offering 100 pesos to people for a vote for PRI."<br /><br /><b>A shocking situation</b><br /><br />Down the road, in the village of San Agustin Mixtepec, election observers found an even more shocking situation. There was a long line of voters and several PRI officials without credentials standing by the voting booth talking to voters and writing down their names. "There are no representatives of other parties here," said Adelaide Chen, a labor organizer from Los Angeles and an official election observer affiliated with the U.S-based Global Exchange. "There is clear evidence of coercion," she said, pointing to three PRI officials sitting in chairs watching the voters, mostly women in traditional dress. Chen and another Global Exchange election observer, Sue Severin, spent the rest of the day at the polling area to document abuses. Global Exchange will issue a report on Wednesday.<br /><br /><table width="250" align="left" style="margin-right:8px; margin-bottom:5px; margin-top:10px;"><tr><td><img src="/images/managed/Story+Image_counting-votes.jpg" alt="counting-votes" width="250" height="188" border="1" style="color#000" /></td> </tr><tr><td class="caption" align="left">Representatives of the Federal Election Committee and election observers count ballots in Central Plaza, Miahuatlan, Oaxaca. Photo by Chuck Collins.</td></tr></table><br /><br />This reporter photographed and filmed PRI leaders showing voters where to mark ballots and writing their names on an informal list. "The poll workers are inexperienced," observed Fabian. "In a small village, it is hard to stand up to the local PRI politicians. They control the food subsidies, jobs and health programs."<br /><br />After 6 p.m., the polls closed. In the regional city of Miahuatlan, the vote was counted on the main plaza with hundreds of onlookers. Gathered around a small wooden table, representatives of the Federal Election Institute and political parties counted the votes together out loud. In a region where the PRI has dominated, the results were surprising.<br /><br />PRI candidate Roberto Madrazo only received 173 votes. The conservative PAN party of Felipe Calderon is not strong in Oaxaca, but he still beat Madrazo with 193 votes. The PRD candidate Lopez Obrador garnered a whopping 501 votes.<br /><br />"Here in the city, the vote is more transparent," observed Fabian after a long day of visiting polls in seven villages. "The problem with the PRI is the rural villages. But we're making progress." <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter--><a href="mailto:c2collins@aol.com">Chuck Collins</a> is a senior scholar at the Institute for Policy Studies. He lives in Oaxaca, Mexico. </div></div></div> Mon, 03 Jul 2006 06:00:01 -0700 Chuck Collins, AlterNet 635295 at http://blogs.alternet.org News & Politics A Rising Tide in Mexico http://blogs.alternet.org/story/34690/a_rising_tide_in_mexico <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The next president of Mexico could be a left populist who puts the needs of ordinary Mexicans ahead of international corporate investors -- if the U.S. refrains from meddling.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->In the southern state of Oaxaca, Andres Manuel Lopez Obrador, or "AMLO," as he is affectionately known across Mexico, is approaching the podium to speak to 13,000 supporters. But first, he must be cleansed. A short medicine woman, wearing the traditional dress of the Mixtec Indians, swats him with green branches and perfumes him with copal incense. Lopez Obrador stands respectfully still with his eyes closed while assembled crowds howl with delight.<br /><br />The Mexican presidential election is in full swing, and Lopez Obrador is one of three major candidates running for the office. Barring the possibility of massive electoral fraud, external meddling or assassination, AMLO will likely become the next president of Mexico.<br /><br />But these are not unthinkable "what ifs." In 1988, by all accounts, <a href="http://www2.eluniversal.com.mx/pls/impreso/web_columnas_sup.detalle?var=29746">massive fraud</a> denied candidate Cuauhtemoc Cardenas the presidency. And in 1994, the popular leading candidate Luis Donaldo Colosio was gunned down in the streets of Tijuana in a murder that has never been solved.<br /><br />Mexicans are all too aware of the seamy history of direct or covert U.S. involvement in shaping or overturning the outcome of elections throughout Latin America. President Bush, in advance of last week's Cancun summit meeting, met with Mexican journalists and pledged that the United States would not be involved in the Mexican election and would work with the choice of the Mexican people. But U.S. progressives should remain vigilant. It's been many decades since a leftist president was tolerated on our southern border.<br /><br />Mexicans go to the polls on July 2 to elect their next president to a constitutionally mandated single six-year term, along with 628 members of Congress. Six years ago voters elected Vicente Fox, the first president in 71 years who was not from the Institutional Revolutionary Party (PRI), Mexico's traditional ruling party. The 2000 election was largely free of irregularities, thanks in large part to Mexico's independent and well-resourced Federal Election Institute.<br /><br />Fox, who ran as the candidate of the conservative National Action Party, or PAN, as it is called in Spanish, remains personally popular. While his legislative agenda has been thwarted in the PRI dominated legislature, Mexicans give him credit for serving honorably and not personally looting the treasury, as many of his predecessors have.<br /><br />Fox has vocally supported Bush administration free trade policies such as the proposed Free Trade Area of the Americas -- earning the accusation of being a "lapdog of empire" from Venezuelan President Hugo Chavez. At the same time, Fox has distanced himself from U.S. policies in Iraq and been openly critical of U.S. immigration policy and proposals to build a wall along the U.S.-Mexican border.<br /><br />Running for president as the nominee on the PAN ticket is 44-year-old Felipe Calderon, who served in Fox's cabinet as energy secretary. Calderon's candidacy has sputtered, and he recently removed his top campaign staff and changed his campaign slogan for the third time.<br /><br />The PRI candidate is Roberto Madrazo, a long-time fixture of national politics. Madrazo grew up in the governor's mansion in the oil-rich gulf state of Tabasco, where his father also served as governor and later as PRI party president, positions his son would later hold. Madrazo inherits the remarkable PRI political machinery, with its legendary get-out-the-vote and steal-the-vote capacity. While claiming that he represents a reformed and chastened PRI, his campaign has been hampered by lackluster campaigning and tainted by his reputation for bullying and arm-twisting.<br /><br />Mexicans wonder out loud about how Madrazo could be so rich after two generations of public service. Internet savvy Mexicans have been circulating the <a href="http://earth.google.com/">Google Earth</a> coordinates (19 14' 22.79" N, 99 10' 16.50" W) to view Madrazo's 14,000-square-foot home on a 3.6-acre estate overlooking Mexico City, one of five houses and multiple sports cars that Madrazo reported on his financial disclosure statements.<br /><br />Madrazo's wealth is a startling contrast to austere Lopez Obrador, a widower who lives in a modest apartment and who drove his own compact car to work when he served as mayor of Mexico City, the continent's largest metropolis. While Madrazo grew up in a life of privilege, AMLO is the son of a shopkeeper who worked in his youth as an advocate for indigenous groups in Tabasco. In the 1980s, he led efforts to successfully force the oil industry to pay reparations for damaging indigenous lands.<br /><br />Polls show Lopez Obrador opening up a lead over his rival candidates. A mid-March poll conducted by <i>El Universal</i> showed Obrador as the preference of 36 percent of voters, with Calderon at 27 percent and Madrazo at 14 percent.<br /><br />Meanwhile Subcommander Marcos, the visible leader of the Zapatista rebellion in the state of Chiapas, has launched the "other campaign." He is traveling to all the states of Mexico to raise issues left out of the main campaigns. He accuses all three major party candidates of being all the same -- and predicts Lopez Obrador will be unable to fulfill his promises.<br /><br />U.S. analysts want to cast Lopez Obrador as part of the leftist tide sweeping Latin America, with the recent election of Evo Morales in Bolivia and Michelle Bachelet in Chile. But Lopez Obrador quickly dismisses any comparisons to trends or leaders in other countries. His role model, as he cautiously points out, is Mexico's beloved Benito Juarez, the Zapotec Indian from humble origins who as president unified the country during a time of external aggression and repelled French invaders in 1867.<br /><br />Lopez Obrador's outsider and independent status was confirmed in April 2005 when national legislators from the PRI and PAN tried to prevent him from running on a minor legal matter. But their tactic backfired as millions of Mexicans took to the streets to support AMLO, forcing opposition party leaders to back off. AMLO has polled as the presidential front-runner ever since.<br /><br />Unlike the other two candidates, AMLO's campaign doesn't bus in banner-waving supporters, and provide free food and T-shirts to bolster his campaign appearances. His popularity is rooted in his plain-spoken commitment to address the growing inequalities of Mexican society. His campaign slogan, "For the Good of All, First the Poor," powerfully connects with the half of Mexico's population who live in poverty and feel forgotten.<br /><br />From the outside, Mexico appears to have had a decade of stability. But the reality is that poverty and insecurity are rising. Real wages have plummeted, and many communities in rural Mexico are now ghost towns after being devastated by the loss of 2 million agricultural jobs. Mexican farmers, after NAFTA, are unable to compete with the imports flowing in from subsidized U.S. farmers, particularly in corn.<br /><br />A Lopez Obrador presidency would likely lead to some significant changes in U.S-Mexican relations. For instance, AMLO would not, like President Fox, carry the banner of U.S. free trade policies at meetings throughout Latin America. In fact, one of AMLO's "50 promises" calls for a renegotiation of the provisions of the 1994 North American Free Trade Agreement that deal with the importation of corn and beans.<br /><br />AMLO would also reverse the drift, initiated under President Fox, of privatizing the public sector and opening up Mexican oil production to foreign investment. AMLO has made some business leaders nervous by his proposal to make public the beneficiaries of the 1994 bank bailout.<br /><br />As Lopez Obrador stays in the lead, the attacks from other campaigns are turning more vicious. Both Madrazo and Calderon attack AMLO as an authoritarian and messianic populist. Calderon told a recent rally that Lopez Obrador was an enemy of foreign investment. "I'm the one who can make an economy grow," Calderon claimed. "All he knows how to do is chase jobs away."<br /><br />Calderon's campaign has recently been running television spots to link Lopez Obrador to the left revolutionary politics of Venezuela's President Chavez. The ads show clips of both Chavez and AMLO criticizing President Fox and imply that they are working together. AMLO denounces these ads, pointing out that he has never met or spoken with Chavez.<br /><br />We should expect the attacks to increase and should be vigilant for signs of U.S. involvement. After all, the stakes for U.S. corporate elites are high.<br /><br />If there is a tide sweeping Latin America, it involves citizens electing leaders who will no longer subordinate the health and economic security of their people to a Washington-driven corporate free trade agenda. Mexico is about to join their ranks. <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins is the co-author of "<a href="http://alternet.bookswelike.net/isbn/1595580158">Economic Apartheid in America: A Primer on Economic Inequality and Insecurity</a>" (New Press). He currently lives in Oaxaca, Mexico, and is covering the Mexican election. </div></div></div> Wed, 12 Apr 2006 21:00:01 -0700 Chuck Collins, AlterNet 634060 at http://blogs.alternet.org News & Politics Billionaires R Us http://blogs.alternet.org/story/27168/billionaires_r_us <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Wal-Mart&#039;s Walton family now has 771,287 times more money than the median U.S. household. What gives?</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->Fall is inequality season. Every autumn, as the leaves change color, we get a vivid new picture of the trends that pull us apart as a country.<br /><br />This year is no different. But after almost three decades of incrementally widening disparities of wealth and income, it's worth noting that we've entered a new version of economic apartheid, American-style. Let's call it Inequality 2.0.<br /><br />The United States is now the third most unequal industrialized society after Russia and Mexico. This is not a club we want to be part of. Russia is a recovering kleptocracy, with a post-Soviet oligarchy enriched by looting. And Mexico, despite joining the rich-nations club of the Organization for Economic and Community Development, has some of the most glaring poverty in the hemisphere.<br /><br />In 2004, after three years of economic recovery, the U.S. Census reports that poverty continues to grow, while the real median income for full-time workers has declined. Since 2001, when the economy hit bottom, the ranks of our nation's poor have grown by 4 million, and the number of people without health insurance has swelled by 4.6 million to over 45 million.<br /><br />Income inequality is now near all-time highs, with over 50 percent of 2004 income going to the top fifth of households, and the biggest gains going to the top 5 percent and 1 percent of households. The average CEO now takes home a paycheck 431 times that of their average worker.<br /><br />At the pinnacle of U.S. wealth, 2004 saw a dramatic increase in the number of billionaires. According to Forbes Magazine, there are now 374 U.S. billionaires. The growth in billionaires took a dramatic leap since the early 1980s, when the average net worth of the individuals on the Forbes 400 list was $400 million. Today, the average net worth is $2.8 billion. Wal-Mart's Walton family now has 771,287 times more than the median U.S. household.<br /><br />Does inequality matter? One problem is that concentrations of wealth and power pose a danger to our democratic system. The corruption of politics by big money might explain why for the last five years the President and Congress have been more interested in repealing the federal estate tax, paid only by multi-millionaires, than on reinforcing levees along the Gulf Coast.<br /><br />Now, to pay for hurricane reconstruction and the war in Iraq, Congress is considering cuts in programs that help poor people, such as Medicaid and Food Stamps. They have not yet considered fairer ways of reducing the deficit by reversing special tax breaks for the rich, such as the recent cuts in capital gains and dividend taxes.<br /><br />Inequality is non-partisan. The pace of inequality has grown steadily over three decades, under both Republican and Democratic administrations and Congresses. The Gini index, the global measure of inequality, grew as quickly under President Clinton as it has under President George W. Bush. Widening disparities in the U.S. are the result of three decades of bi-partisan public policies that have tilted the rules of the economy to the benefit of major corporations and large asset owners at the expense of people whose security comes from a paycheck.<br /><br />Public policies in trade, taxes, wages and social spending can make a difference in mitigating national and global trends toward prolonged inequality. But our priorities are moving in the wrong direction.<br /><br />For example, the failure to raise the minimum wage from its 1997 level of $5.15 an hour guarantees continued income stagnation for the working poor for years to come. The President and Congress's focus on tax cuts for the wealthy and their disinterest in government spending to expand equal opportunity sets the stage for Inequality Version 3.0.<br /><br />We shouldn't tolerate this drift toward an economic apartheid society.<br /><!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Chuck Collins and Felice Yeskel are co-authors of the new book, "Economic Apartheid in America: A Primer on Economic Inequality and Insecurity" (The New Press). </div></div></div> Sun, 23 Oct 2005 21:00:01 -0700 Chuck Collins, Felice Yeskel, AlterNet 631344 at http://blogs.alternet.org Economy Economy Case Against Inheritance Tax Is Bogus http://blogs.alternet.org/story/25480/case_against_inheritance_tax_is_bogus <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">The case for abolishing the federal estate tax is a sham, deflated by Congress&#039; own research and investigative reporting.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->A devastating hurricane hits the Gulf Coast. The war in Iraq claims almost 1,900 American lives with no end in sight in both casualties and cost. And red ink flows through both short- and long-term federal deficit projections. Yet in the coming weeks, congressional leaders will move to abolish permanently the estate tax, America's only levy on concentrations of inherited wealth.<br /><br />Only after considerable pressure to respond to Hurricane Katrina and observe Chief Justice William Rehnquist's funeral did Senate Majority Leader Bill Frist back off from his determination to begin the estate tax debate immediately after Labor Day.<br /><br />It will be fascinating to watch how the senators from Louisiana, Mississippi and Alabama explain to their constituents why a $1 trillion tax break for multimillionaires and billionaires, few of whom live in their states, ranks as a timely national priority.<br /><br />The case for abolishing the federal estate tax is a sham, deflated by Congress' own research and investigative reporting. Yet congressional tax cutters continue to incant the "death tax" mythology: that the estate tax punishes success, sinks family farmers and small businesses, and is unfair double taxation. In the post-Katrina environment, they have even gone so far as to make the far-fetched claim that estate tax repeal will be an economic stimulus to the Gulf states.<br /><br />There is no evidence that the estate tax imperils small-scale farms or America's entrepreneurial spirit. The estate tax is paid solely by multimillionaires and billionaires, and only after they pass on substantial wealth to their heirs. And the bulk of the assets subject to the tax take the form of appreciated property and stocks, wealth that has never been subject to any tax, let alone a double tax.<br /><br />The heirs to some of America's largest family fortunes, including members of the Mars candy and Walton families, have paid handsomely to promote these myths. But the responsibility at this moment lies with congressional leaders who must justify a windfall tax cut for the wealthy during a time of war and natural disaster.<br /><br />Never before has our country passed tax cuts for the wealthy during a time of war. Historically, wealth has been "conscripted," in the Civil War parlance, to share in the sacrifice and preserve domestic unity.<br /><br />Isn't anyone embarrassed about this inequality of sacrifice?<br /><br />It is unlikely repeal advocates in the Senate will muster the votes to abolish the tax, though the vote will be close. The real risk is that the Senate will reach agreement on an irresponsible reform that will effectively gut the law.<br /><br />Repeal advocates, such as Sen. Jon Kyl of Arizona, have offered their own "reform" proposals that would raise the amount of wealth exempted by the tax to more than $10 million and drop the rate to 15 percent from its current level of 47 percent. Such an irresponsible reform would lose more than 85 percent of the revenue raised by the tax and cripple the nation's charitable sector, which according to a Congressional Budget Office study would experience a decline in estate giving of more than $10 billion a year.<br /><br />We support a more modest reform that raises the wealth exemption to $5 million for a couple, keeps the rate at 45 percent, and carves out provisions for the transfer of closely held family business. Such a reform would retain substantial revenue in the face of war, disaster and deficits, and maintain a powerful incentive for charitable giving.<br /><br />The proponents of all-or-nothing repeal have blocked proposals for such reasonable reforms since the summer of 2000. But it's time to bring predictability back into the estate planning process.<br /><br />The estate tax is the most fair and equitable tax in the land. A levy on estates in excess of $5 million is an appropriate mechanism for those who have disproportionately benefited from our marvelous system of wealth creation to pay back the society that fostered the fertile ground for their success.<br /><br />The estate tax should be rightfully understood as a "gratitude tax." <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter-->Bill Gates Sr. is co-chairman of the Bill and Melinda Gates Foundation. Chuck Collins is senior fellow at United for a Fair Economy, a nonprofit research group. They wrote this article for the Knight Ridder/Tribune News Service. </div></div></div> Wed, 14 Sep 2005 21:00:01 -0700 Chuck Collins, Bill Gates, Sr., AlterNet 630472 at http://blogs.alternet.org News & Politics Long Live the Estate Tax! http://blogs.alternet.org/story/15002/long_live_the_estate_tax%21 <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Instead of taking steps that would strengthen our democracy, we&#039;re heading backward to the wealth inequalities of a century ago.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->There is a stunning disconnect between the terrible budget shortfalls facing states and localities and the priorities of federal tax-cutters. States face budget deficits of more than $60 billion for the coming year -- and the ax is falling on mental health, education and children's healthcare. Libraries are being shuttered, tuitions increased and parks closed. Governors of all political persuasions talk about the need for massive federal relief to the states in the form of block grants and Medicaid subsidies.<br /><br />Yet the President and Congressional tax-cutters are marching ahead with a $670 billion tax cut that could include elimination of dividend taxes and an acceleration of 2001 tax rate cuts. According to the Urban Institute-Brookings Institution Tax Policy Center, 42 percent of the benefits of the dividend tax cut will go to the richest 1 percent of taxpayers, whose incomes are above $330,000. These proposals have more to do with rewarding campaign contributors and lobbying patrons than with economic stimulus.<br /><br />Also at the top of the domestic agenda is the push to make repeal of the federal estate tax permanent. Such a step will not have any short-term or long-term economic stimulus effect. But cutting $850 billion in revenue in the decade after the tax is phased out -- money that would have been collected from the heirs of multimillionaires -- will prolong the current fiscal crisis. Many states will feel the pain of revenue loss first because their inheritance and estate taxes are linked to the federal levy.<br /><br />Today, the estate tax affects less than 2 percent of the richest households, those with wealth exceeding $1 million. A reformed estate tax, with wealth exemptions boosted to $3.5 million, would still generate tens of billions of dollars of revenue a year. Under such a reform, an estimated 6,000 estates a year, averaging $17 million each, would pay the tax. In Maine, Montana, Alaska and Mississippi -- states where both senators have voted to completely eliminate the tax -- the estimated number of estates paying the tax every year would be fewer than 25.<br /><br />Proposals to reform the tax have been blocked since 2000 by the "all or nothing" repeal lobby, which understands the peril of not having smaller estates as camouflage. Once exemptions rise above $3 million, it becomes impossible to find a credible and photogenic farmer or restaurant owner who will complain about what opponents call the "death tax." It's hard enough to find them now. The pro-repeal American Farm Bureau was asked to produce an example of a farmer who had lost a farm because of the estate tax. It could not identify a single one.<br /><br />Lost in this debate are the benefits to our country of maintaining an estate tax. Originally passed in 1916, the estate tax was a fundamentally American response to the excesses of the Gilded Age. Populist reformers labored for three decades before 1916 to pass federal income and estate taxes in order to shift the tax burden, mostly in the form of 19th century tariff duties and excise taxes, off of Midwestern and Southern farm states and onto the wealthy Northeastern states. But underlying the movement for an estate tax was a recognition that too much concentrated wealth and power were putting our democracy at risk. We had fought a revolution to reject hereditary political and economic power -- and the dizzying inequalities of the Gilded Age violated a fundamental American ideal of equality of opportunity.<br /><br />We are now in a second Gilded Age. Instead of taking steps that would strengthen our democracy, we're heading backward to the wealth inequalities of a century ago. We need to preserve the estate tax in states and at the federal level for exactly the reason it is under assault. In a democracy, we should be offended when the power of concentrated wealth brazenly attempts to shape the terms of policy debate and dictate the rules of our society.<br /><br /><i>Bill Gates Sr. is co-chair of the Bill and Melinda Gates Foundation; Chuck Collins is co-founder of United for a Fair Economy and Responsible Wealth. They are the authors of "Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes" (Beacon). For book tour schedule visit <a href="http://www.responsiblewealth.org/commonwealth">Responsible Wealth</a>.</i> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter--> </div></div></div> Sun, 02 Feb 2003 21:00:00 -0800 Chuck Collins, Bill Gates, Sr., The Nation 595229 at http://blogs.alternet.org News & Politics Victory on Estate Tax! http://blogs.alternet.org/story/13367/victory_on_estate_tax%21 <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-teaser field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even">Read an open letter from one of the organizers of the successful battle to preserve the estate tax.</div></div></div> <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-story-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even"><img typeof="foaf:Image" src="/files/styles/story_image/public/story_images/default.jpg" alt="" /></div></div></div> <!-- BODY --> <!--smart_paging_autop_filter-->We won!<br /><br />Once again, we have stopped the estate tax from being permanently repealed. Thanks to all of you who worked on this effort.<br /><br />The Gramm-Kyl repeal amendment needed 60 votes to pass in the Senate, but they only got 54 votes. We held almost all our original supporters and were able to shift the votes of several senators to vote against repeal, including: Sen. Feinstein (D-CA). Check out our Web site Thursday for final results.<br /><br />We have begun to turn the tide. We intend to advance a reform agenda. But before I describe our next steps, I'd like to take a moment to briefly look back at this intense struggle.<br /><br />Ten years ago, a group of very wealthy families, including the heirs of the Mars candy and Gallo wines companies, started to donate millions of dollars to an organized effort to kill the estate tax. They waged a 10-year battle, largely without opposition. They deployed millions of dollars in media spin and campaign contributions to influence Congress.<br /><br />They actually won repeal in the summer of 2000, but we organized to ensure we had the votes in the House to prevent an override of President Clinton's veto.<br /><br />Estate tax repeal was included in the 2001 Bush Tax Cut bill, but it was not permanent. As each day passed last year, we were able to chip away at the opposition's case for wholesale repeal.<br /><br />Now we have stopped their effort to make repeal permanent. This is a major blow to pro-repeal forces, as the financial and political cost of repeal will only continue to rise in the coming years. We do not think they will try to move it again in 2002 (but we shall remain vigilant!).<br /><br />Over the last year, we have helped build an effective coalition of organizations and individuals to oppose wholesale repeal. United for a Fair Economy and Responsible Wealth helped convene "Americans for a Fair Estate Tax," a coalition of religious, charities, labor and business groups.<br /><br />We have a field organization with organizers working in 12 swing states. We bought advertising in national and local media. We booked talk radio programs and placed op-eds in key newspapers. The coalition recently conducted polling and found out that Americans support reforming the tax, but not repealing it. Today, we had a press conference in Washington, D.C. to publicize this <a href="http://www.responsiblewealth.org/" target="_alternet">poll</a>.<br /><br />We know the forces committed to repeal aren't going to take our victory lying down. That's why we are ready to advance our reform agenda.<br /><br />In the coming months, we will work to advance proactive reform proposal and win co-sponsors in the House and Senate.<br /><br />We will wage a multi-year effort to win reform -- with research, media, grassroots advocacy and popular education. This includes efforts to educate the public and key constituencies about the negative aspects of complete estate tax repeal. A popular book, "Wealth and Our Commonwealth: Why America Needs to Tax Accumulated Wealth," co-authored by William H. Gates, Sr., will come out in January, and make the moral case for preserving the estate tax. Working with our coalition partners, we plan to change the terms of the debate on this issue.<br /><br />Thanks to all of you who have made calls, sent emails, visited elected officials, talked on the radio, given contributions and talked to neighbors. It has made a difference.<br /><br />We look forward to working with you in this effort. <!-- All divs have been put onto one line because of whitespace issues when rendered inline in browsers --> <div class="field field-name-field-bio field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <!--smart_paging_autop_filter--> </div></div></div> Wed, 12 Jun 2002 21:00:00 -0700 Chuck Collins, United for a Fair Economy 590309 at http://blogs.alternet.org News & Politics