While we can expect more corporate give-aways, please run labor and justice candidates that shout out to raise taxes sufficiently -----do not fall for the blip we got from O'Malley and Obama!
Below I look at how Europe is leading the way on progressive economic recovery. They are not saints by any means, but they are listening more to their citizens!
France is the leader in European financial crisis policy in moving away from protecting bank profits to making these banks write down the debt from fraud. It is also good to know that France was one country that was not heavily involved in all of these financial frauds. You don't hear of a French bank as you do US, UK, and Germany. They are not innocent, but kept their noses clean for the most part. We hope Hollande is saying to the wealthy French corporations that threaten to leave.....go ahead and leave so we can build small and regional businesses! Obama has openly campaigned across Europe against these policies----the bank financial transaction tax and higher tax on wealth so we won't get it through now, but work on this state by state.....your governor should not be afraid to give global corporations and national chains the boot if they do not pay higher taxes!
France cleared to impose controversial 'millionaire tax'
Emile Picy and Natalie Huet Reuters 1:34 p.m. EST, December 29, 2013
PARIS (Reuters) - France's Constitutional Council gave the green light on Sunday to the government's controversial 'millionaire tax', to be levied on companies that pay salaries of more than 1 million euros ($1.38 million) a year.
The measure, introduced in line with a pledge by President Francois Hollande to make the rich do more to pull France out of crisis, has infuriated business leaders and soccer clubs, which at one point threatened to go on strike.
It was originally designed as a 75 percent tax to be paid by high earners on the portion of annual income exceeding 1 million euros, but the council rejected it last year, saying it was unfair. France's top administrative court later said that 66 percent was the legal maximum for individuals.
The Socialist government has since reworked the tax to levy it on companies instead, raising the ire of entrepreneurs.
Under its new design, which the council found constitutional, the tax will be a 50 percent levy on the portion of wages above 1 million euros in 2013 and 2014.
Including social contributions, the rate will effectively remain about 75 percent, though the tax will be capped at 5 percent of a company's turnover.
The tax is expected to affect about 470 companies and a dozen soccer clubs, and is forecast to raise approximately 210 million euros a year.
The Constitutional Council, a court comprising judges and former French presidents, has the power to annul laws if they are deemed to violate the constitution.
Tax increases designed to reduce France's budget deficit have fuelled rising discontent in the country, with recent polls giving Hollande the lowest approval rating of any French president on record.
His 2012 supertax election pledge infuriated high earners in France and prompted actor Gerard Depardieu to flee the country. It has also alienated entrepreneurs and foreign investors, who have accused Hollande of being anti-business.
Hollande has said that the wealthy should contribute more to help to repair the country's finances, arguing that the supertax should also encourage companies to curb excessive executive pay.
In Sunday's ruling, the Constitutional Council rejected planned wealth tax measures that it said imposed levies on potential gains - such as those on life insurance policies - and thus risked overestimating a taxpayer's actual resources.
It also quashed several measures designed to crack down on tax avoidance schemes through which individuals and companies use legal loopholes to minimize their tax bills.
One of the proposed measures required consultants and firms offering tax planning services to disclose such schemes before marketing them. The council found the provision was too vague and ran counter to freedom of entrepreneurship. ($1 = 0.7258 euros)
Below you see how our brave Capitol Hill pols work for American citizens. You see a .03% tax....HOW SMALL IS THAT with no mention of justice in recovering fraud. Tens of trillions of dollars in fraud with a few hundred billion over 10 years. They are simply meeting the public demand with a policy that does nothing. This is called 'progressive'. Harkin and DeFazio could shout loudly and strongly that we need to declare a War on Fraud ------that would be progressive! As the article on the European stance shows the US could not even place it in the Dodd Frank Financial Reform bill when democrats had a supermajority!
NEO-LIBERALS WORK FOR WEALTH AND PROFIT AND THAT IS WHY CONGRESS WILL NOT MOVE FORWARD ON THIS!
Democratic Sens. Tom Harkin (D-Iowa) and Rep. Peter DeFazio (D-Ore.) on Thursday introduced a bill to slap a 0.03 percent tax on financial transactions in the U.S. They have introduced this same bill repeatedly in the past. But this time, against the backdrop of endless budget battles between the White House and Congress, the lawmakers framed it primarily as a revenue-raiser, noting that the Joint Committee on Taxation says the tax would raise $352 billion over the next 10 years.
U.S. Accused of “Discouraging” Financial Transaction Tax
By Carey L. Biron Reprint | | Print | Send by email WASHINGTON, Sep 28 2012 (IPS) - On Friday, 62 civil-society organisations charged the U.S. State Department with spreading “misinformation” regarding the feasibility of levying a small tax on stock sales and other financial transactions, revenues from which could be used for national and international public goods.
Referring to a July meeting of the United Nations that discussed long-term financing options to help countries deal with the effects of climate change, a letter sent Friday to U.S. Secretary of State Hillary Clinton accuses a member of the U.S. negotiating team of “misstatements”. The letter requests that the U.S. government “not discourage other countries from supporting this tax”.
Calls for such a levy, known as a financial transaction tax (FTT, also called a Robin Hood tax), have been gaining strength in the United States and abroad in recent months. Proponents suggest that such an approach could not only raise hundreds of billions of dollars for use in mass-scale efforts towards health, education or climate change, but could also cut down on the type of computerised high-speed trading that facilitates damaging commodities speculation.
The letter comes just ahead of a follow-up to the July meeting, which next week will again discuss potential ways to fund the estimated hundred-billion-dollar-a-year effort to mitigate and prepare for the effects of climate change. The talks are meant to lead to a report that will guide the U.N.’s thinking on the issue of climate finance.
“We firmly believe it is past time for the financial sector to pay its fair share of taxes, and for the government of the United States to support (a) modest imposition on financiers and multinational corporations in order to meet the needs of ordinary people,” the letter, signed by dozens of environment, aid, development and social-justice organisations, stated.
“At a time when public funds are deemed scarce, a (FTT) would create a new source of revenue to pay for desperately needed public goods.”
Despite earlier hopes that President Barack Obama (rumoured to support the issue) would eventually come out as a proponent of an FTT, the president has not yet spoken publicly on the issue. In August, his communications director was described in media reports as being unenthusiastic about the issue.
At the July U.N. meeting, U.S. State Department official Paul Bodnar, a member of the U.S. climate negotiations team, stated, “International revenue-generation mechanisms can seem attractive because of the large sums they appear to provide, but many of them are problematic conceptually or difficult to implement in practice.”
Bodnar highlighted FTT as a specific example.
“Actually, FTT has lots of support, especially among a number of developing countries as well as some developed countries,” Karen Orenstein, with Friends of the Earth, an environment watchdog and one of the signatories of the new letter, told IPS. “So having the United States disparage this approach in an international context is not helpful, especially when it is doing so to try to discourage other countries.”
Friday’s letter accuses Bodnar of three specific misstatements: calling into question the feasibility of imposing an FTT globally; suggesting that traders would figure out how to circumvent the FTT, thus limiting its ability to raise significant revenue and even encouraging lucrative finance centres to move to other countries; and offering that the source of climate financing should be linked directly to emissions.
(By deadline, the State Department had not responded to requests for comment.)
While the third point is open to debate – the letter notes that tax revenues are not often linked directly to the source of taxation – the first two could indeed call into question the overall feasibility of an FTT.
Yet the letter, first, points out that FTTs have already been implemented in more than 30 countries, suggesting that they “do not have to be global to work”; and, second, highlights a finding by the International Monetary Fund (IMF) that FTTs “do not automatically drive out financial activity to an unacceptable extent”.
Indeed, IMF Managing Director Christine Lagarde has publicly stated, “I persist in thinking we should explore this idea and examine how realistic and how feasible it is and do this on an international basis.”
Lagarde is joined by a rising chorus of economists, activists, development experts and even high-finance luminaries in support of the idea.
In mid-September, a new bill was introduced in the U.S. House of Representatives that would place miniscule taxes on transactions involving stocks, bonds and derivatives, revenues from which would be put in part towards deficit reduction, global health, climate change and social safety nets. The bill’s author estimates that the tax would raise around 350 billion dollars a year.
On Thursday, the United States’ widest-circulation and most mainstream newspaper, USA Today, even threw its support behind an FTT, noting that “Slap(ping) a small transaction tax on rapid trades … would be a big win for small investors, and the only people harmed would be those now putting everyone else at risk.”
With Washington today overwhelmed by the final weeks of a tight presidential election, pro-FTT momentum is currently coming from within the European Union. On Friday, the finance ministers of France and Germany formally requested approval to allow nine EU countries to move forward with imposing an FTT.
An earlier attempt to push through an EU-wide FTT failed amidst strong pushback from certain members, but could now proceed in this smaller arrangement.
On Wednesday, French President Francois Hollande told the U.N. General Assembly in New York, “Today we need to … introduce a tax on financial transactions – that has already been agreed to by several European states – so that the capital movements that profit from globalisation can contribute to international development and the fight against pandemics.”
In Washington, meanwhile, current U.S. policy is traced to Treasury Secretary Timothy Geithner, the former president of the Federal Reserve Bank of New York, who has forcefully come out against the idea of an FTT. If Barack Obama wins another term in the November elections, however, Geithner has stated that he would step down from his current position.
“There’s a good chance there will be fresh thinking on FTT in the next administration,” Sarah Anderson, with the Institute for Policy Studies, a think tank here in Washington, told IPS. “Not only will there be new economic policy leaders coming in, but the international debate has changed dramatically since President Obama first took office.”
The American people need to shout out that now Congress has no excuse in holding back as the EU holds its banks accountable.
We want as well to keep up the demands for recovery of massive fraud with a War on Fraud!
EU grouping gets OK for financial transaction tax
The Associated Press European Commissioner for Internal Market Michel Barnier, left, speaks with Dutch Finance Minister and newly appointed chief of the eurogroup Jeroen Dijsselbloem during a meeting of EU finance ministers at the EU Council building in Brussels on Tuesday, Jan. 22, 2013. Eleven eurozone countries seeking to unilaterally implement a financial transaction tax are expected Tuesday to receive the blessing of other European Union countries, bringing the once-controversial project one step closer to reality. At center is Thomas Weber, and member of the EU delegation. (AP Photo/Virginia Mayo)
By JUERGEN BAETZ and DON MELVIN / Associated Press / January 22, 2013 1
BRUSSELS (AP) — A group of 11 European Union countries was given the go-ahead Tuesday to work on the introduction of a tax on financial transactions.
The tax is designed to help pay for the rescue of Europe’s banks and discourage risky trading. It would apply to anyone in the 11 countries who makes a bond or share trade or bets on the market using complex financial products called derivatives.
EU Tax Commissioner Algirdas Semeta told reporters after a meeting of the bloc’s 27 finance ministers that the decision marked a ‘‘major milestone for EU tax policies.’’
The plan is to use some of the revenue raised from the tax, which could run into tens of billions of euros, to prop up shaky banks. This would help out governments, which have had to pay for bank rescues in the past. Some supporters of the tax have also suggested that part of the revenue could help fund the EU’s budget.
‘‘The financial sector must appropriately participate in bearing the cost of the financial crisis,’’ German Finance Minister Wolfgang Schaeuble said in a statement.
Europe’s banking industry has been one of the main causes of the euro area’s three-year financial crisis. Governments in countries such as Spain and Ireland have had to rescue their banks, which had been brought close to collapse by bad property investments. The rescues caused the governments’ levels of debt to rise to dangerously high levels.
The crisis was exacerbated by market speculators using derivatives to make risky bets on how the market in a particular product would move. The European Commission, the EU’s executive branch, has proposed that trades in bonds and shares be taxed at 0.1 percent and trades in derivatives at 0.01 percent.
Semeta had no immediate estimate of how much revenue the tax would generate, but he noted that the Commission had previously estimated that such a tax across the 27-nation bloc could yield €57 billion a year. The 11 nations pushing ahead represent about two-thirds of the EU’s economy, he said.
Germany, France and nine other nations had initially hoped the tax would be adopted by the entire EU. However, several countries, including Britain, home to the EU’s biggest financial hub, refused to endorse the measure amid concerns over its economic impact.
The Confederation of British Industry, a UK business lobby group, criticized Tuesday’s decision, saying the tax would be ‘‘a drag on the eurozone recovery.’’
‘‘As the UK’s largest single trading partner, a healthy European economy is in everyone’s interests so we urge participating member states to reconsider this tax,’’ it added.
The idea of a financial transaction tax was dismissed in the U.S. during the drafting of the Dodd-Frank act, the country’s largest financial regulation overhaul since the 1930s.
Last year’s deadlock over the tax opened the possibility under EU law, using the so-called enhanced cooperation mechanism, for a group of nine or more nations to go ahead separately. The countries involved are now expected to start working out detailed proposals.
The decision Tuesday cleared a legal hurdle by allowing those nations to push ahead without the backing of all 27 nations, but it did not concern the substance of the proposal.
Ireland’s Finance Minister Michael Noonan said the decision was ‘‘more about process than about the makeup or the actual relevance of the financial transaction tax.’’ Ireland currently holds the rotating presidency of the EU, and Noonan chaired the meeting.
The 11 countries wanting to create a joint financial transaction tax are Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain. The Netherlands, where a new government came to power last fall, might also participate at some point.
The meeting of the EU finance ministers came a day after a meeting of the eurogroup, composed of the finance ministers of the 17 EU nations that use the euro currency.
The eurogroup elected Dutch Finance Minister Jeroen Dijsselbloem (DIE-sell-bloom) as its new president, replacing Jean-Claude Juncker, the Luxembourgish Prime Minister who held the job for eight years. The Dutchman, who is 46, has been finance minister only since November.
Dijsselbloem has a full in-tray: The need to negotiate a bailout for Cyprus, pushing forward the introduction of an EU banking union and reconciling deficit reduction in many countries with the need for policies that promote growth.
At their meeting Monday, the eurozone’s finance ministers also agreed in principle to extend maturities on some of the debt of Ireland and Portugal, both of whom have received EU bailouts.
That move, echoing a similar concession made to Greece in December, will allow Ireland ‘‘to enhance the sustainability of Irish debt and over time will cost us less,’’ Noonan said.
The decision also needed approval by the EU’s 27 finance ministers.
The EU’s monetary affairs commissioner, Olli Rehn, said both Ireland and Portugal are expected to return to the markets for their financing needs this year.
‘‘A successful return to the markets for these two countries is both in the interest of themselves and certainly in the interest of the entire European Union,’’ Rehn said.
The reason I am using European media as a comparison is that the US media will not approach the subject as a whole. Germany and Wall Street are the ones driving the desire to implode social democracies like France, Portugal, Italy, Greece (PIGS) and they are the ones fighting any attempt to bring money back. The UK is not part of Europe but was heavily involved in frauds of its own. These financial stances are what has UK hesitant about joining the EURO and it is what has the EURO possibly breaking apart as the PIGS nations are refusing to allow their societies take the brunt of the fleecing by banks.
WALL STREET AND GERMANY'S DEUTSCHE BANK ARE THE SAME. THEY STOLE ALL THE MONEY AND WANT TO KEEP IT. SADLY FOR GERMAN CITIZENS, THEY, LIKE AMERICANS ARE BEING USED TO PAY DOWN ALL THE DEBT FROM THIS MASSIVE FRAUD SCHEME.
So, German taxpayers know if the PIGS default they will have their wealth confiscated as is happening to American citizens now! GERMANS NEED TO HOLD THEIR BANKS ACCOUNTABLE AND ARE NOT JUST AS IN AMERICA! We have to remember, these massive frauds not only emptied our government coffers, but coffers from countries around the world. THIS IS WHY THE WORLD DOES NOT TRUST OR LIKE US!
Complaint to EU: German Banks Try to Torpedo Transaction Taxes
By Claus Hecking and Stefan Kaiser
DPA Frankfurt's banking skyline.
German banking associations have sent letters to the European Commission urging it to forbid the new financial transaction taxes imposed by France and Italy. Insiders believe the letters are an attempt by the banking lobby to block a planned EU-wide financial transaction tax.
We have seen trillions in corporate tax breaks over these few years and we know all that money was spent expanding overseas. We know as well that Obama and neo-liberals are bringing up the minimum wage increase to tie it to lower corporate tax rates.....THE OPPOSITE OF WHAT NEEDS TO BE DONE. Last year corporations averaged only 10% tax rate and our government coffers are starved at all levels.
NEO-LIBERALS WORK FOR WEALTH AND PROFIT AND WILL NOT PASS PROGRESSIVE TAX LAW. RUN AND VOTE FOR LABOR AND JUSTICE AND MAKE THESE PROGRESSIVE TAX CHANGES A STATE AND CITY ISSUE!
Progressive Principles for Tax Reform
We cannot afford to extend tax breaks for corporations or the wealthy that cripple our ability to invest in areas that expand economic growth, like infrastructure and education. Tax reform must be done in a way that raises significant revenue, protects working families and the vulnerable, and requires corporations and the wealthy to pay a fair share.
The primary goals of comprehensive tax reform should be to progressively raise sufficient revenue to (1) make investments that will grow the economy, and (2) set us on a path for long-term deficit reduction. Low- and moderate-income Americans are already contributing to deficit reduction through the Budget Control Act spending caps and are likely to be asked to sacrifice more. Progressive tax reform is the only way that wealthy Americans can share significantly in that sacrifice.
Rather than use the 1986 tax reform as a model, we should be taking cues from our last five balanced budgets (1969 and 1998-2001), which all required above average revenue. During these years of balance, federal revenue averaged 19.5% of GDP, substantially higher than the previous 40 year average (18% of GDP) and the pre-recession level (18.5% of GDP). However, with demographic shifts, the desperate need for job-creating investments, and the size of our current deficits, our revenue will need to be higher than even these historical levels to achieve balance.
The writing is on the wall: a revenue-neutral approach to tax reform – on either the corporate or individual side of the tax code – is not an option. Further, so-called “dynamic scoring,” that imagines revenue out of thin air and is widely refuted by respected economists of all political affiliations, cannot be used to shirk the requirement for revenue in deficit reduction proposals. We believe that any comprehensive tax reform must include the following six principles.
Corporate Tax Reform Principles
1. Revenue Positive
As the debate over our fiscal challenges proceeds, more and more constituencies have been asked to contribute to taming our deficit under the pretense of “shared sacrifice.” Yet time and time again, the corporate tax code has been given a pass. This asks nothing of corporations that continue to set near-record level profits and have largely recovered from our post-2008 economic slide, and requires the sacrifice of working families and the poor to be more severe. Plain and simple, the corporate contribution to our deficit reduction must increase from the status quo. As a share of GDP, corporate taxes have fallen from 4.7% in the 1950s to a scant 1.9% from 2000-2009. In 2007, the U.S. Treasury found that when evaluated on average corporate tax rates, the United States was second lowest among its competitors in the G8 and three percentage points below the Organization for Economic Cooperation and Development (OECD) nations’ average. Just this year, CBO data show that the effective corporate tax rate dropped to 12.1%, the lowest recorded level during the past 40 years. As a share of our total revenues, corporate taxes averaged 27.6% in the 1950s and have dropped precipitously since to 10.4% from 2000-2009. This is not a fair distribution of our tax burden.
How do we improve? We should advance the tax code’s efficiency, eliminate wasteful loopholes, broaden the base, and reduce bias towards overseas investments. However, the presumption that we should turn around and shovel this revenue out the door through lower marginal rates – particularly when we have huge needs for investment in areas such as infrastructure and education – is simply one we cannot afford.
2. Promote Responsible Corporate Behavior
In addition to being a means through which the private sector contributes to public goods and societal needs, the corporate tax code is meant to serve as a tool to fuel smart investments, and an economic instrument to incent clear, positive objectives. Comprehensive corporate tax reform should retain those expenditures that have proven
to be an efficient and worthwhile investment in our nation’s future. This includes, but is not limited to, incentives to hire disadvantaged workers, invest in distressed communities such as the Low Income Housing Tax Credit, bring jobs home from overseas, help small businesses and promote clean energy and energy efficiency.
Further, we must eliminate tax loopholes that encourage reckless and undesirable behavior such as the overuse of debt financing and tax sheltering, and explore commonsense revenue streams like putting a price on carbon pollution or enacting a small financial transactions tax to reduce market volatility. We should also repeal the more than $95 billion in special tax breaks we are scheduled to give away to the established, highly profitable fossil fuel industry over the next ten years.
3. A Global System that Works for the American People
In addressing our serious revenue gap, we should reduce – not increase – the tax code’s bias towards overseas investment. Rather than fixate on top marginal rates, corporate tax reform should focus on what’s actually broken: our partial-worldwide system relying on deferral has not kept pace with the globalized business community. The status quo allows multinational corporations to achieve extremely low worldwide and domestic effective tax rates, encourages shifting of profits and investment overseas, and costs billions each year in US tax revenues. To harmonize 21st century commerce with our revenue needs, we should modernize our tax code by either ending deferral (and the excessive tax avoidance this encourages) or adopting a global minimum tax (rendering deferral largely irrelevant).
Yet some large corporate interests have marched to Capitol Hill advocating for a tax system that would worsen the tax code’s bias towards foreign profits and investment, and increase the deficit. They claim that the only way for the United States to remain globally competitive is to transition to a territorial tax system, which would levy taxes only on earnings in the country in which they are reported and exempt corporations’ offshore profits from US taxes. Their solution is wrong and ignores some very hard facts.
Such a system would increase the incentives and opportunities for multinationals to shift profits and investment offshore. While that might be good for corporate shareholders, it would not be good for America's workers. The non-partisan Congressional Research Service told Congress last year that a territorial system “would make foreign investment more attractive,” causing investment to flow abroad and reducing wages for US workers.
Regardless of rumor or political agenda, the United States remains the preeminent location for businesses in the global economy. According to the World Bank, the United States ranks first among large countries in the ease of doing business, which included more comprehensive measures of business-friendliness including regulation burden, property rights, access to credit, and contract enforcement, to name a few. There is no need to cater to the demands or large corporations, particularly when it would devastatingly undercut the investments we need to make in our infrastructure and human capital.
Individual Tax Reform Principles
1. Restore and Improve Progressivity
It is a bedrock principle of fairness that those with higher incomes should pay progressively higher tax rates. Any tax reform must ensure that each fifth of the income distribution (as well as the top 1% and top 0.1%) should have a higher average effective tax rate than the income group below. Across the board tax rate cuts are regressive because a 20% tax cut for a millionaire – even as a share of income – amounts to a far greater benefit than a 20% cut for a hardworking low income American.
To maintain or strengthen progressivity, we should end one of the leading contributors to after-tax income inequality in this country, the special tax breaks for investment income. Workers who get their salaries from wages often pay a higher effective tax rate than wealthy individuals like Mitt Romney and Warren Buffett who make most of their income from selling stocks and bonds or from dividends. This undermines the basic tenant that average tax rates should rise with income. In fact, the richest 1% of taxpayers receives 71% of all capital gains, while the bottom 80% of taxpayers receives only 10% of capital gains. We should treat all capital gains and qualified dividends as ordinary income, an approach President Reagan once signed into law.
We must also strengthen the estate tax, which is the single most progressive tax. The weakening of estate tax requirements over time has contributed to expanding income inequality for the top 1%. The current estate tax rules should expire and, at a minimum, we should return to 2009 levels as President Obama has proposed, which would impact only the wealthiest three out of every 1,000 estates.
2. Fair Rates for the Wealthiest Taxpayers
We must ensure that the wealthiest Americans are paying their fair share of taxes. While we applaud success, when the wealthy get tax breaks they don’t need and the country can’t afford, the middle class and working families make up the difference in cuts to programs like education and Medicare. What’s more, the income gains of the last three decades have not been distributed fairly. The wealthiest Americans’ have seen an outsized growth in income (155% income gains for the top one percent of earners compared to 41% income gains for the bottom 80 percent) and tax reform should not exacerbate these trends of gross income inequality. As studies continue to bear out, high levels of income inequality weaken the economic environment for all Americans.
As a first and minimum step, instead of giving an average tax break of $160,000 to millionaires, the Bush-era tax rates on the richest 2% should return to the rates we had when Bill Clinton was president and the economy was booming. As a recent Congressional Research Service report found, reductions in the top tax rates have little association with economic growth, although it found these reductions were associated with increasing income disparities.
There is a meaningful difference between a multimillionaire and a family earning $250,000 a year that our tax code fails to recognize. The simplest and most direct way to address our revenue needs while avoiding undue burdens on some upper-middle class Americans is to add additional tax brackets for the extremely wealthy as proposed by Rep. Schakowsky (H.R. 1124). Because the root of our tax code’s complexity stems from the web of deductions and tax expenditures, not tax rates, these new brackets could help raise additional revenue and improve equity without unduly hampering economic efficiency.
3. Reexamine Expenditures that Benefit the Wealthy; Protect those that Help Working Families, the Poor, and Seniors
Tax policy is economic policy, and tax expenditures are a form of spending. We must prioritize our spending through the tax code to remove expenditures that disproportionately benefit the wealthy, while protecting those that create ladders of opportunity, reward work, and protect the poor.
Subsidies that disproportionately benefit the wealthy should be made fairer and more efficient by targeting them better, such as by transitioning to tax credits. At the very least, we should cap the benefit of itemized deductions for families with incomes over $250,000 at 28%, as outlined in the President’s budget. Only one-third of taxpayers itemize their deductions because the majority of Americans claim the standard deduction. Further, the value of a deduction corresponds to an individual’s marginal tax rate, making itemization highly regressive.
We support tax expenditures that increase access to health care, homeownership, and a secure retirement. Tax credits that benefit seniors, the poor, or working families – such as the child tax credit – should also be protected with their refundability maintained. We support maintaining the improvements made under the American Recovery and Reinvestment Act to tax credits targeting working families, including the Earned Income Tax Credit, the Child and Dependent Care Credit, and the American Opportunity Tax Credit. In addition, as our economy continues to recover, we support tax credits to create consumer demand and assist low- and middle-income families such as the successful Making Work Pay tax credit.
We also must not fall for the trap of agreeing to a tax reform framework that sets a goal of locking in regressive and costly rate reductions while leaving for later which tax expenditures would be targeted. This would either result in lower overall revenue or would put at risk tax expenditures that benefit the poor and the middle class, and neither is acceptable.