The Progress Report
by Christy Harvey, Judd Legum and Jonathan Baskinwith Nico Pitney and Mipe Okunseinde
.January 31, 2005
TAXES
A Plan for Progressive Reform
IRAQ
TAXES
A Plan for Progressive Reform
Over the last four years, President Bush's tax schemes have made the system more complex, shifted more of the burden to the middle class and exploded the federal deficit. We can do better. Today, American Progress is releasing a plan for progressive tax reform that proves it. The American Progress plan is fiscally responsible reform that significantly simplifies the system, restores fairness and increases economic opportunity. Here are the highlights:
SIMPLICITY – REDUCE THE NUMBER OF TAX BRACKETS: President Bush has added over 10,000 pages to the federal tax code. The American Progress plan would make the system far simpler. The number of tax brackets would be reduced from six to just three – 15 percent (for income up to $25K), 25 percent (for income between $25K and $120K) and 39.6 percent (for income over 120K).
SIMPLICITY – CLOSE LOOPHOLES: The plan would close loopholes in the corporate income tax code, including the "Bermuda" loophole that allows U.S. firms to avoid paying taxes by moving their operations overseas. By closing individual loopholes, the plan would also eliminate the need for the Alternative Minimum Tax (AMT) – a special rate initially created to ensure that the very rich pay some taxes. Without reform, the AMT would impact 36 million Americans by 2010.
FAIRNESS – TAX ALL INCOME THE SAME: Under the Bush administration's tax policies, middle-class Americans are shouldering more of the burden. The American Progress plan corrects that by simplifying the rate structure and taxing each source of income the same – whether it is dividends from investments or wages.
FAIRNESS – ELIMINATE REGRESSIVE SOCIAL SECURITY TAXES: One of the most regressive components of our tax system is the employee Social Security payroll tax. The flat 6.2 percent tax employees pay on their first $90K of income imposes an effective tax rate four times larger for middle-income workers than the top 1 percent. The American Progress plan would eliminate it. Social Security funding would be strengthened by eliminating the cap on employer contributions (currently there is no employer contribution for income in excess of $90K) and devoting 2.25 percent of Gross Domestic Product (GDP) from general revenues. The plan would not only preserve Social Security funding but cut the program's long-term deficit in half.
FISCAL RESPONSIBILITY – REDUCE THE DEFICIT: The federal government is on pace to rack up another $1.4 trillion over the next ten years. The American Progress plan is fiscally responsible, reducing the revenue shortfall by $478 billion compared to the administration's budget. At the same time, the American Progress plan would include a tax cut for the 70 percent of Americans who earn up to $200,000, providing an average cut of over $600.
OPPORTUNITY – INCENTIVES FOR ALL AMERICANS TO SAVE: The American Progress plan would create new opportunities for tens of millions of Americans to save and create wealth. The current deduction system is upside-down – providing a greater incentive to save if you have a higher income (and pay a higher marginal tax rate). The plan would create a new across-the-board 25 percent refundable tax credit for retirement savings. This would provide the same incentives for every American – whether an investment banker or a secretary – to save, including the 33 million Americans who don't earn enough to have income tax liability.
OPPORTUNITY – INCREASE TAKE HOME PAY FOR LOW-INCOME TAXPAYERS: The American Progress plan provides more take home pay for those who need it most. Currently, more than 20 million of the country's poorest children receive less than the full benefit from the child tax credit, and 8 million children receive no benefit at all. The American Progress plan gives every family earning over $5,000 a year access to the child tax credit. It also makes sure that single working parents who receive the Earned Income Tax Credit don't lose their benefits just because they get married.
Under the Radar
CORPORATE WELFARE – WHEN THE CASH COW COMES HOME: Come one, come all, it's another corporate giveaway. Last year's American Jobs Creation Act, a bill sped through Congress while everyone else was distracted by the presidential election, included a dubious provision that allows corporations to repatriate their piles of foreign profits at a rate much lower than the normal corporate tax rate. Successfully forced through by a lobbying coalition of "dozens of America's largest corporations," the idea behind this "tax holiday" was that the flow of money coming in – estimated to be between $100 billion and $500 billion by the end of 2005 – would lead to job creation here at home. However, as a New York Times editorial explains, "few of the approved uses for the repatriated funds…will lead directly, if at all, to more jobs." All this information comes days after a congressional study found tax revenues could increase "by $311 billion over the next 10 years" if the federal government started enforcing tax obligations and closing loopholes. In light of the fact that "corporate tax receipts, relative to the size of the economy, [have] sunk to a level not seen since 1983 and, before that, the Great Depression," our government needs to stop letting itself get milked.
SOCIAL SECURITY – THE LENINIST STRATEGY: How has Social Security privatization, once an unspeakable notion on Capitol Hill, moved to the top of President Bush's agenda? As the Los Angeles Times reports, nothing less than a twenty-year right-wing "economic education campaign" inspired by the work of Russian Bolshevik Vladimir Lenin. "Our reform strategy involves what one might crudely call guerrilla warfare against both the current Social Security system and the coalition that supports it," Heritage Foundation analysts Stuart Butler and Peter Germanis wrote in a 1983 Cato Journal article titled "Achieving a 'Leninist' Strategy." Today, as President Bush musters support for his plan, he is able to draw "on a deep reservoir of resources – including policy research, ready-to-hire experts and polling on how to discuss the issue – that conservatives have created over the last 20 years." And despite the fact that conservative predictions about Social Security's financial collapse have proven false, and that the privatization model in Chile they hold with high regard has left Chileans worse off, the "education campaign" continues.
SOCIAL SECURITY – "YOU CAN'T GET OUT WHAT YOU CAN'T PUT IN": When the president starts bemoaning the life expectancy gap between minority groups and whites, it should give us hope that our government is finally going to begin tackling health care access, community violence, high unemployment, disparate wages, and other social ills. It should not be a ploy to garner support for an ill-fated Social Security plan. Unfortunately, President Bush has decided to step up his privatization rhetoric by taking advantage of a sad statistic: the discrepancy between the life expectancy of blacks and whites. In fact, President Bush neglects that some of the actual realities of life for blacks in America – lower wages and a higher chance of disability – are part of the reason why "the [Social Security] program may actually benefit blacks more than whites." And analysts from the AARP, economic scholars, and the Social Security Administration's own actuaries agree with this conclusion. As economist Jeffrey Liebman stated, "If the problem we're trying to address is African-Americans having lower life expectancy, increasing their retirement benefits and their ability to pass wealth on to their children is not the way to do that." In response to President Bush's latest Social Security sales tactic, Rep. Charles Rangel (D-NY) replied, "It is one of the cruelest things that I have ever read, and I regret that it comes from the office of the president."
.January 31, 2005
TAXES
A Plan for Progressive Reform
IRAQ
TAXES
A Plan for Progressive Reform
Over the last four years, President Bush's tax schemes have made the system more complex, shifted more of the burden to the middle class and exploded the federal deficit. We can do better. Today, American Progress is releasing a plan for progressive tax reform that proves it. The American Progress plan is fiscally responsible reform that significantly simplifies the system, restores fairness and increases economic opportunity. Here are the highlights:
SIMPLICITY – REDUCE THE NUMBER OF TAX BRACKETS: President Bush has added over 10,000 pages to the federal tax code. The American Progress plan would make the system far simpler. The number of tax brackets would be reduced from six to just three – 15 percent (for income up to $25K), 25 percent (for income between $25K and $120K) and 39.6 percent (for income over 120K).
SIMPLICITY – CLOSE LOOPHOLES: The plan would close loopholes in the corporate income tax code, including the "Bermuda" loophole that allows U.S. firms to avoid paying taxes by moving their operations overseas. By closing individual loopholes, the plan would also eliminate the need for the Alternative Minimum Tax (AMT) – a special rate initially created to ensure that the very rich pay some taxes. Without reform, the AMT would impact 36 million Americans by 2010.
FAIRNESS – TAX ALL INCOME THE SAME: Under the Bush administration's tax policies, middle-class Americans are shouldering more of the burden. The American Progress plan corrects that by simplifying the rate structure and taxing each source of income the same – whether it is dividends from investments or wages.
FAIRNESS – ELIMINATE REGRESSIVE SOCIAL SECURITY TAXES: One of the most regressive components of our tax system is the employee Social Security payroll tax. The flat 6.2 percent tax employees pay on their first $90K of income imposes an effective tax rate four times larger for middle-income workers than the top 1 percent. The American Progress plan would eliminate it. Social Security funding would be strengthened by eliminating the cap on employer contributions (currently there is no employer contribution for income in excess of $90K) and devoting 2.25 percent of Gross Domestic Product (GDP) from general revenues. The plan would not only preserve Social Security funding but cut the program's long-term deficit in half.
FISCAL RESPONSIBILITY – REDUCE THE DEFICIT: The federal government is on pace to rack up another $1.4 trillion over the next ten years. The American Progress plan is fiscally responsible, reducing the revenue shortfall by $478 billion compared to the administration's budget. At the same time, the American Progress plan would include a tax cut for the 70 percent of Americans who earn up to $200,000, providing an average cut of over $600.
OPPORTUNITY – INCENTIVES FOR ALL AMERICANS TO SAVE: The American Progress plan would create new opportunities for tens of millions of Americans to save and create wealth. The current deduction system is upside-down – providing a greater incentive to save if you have a higher income (and pay a higher marginal tax rate). The plan would create a new across-the-board 25 percent refundable tax credit for retirement savings. This would provide the same incentives for every American – whether an investment banker or a secretary – to save, including the 33 million Americans who don't earn enough to have income tax liability.
OPPORTUNITY – INCREASE TAKE HOME PAY FOR LOW-INCOME TAXPAYERS: The American Progress plan provides more take home pay for those who need it most. Currently, more than 20 million of the country's poorest children receive less than the full benefit from the child tax credit, and 8 million children receive no benefit at all. The American Progress plan gives every family earning over $5,000 a year access to the child tax credit. It also makes sure that single working parents who receive the Earned Income Tax Credit don't lose their benefits just because they get married.
Under the Radar
CORPORATE WELFARE – WHEN THE CASH COW COMES HOME: Come one, come all, it's another corporate giveaway. Last year's American Jobs Creation Act, a bill sped through Congress while everyone else was distracted by the presidential election, included a dubious provision that allows corporations to repatriate their piles of foreign profits at a rate much lower than the normal corporate tax rate. Successfully forced through by a lobbying coalition of "dozens of America's largest corporations," the idea behind this "tax holiday" was that the flow of money coming in – estimated to be between $100 billion and $500 billion by the end of 2005 – would lead to job creation here at home. However, as a New York Times editorial explains, "few of the approved uses for the repatriated funds…will lead directly, if at all, to more jobs." All this information comes days after a congressional study found tax revenues could increase "by $311 billion over the next 10 years" if the federal government started enforcing tax obligations and closing loopholes. In light of the fact that "corporate tax receipts, relative to the size of the economy, [have] sunk to a level not seen since 1983 and, before that, the Great Depression," our government needs to stop letting itself get milked.
SOCIAL SECURITY – THE LENINIST STRATEGY: How has Social Security privatization, once an unspeakable notion on Capitol Hill, moved to the top of President Bush's agenda? As the Los Angeles Times reports, nothing less than a twenty-year right-wing "economic education campaign" inspired by the work of Russian Bolshevik Vladimir Lenin. "Our reform strategy involves what one might crudely call guerrilla warfare against both the current Social Security system and the coalition that supports it," Heritage Foundation analysts Stuart Butler and Peter Germanis wrote in a 1983 Cato Journal article titled "Achieving a 'Leninist' Strategy." Today, as President Bush musters support for his plan, he is able to draw "on a deep reservoir of resources – including policy research, ready-to-hire experts and polling on how to discuss the issue – that conservatives have created over the last 20 years." And despite the fact that conservative predictions about Social Security's financial collapse have proven false, and that the privatization model in Chile they hold with high regard has left Chileans worse off, the "education campaign" continues.
SOCIAL SECURITY – "YOU CAN'T GET OUT WHAT YOU CAN'T PUT IN": When the president starts bemoaning the life expectancy gap between minority groups and whites, it should give us hope that our government is finally going to begin tackling health care access, community violence, high unemployment, disparate wages, and other social ills. It should not be a ploy to garner support for an ill-fated Social Security plan. Unfortunately, President Bush has decided to step up his privatization rhetoric by taking advantage of a sad statistic: the discrepancy between the life expectancy of blacks and whites. In fact, President Bush neglects that some of the actual realities of life for blacks in America – lower wages and a higher chance of disability – are part of the reason why "the [Social Security] program may actually benefit blacks more than whites." And analysts from the AARP, economic scholars, and the Social Security Administration's own actuaries agree with this conclusion. As economist Jeffrey Liebman stated, "If the problem we're trying to address is African-Americans having lower life expectancy, increasing their retirement benefits and their ability to pass wealth on to their children is not the way to do that." In response to President Bush's latest Social Security sales tactic, Rep. Charles Rangel (D-NY) replied, "It is one of the cruelest things that I have ever read, and I regret that it comes from the office of the president."
posted by T. Scott Brineman at 3:03 PM
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