The May 2006 Edition of Street Spirit

A publication of the American Friends Service Committee

 
 

National AFSC AFSC Economic Justice BOSS Website

 

 

In this issue:

Oakland Tenants Face Eviction

UC Attacks the Berkeley Freebox

Berkeley Freebox Poetry Contest

Reform Profit-Making Nursing Homes

A Berkeley Fair for Street Youth

Ultimate Gift of a Homeless Veteran

Tax Cuts for Rich Harm U.S.

Many Children Left Behind

S.F. Bayview: History Lesson in Urban Removal

Let Their Chains Fall Off

Poor Leonard's Almanack: On Poets and Poetry

May Poetry of the Streets


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Street Spirit is published by American Friends Service Committee.

All works are copyrighted by the authors.

The views expressed in Street Spirit are those of the individual authors alone, and not necessarily that of the American Friends Service Committee.

Warning: Tax Cuts for the Rich Harm the Nation's Health

by Holly Sklar

"Investor." Art by Art Hazelwood

Borrowing money from economic competitors to pay for tax breaks for millionaires and billionaires is more stupid than borrowing money from Tony Soprano to gamble.

Did you get a million-dollar cut in your taxes? Taxpayers with incomes above $10 million saved $1 million on average on their 2003 taxes, according to the latest available IRS data, thanks to tax changes under President Bush. Tax breaks will be even bigger this year.

It would take about 29 years for a full-time worker to make a million bucks at today's average hourly wage, which is falling behind inflation.

Taxpayers with incomes above $10 million "paid about the same share of their income in income taxes as those making $200,000 to $500,000 because of the lowered rates on investment income," reports tax expert David Cay Johnston. At the state and local level, low-income taxpayers pay a greater share of their income in taxes than wealthy taxpayers.

Taxpayers with incomes less than $50,000 -- the great majority of taxpayers -- saved an average $435 in 2003. It would take 2,300 years to match a million-dollar tax cut. And taxpayers lost much more than $435 to deepening budget cuts and rising fees for services that taxes once funded.

Why are millionaires getting big tax breaks while Congress cuts tuition aid for kids whose families can't afford to pay for college?

Why are millionaires getting tax breaks while soldiers are killed and maimed in Iraq for lack of adequate armor?

Why are millionaires getting tax breaks while vital levees are shortchanged from New Orleans to California?

Why are millionaires getting tax breaks while 46 million Americans have no health insurance and, as the Institute of Medicine documents, lack of health insurance causes thousands of needless deaths a year?

Taxpayers with incomes above $1 million will see their after-tax income grow by about 6 percent in 2006 because of tax cuts the nation can't afford.

The worst is yet to come. As the Center on Budget and Policy Priorities reports, current and proposed tax cuts for households with incomes above $1 million would cost more than the combined cuts planned over the next five years for education, veterans health benefits, medical research, environmental protection, and programs such as housing, energy, child care and nutrition assistance for families living in poverty.

President Bush has given so much revenue away in tax breaks, he's already racked up more new debt than all the presidents combined accumulated before 1990. We are in record-breaking debt to foreign countries. And without a change in course, Bush will nearly double the national debt during his presidency.

Borrowing money from economic competitors to pay for tax breaks for millionaires and billionaires is more stupid than borrowing money from Tony Soprano to gamble.

Tax expert Robert McIntyre says, in the last fiscal year, "one out of every four dollars in federal spending outside of Social Security was paid for with borrowed money. That $501 billion shortfall occurred mostly because personal income tax revenues as a share of the economy were 29 percent lower than they were in fiscal 2000, the year before Bush took office."

"Extending the 2001 and 2003 tax cuts would add $3.3 trillion (including interest) to deficits over the next decade," reports the Center on Budget and Policy Priorities. "Each year the tax cuts would cost as much as the annual budgets of all these federal departments combined: Education, Veterans Affairs, Homeland Security, Energy, State, Housing and Urban Development and the Environmental Protection Agency."

It's madness.

Tax cuts are boosting the lifestyles of the superrich and sales of "giga-yachts" longer than football fields, but they aren't boosting the economy. The current economic recovery has had weaker growth in employment, wage and salary, gross domestic product, consumption and investment than the typical post-World War II recovery.

Taxes are our dues for democracy. Taxes are how we pool our money for public health and safety, infrastructure, research and services -- from the development of vaccines and the Internet to public schools and universities, transportation, courts, police, parks and safe drinking water.

Without fair and adequate taxes, we cannot repair the public infrastructure inherited from past generations or meet the challenge of global warming. We cannot invest in the research and education vital for future progress.

Tax forms should come with a warning: Tax cuts for the rich are hazardous to the nation's health, economy and security.

It's time to change course.

Holly Sklar is co-author of A Just Minimum Wage: Good for Workers, Business and Our Future (www.letjusticeroll.org) and Raise the Floor: Wages and Policies That Work for All Of Us (www.raisethefloor.org). Contact her at hsklar@aol.com. Copyright (c) 2006 Holly Sklar


A Trillion Good Reasons to Keep the Estate Tax

by Mike Lapham

My grandparents and great-grandparents paid the estate tax when they passed along the family business. Some decade soon, my own parents will.

With hundreds of thousands, perhaps millions, of dollars to gain, I should be cheering for the proposal coming before the Senate in May to do away with the estate tax, which applies only to multimillion-dollar inheritances.

Instead, I'm organizing wealthy members of Responsible Wealth to oppose repeal of the estate tax. As multimillionaires, we have benefited handsomely from all that our country provides: public education, roads, clean water, legal protection, research funding and public safety, just for starters.

One Responsible Wealth member, Martin Rothenberg, grew up using the public library, went to school on the GI Bill, received a government fellowship, and built a $30 million software company using publicly funded research and publicly educated employees. "I hope the taxes on my estate will help fund the kind of programs that benefited me and others from humble backgrounds," he says.

Given the choice to be taxed or not, we all tend to choose not. That's just human nature. But we have to look at the wider implications of what we ask our elected officials to do for us.
In 2001, when Congress voted to phase out and repeal the estate tax, the federal treasury was expecting a $5 trillion surplus. Times have changed, however. Now there's over $8 trillion in federal debt.

There are a trillion good reasons to retain the estate tax. Permanently abolishing the estate tax would cost almost $1 trillion in the first 10 years.

I believe our country has higher priorities for $1 trillion than giving families like mine a huge tax break. Besides our existing $8 trillion debt, consider some of the additional expenditures coming down the pike.

1. The Iraq War will continue to be costly in both human lives and money. Nobel Prize-winning economist Joseph Stiglitz and his coauthor Linda Bilmes estimate a total budgetary cost of between $750 billion and $1.27 trillion.

2. In late 2003, Congress passed an expansion of the Medicare prescription drug benefit. The Center for Medicare and Medical Services projects a ten-year cost of $797 billion.

3. Congressional leaders have pledged to abolish the Alternative Minimum Tax (AMT) for individuals, especially as an estimated 30 million taxpayers will pay the AMT by 2010. Eliminating the AMT will reduce federal revenues by $611 to $790 billion over ten years.

4. The Republican leadership in Congress would like to extend the tax cuts they passed in 2001 and 2003. The cost of this extension would be $1 trillion in lost revenue over ten years.
Estate tax repeal, combined with these other expenditures, would balloon our national debt in the coming decade. With lighter and lighter taxation of wealthy asset-owners like my family each year, more tax dollars would come out of the pockets of working Americans. In this context, considering estate tax repeal is fiscally and morally irresponsible.

A new poll shows that most Americans agree. Voters chose keeping the estate tax as one of the two best ways to reduce the budget deficit. Almost three-quarters support reforming the tax or leaving it intact rather than repealing it.

In a society where the economic rules are strongly tilted in favor of the haves at the expense of the have-nots, where tax laws give generous loopholes to the wealthiest among us, the occasion of passing on wealth to the next generation is an appropriate time to tax our accumulated fortunes. Most of the appreciated value of these assets has never been taxed.

The choice is whether to remove a tax on estates of more than $3.5 million, affecting only the 6,000 wealthiest individuals who die each year. Responsible Wealth members believe that a fair tax system, fiscal responsibility, and priorities like healthcare and education are better choices than lining the pockets of our progeny.

I could be sitting back hoping my parents' estate won't be subject to the estate tax. Instead, I'm hoping the majority of U.S. Senators understand what many of them don't: that we in the richest one percent can and should pay this very fair tax, as an appropriate way for us to give back and create opportunities for others.

Mike Lapham (mlapham@responsiblewealth.org) is director of the Responsible Wealth project of United for a Fair Economy. United for a Fair Economy raises awareness of the damaging consequences of concentrated wealth and power.


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