More than half of discretionary spending goes to the military. Only a tiny fraction addresses the most urgent threat to our security.

By Lindsay Koshgarian, Alliyah Lusuegro

( Otherwords.org ) – As the hottest summer in human history approached its end, tens of thousands of climate marchers rallied in New York to call for bold climate solutions. Meanwhile, lawmakers in Washington lurched toward another fight over the federal budget.

More than ever, the U.S. needs to get serious about climate. And to do that, we need to re-prioritize what’s in that budget.

As it stands, more than half of the discretionary budget that Congress allocates each year goes to the Pentagon. Until the passage of the Inflation Reduction Act last year, the average taxpayer gave $2,375 each year to the military — and just $6 to renewable energy projects.

The Inflation Reduction Act marked the most significant commitment to reducing fossil fuel emissions in U.S. history. But it still falls far short of the need if we are to avoid the most devastating effects of climate change.

Those ravages are already on display. In the United States, summer was a boiling cauldron of heat domes and wildfire smoke and awash with floods and tornadoes — all worsened by climate change. The deadliest wildfire in U.S. history claimed hundreds of lives in Maui.

The rest of the world suffered too.

Normally temperate parts of Europe roasted in the heat. Thousands of people have died and gone missing in Libya, where whole communities were washed into the sea by flooding. At our southern border, migrants escaping climate chaos throughout our hemisphere are seeking refuge only to be preemptively denied an opportunity to apply for asylum — a violation of national and international law.

Climate change is making each of these human disasters deadlier and more frequent.

It’s easy to feel overwhelmed by the scale and horror of it all. But the U.S. is in a unique position to contribute to solutions. As the wealthiest country in the world, we have the resources and knowledge to lead the way. We also bear the responsibility of having released more fossil fuel emissions over our history than any other country.

Image by G.C. from Pixabay

Unfortunately, our anemic contributions to global climate programs fail to meet either the need or our responsibility for this great threat to world security. Instead, in the name of security, we throw hundreds of billions of dollars every year into war and weapons.

This year, Congress looks likely to approve an $886 billion (or higher) military budget. But debate is nearly absent on increasing global climate aid, which last year totaled just $1 billion.

Worse still, the Pentagon itself is part of the problem. It’s the most carbon intensive institution in the world, responsible for 75 percent of federal government emissions. Boeing’s B-52 Stratofortress, for example, uses as much fuel in an hour as an average car driver consumes in seven years.

And the biggest Pentagon contractors emit even more than the Pentagon itself. Instead of looking for ways to reduce these emissions, some members of Congress are now making efforts to excuse Pentagon contractors from even reporting their emissions — a serious backstep in holding big-time industrial polluters accountable.

There can be no security without climate solutions. For our own safety and the world’s, we can and must do more. It’s time to reorder our federal budget priorities to address this global threat before it boils over any further.

Climate change is the fight of our lifetime. It’s time we spent our money like we knew that.

 

Lindsay Koshgarian, Alliyah Lusuegro

Lindsay Kosgharian directs the National Priorities Project (NPP) at the Institute for Policy Studies. Alliyah Lusuegro is the NPP outreach coordinator.

Otherwords.org

By: Jennifer Shutt and Ariana Figueroa –

 

WASHINGTON — House Speaker Kevin McCarthy announced a deal in principle Saturday night that would stave off a first-ever default on the nation’s debt as long as it can clear both chambers of Congress before June 5.

The agreement would address the nation’s debt limit and include a “historic” reduction in spending, McCarthy said, though he declined to give details during brief remarks from the U.S. Capitol building or answer questions. McCarthy also signaled there will be enhanced work requirements for some federal safety net programs, a priority for Republicans.

President Joe Biden in a statement after McCarthy spoke called the agreement “an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone. And, the agreement protects my and Congressional Democrats’ key priorities and legislative accomplishments.”

In a hint, though, that some Democrats may find the deal hard to accept, Biden added, “The agreement represents a compromise, which means not everyone gets what they want. That’s the responsibility of governing.”

The White House did not provide further details, but said legislative text will be finalized over the next day. “I strongly urge both chambers to pass the agreement right away,” Biden said.

The White House had said earlier that Biden spoke with McCarthy on Saturday evening, and before that with Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries.

McCarthy said he expects to have the bill text by Sunday, and schedule a House vote by Wednesday.

“We still have more work to do tonight to finish all the writing of it,” McCarthy said.

McCarthy was expected to speak with members of the House Republican conference on a call later Saturday night.

The California Republican said the legislation “has historic reductions in spending, consequential reforms that will lift people out of poverty into the workforce, rein in government overreach. There are no new taxes, no new government programs. There’s a lot more within the bill.”

McCarthy said he’ll speak with the president again Sunday afternoon.

Spending held flat

The Associated Press reported that the agreement would address the debt limit for two years while holding spending flat for the upcoming fiscal year, which is slated to begin Oct. 1. The agreement would set additional limits on spending during the following fiscal year, 2025.

The Biden administration also reportedly agreed to enhanced work requirements on federal food assistance, according to the AP.

U.S. House Speaker Kevin McCarthy, front, with GOP Rep. Garret Graves of Louisiana at left, speaks briefly to reporters about a deal on the debt ceiling he said has been reached with the White House, on May 27, 2023. (Screenshot from speaker’s office webcast)

A debt ceiling bill passed by the House expanded work requirements for certain recipients of the Supplemental Nutrition Assistance Program who do not have children. The idea has gained traction in a bill recently introduced by Rep. Dusty Johnson, a South Dakota Republican.

Treasury Secretary Janet Yellen has warned lawmakers that without an enacted agreement, the country could begin a default as soon as June 5. 

McCarthy will now need to sell the deal to U.S. House Republicans, many of whom signaled opposition to a bipartisan deal far before one was struck. House GOP leaders will likely need the help of Democrats in that chamber to get the 218 votes needed to pass the legislation.

Democrats who control the U.S. Senate will need the help of Republicans to move the agreement through that chamber, where the legislative filibuster requires at least 60 senators to vote to move legislation toward final passage.

 

 

Jennifer Shutt

Jennifer covers the nation’s capital as a senior reporter for States Newsroom. Her coverage areas include congressional policy, politics and legal challenges with a focus on health care, unemployment, housing and aid to families.

 

Ariana Figueroa

Ariana covers the nation’s capital for States Newsroom. Her areas of coverage include politics and policy, lobbying, elections and campaign finance.

 

Published  under Creative Commons license CC BY-NC-ND 4.0.

 

For many of the rest of us, it’s time to pat ourselves on the back for the charitable donations we made to tax-deductible organizations in 2022. Time to pat ourselves on the back for being clever and generous enough to “do well by doing good,” right? Time, perhaps, to wonder why, even when we give to organizations seeking radical change, the IRS still rewards us with a tax deduction. Do the feds really support organized opposition to, for example, the military-industrial complex? Or is there more to the story of what my students sometimes refer to as the “nonprofit-industrial complex”?

What’s That Tax Deduction Really Worth?

For many decades, people who give away money have been schooled to seek a tax deduction in return. We’re encouraged to be suspicious of organizations that don’t qualify under section 501(c)(3) of the U.S. Tax Code, which offers a bonus for our generosity. We’re told that the federal government will bless any organization that’s really doing something useful with the magic wand of that coveted tax-deductible status.

Can’t charitable donations save us thousands of tax dollars? Doesn’t that make insisting on such a tax deduction the grown-up thing to do?

Not, as it turns out, for most people. This belief that charitable write-offs also pay off is based on a misunderstanding about how such tax deductions work. Suppose you give a qualifying charity $100. That will reduce your tax bill by the same amount, right? Alas, no. That $100-dollar gift will reduce the amount of your income that you pay taxes on by half the amount of your gift, or $50. This means that if you, like most working folks, pay federal taxes at an effective rate of less than 15%, the amount you save on taxes by giving $100 is less than 15% of $50, or a whopping $7.50 — the price of a couple of fancy coffee drinks.

But giving to get a tax deduction is even less financially advantageous than that. Suppose you’re part of a married couple that earned $120,000 in 2022. Lucky you. If you were taxed for every penny of that amount, your federal income tax bill would be $17,634, an effective tax rate of 14.7%. (Look here to see how it works.)

What if you decide to tithe, donating 10% of that $120,000, or $12,000, to qualifying charities. Such giving would reduce your taxable income by $6,000, bringing it down to $114,000. Your federal income tax bill would then come down to $16,314, saving you about $1,320. Not bad, eh?

But here’s the kicker: Suppose instead that you decide not to “itemize” — that is, list all your contributions (and other expenditures like that great middle-class welfare plan, the mortgage interest tax deduction)? Instead, you opt for the “standard deduction.” For a married couple filing together, that will reduce your taxable income by $25,900, bringing that same tax bill to a mere $11,396, saving you about $5,700 in taxes without your giving away a penny. To get the same tax write-off by making contributions, you’d have to donate twice the standard deduction, or $51,800.

So am I suggesting that we shouldn’t give money to non-profits, because we often don’t really benefit from the tax deduction? Absolutely not. I’m saying that when we donate, we shouldn’t do it because of the tax deduction. We should do it, if we can, because it supports activities crucial to our own and the long-term survival and even flourishing of so many other people. This is true, whether you’re helping a relative pay the rent this month or contributing to a candidate for the Wisconsin supreme court. Neither of those gifts will garner you a penny in tax deductions, but one will keep someone you love off the street and the other would have helped ensure that women in Wisconsin could still get an abortion when they needed one.

Buy the Book

Who loses out when we refuse to give without a tax deduction? To begin with, we do, because we’ve placed an artificial limit on the kinds of campaigns, organizations, and people we allow ourselves to donate to. We’ve automatically excluded, for instance, gifts to political parties and candidates. No organization offering tax deductions can support or oppose any candidate for elected office. Of course, elected officials aren’t the only people in a position to affect our lives, but four years under Donald Trump and a couple under Joe Biden should have reminded us that they can do a whole lot of harm, or substantial good.

Making Sense of the Foundation-Non-Profit Complex

The current system of tax deductions creates other losers as well. The halo that surrounds 501(c)(3) status also constrains recipient non-profit organizations. Those that agree to the IRS rules are making a not-always advantageous deal with the devil. That tax-deductible status comes with some hefty limits:

• No electioneering (campaigning for or against candidates)
• No activities outside the “charitable and educational purpose” described in the organization’s original application for such status
• Organizations may not be created for the purpose of violating laws, meaning that advocating for civil disobedience, for example, or tax resistance can’t be part of an organization’s official purpose.

Failure to comply with the rules can get an organization’s tax-exempt status yanked. One result: organizations begin to censor themselves, sometimes restricting their activities even more than the law requires. For example, while 501(c)(3)s aren’t allowed to get involved in election campaigns for specific candidates, depending on their total annual income, they are allowed to use as much as 20% of their spending each year to influence legislation or government policies.

That means they can work directly for or against ballot initiatives and spend money to lobby government officials. They can, for example, employ paid lobbyists or rent buses to bring people to a state capitol or Congress to talk to their representatives about a particular issue. Many smaller non-profits may not even know this and so may limit their scope of action even more severely than the law requires for fear of losing that precious status.

The third restriction (no illegal purposes) has ramifications for organizations that may want to fund or be involved with actions that are nonviolent but illegal, like certain kinds of civil disobedience. In 1975, for instance, the IRS denied 501(c)(3) status to an antiwar organization whose stated charitable purpose was training people to participate in nonviolent civil disobedience. Does that mean that no 501(c)(3) outfit can engage in civil disobedience? No, but it does mean that your entire stated charitable purpose cannot be law-breaking. Fear of losing their status, whether well-founded or not, keeps many organizations from even considering participation in entire realms of political action.

Given these restrictions, why would organizations seeking radical change to existing racial, gender, or economic structures want to go the 501(c)(3) route? What makes that status so valuable for a non-profit organization? We’ve already seen that individual donors shy away from giving when they don’t get a tax deduction. But for many organizations there’s an even more important source of funds that also requires the 501(c)(3) tag: foundation grants. Although individuals give far more money overall than foundations, many organizations depend on large chunks of money from foundations, which in most cases will only make grants to 501(c)(3) groups.

But accepting foundation funding is another Faustian bargain for several reasons:

• Foundation funding can deform your program: It can entice you to change your focus and your activities to attract grant money. You’re no longer choosing your own priorities. Instead, you find yourself tailoring what you do to what foundations want to support.

  Say yours is a racial-justice organization working for serious police reform. Funding for your area of work is scarce, but a whole tranche of funding for after-school youth programs suddenly becomes available. Now, there may even be a place for such programs addressing young people in your overall political strategy. But if you need the money to keep the doors open, you may be tempted to refocus large parts of your program, not because you think after-school youth activities are the best vehicle for police reform, but because that’s where the money is.

• Foundations can be fickle: They are easily distracted by the new and shiny. One moment, they may be all about “sustainable communities,” which might be a perfect fit for your organization’s efforts to address the problems of renters in your city. So you spend three years building the coalitions and doing the public contact work necessary to put a rent-stabilization ordinance on the ballot. At that very moment, however, the money dries up, because funders are now focusing on public transit instead. Just when you most need the support to help win the next election, your benefactors have wandered off in pursuit of something different.

• Foundations can rearrange an entire non-profit “ecosystem”: They may, for example, look at organizations in various states working on racial justice in public education and decide that such a movement needs a national “collaboration” (a foundational buzzword). So a coordinating council is created and funded, requiring that individual organizations participate as a condition for receiving grant money. That means they’ll have to divert staff time for planning for national meetings, Zoom calls, and conferences. Such a coalition could, of course, supercharge the work of individual organizations, but it might just as easily distract them from crucial local work while involving them in controversies they’d rather avoid.

• Foundations have no incentive to support fundamental economic change: Where do foundations come from? The majority, even in the liberal and progressive world, are private, often funded by a single family (think “Rockefeller”) or company (think “Ford” or “Kellogg”). Creating such philanthropic vehicles provides real tax advantages to such families and companies. It also gives them a very respectable way of influencing public policy. Ultimately, these foundations are not going to support serious challenges to the capitalist system, because that system guarantees the continued wealth of their founders.

Foundations and “Movement Capture”

I teach at a college and, over the years, many of my justice-minded students have expressed a desire to change the world by founding their own non-profit organizations. In their minds and based on the models they see in their worthy community-engaged learning classes, non-profits are the sine qua non of social change and social movements. For most of them, working for social justice means working for a non-profit.

It wasn’t always this way. Before the 1954 U.S. tax code created the 501(c)(3) designation, charities existed, but mostly to provide direct aid to people in need. They certainly weren’t the main political vehicles for social change. In fact, many people organizing to improve their lives were far more likely to turn to unions, not only to improve wages and working conditions, but to address other issues in their lives like housing. It’s probably no accident that the rise of the non-profit sector in the second half of the twentieth century coincided with the reduced power of unions.

It was during the Civil Rights movement of the 1950s and 1960s that modern non-profits and foundations first played a significant role in attempts to bring about structural change in this country, even while also ensuring that such change, in the end, would be limited in nature. The giant among those philanthropic organizations was then the Ford Foundation, the largest collection of charitable wealth the world had ever seen.

A bit late to the civil rights fight, Ford turned its attention in that direction toward the end of the 1960s, after the passage of the Civil Rights and Voting Rights Acts. Under the leadership of McGeorge Bundy, a Cold War liberal and Vietnam War architect, Ford began to make huge contributions in the field of civil rights, mainly to the venerable National Urban League, but also to the NAACP. At the same time, it sought to reduce more militant activities, refusing, for example, to fund Martin Luther King’s planned Poor People’s March on Washington, scheduled for 1968. At the time when the Black Power movement was growing, Ford used its inaugural funding of Black organizations to moderate the influence of more radical voices.

University of Washington scholar Megan Ming Francis has labeled such attempts to use foundation money to control and channel a powerful social movement as “movement capture.” In a 2019 paper, she describes an early example of this process. During the 1920s and 1930s, she writes, funders, including the white-run Garland Foundation, used “their financial leverage to redirect the NAACP’s agenda away from the issue of racial violence to a focus on education at a critical juncture in the civil rights movement.” A decades-long fight for a federal anti-lynching law never succeeded. 

Who knows what might have happened had the most powerful civil rights organization of the time kept its focus on lynching and the institutionalized state torture of Black people in the early twentieth century? Maybe police would no longer continue to routinely kill people of color with such impunity in this century.

An extract from the Ford Foundation’s 1967 annual report indicates that the tradition of squelching popular uprisings and redirecting the focus of activists lived on at Ford:

“Staff attention has been turned to the more militant civil rights organizations, specifically the Congress Of Racial Equality (CORE) and the Southern Christian Leadership Conference (SCLC). Our interest in both is in seeing whether we may be of help to them in fashioning rational, goal-oriented programs of constructive action.” [Emphasis added.]

In other words, use Ford money to get the militants to pivot to activities their “betters” then considered “constructive action.”

What’s a Donor to Do?

The view of funders and non-profits I’ve offered here doesn’t fit either the right-wing understanding of charity as an alternative to government action (former President George H.W. Bush’s “thousand points of light”) or the liberal belief in the power of foundation-funded organizations to change the world. Unfortunately, I have no prescription for how or where to give your money away this tax season, or indeed during the rest of the year. I can only suggest that you do give. And that whatever any of us give, whether it be money, time, or attention, we do it expecting the only return that really matters: taking part in the larger movements for justice and mercy in all their forms.

Copyright 2023 Rebecca Gordon

Via ( Tomdispatch.com

(The Conversation) – About a decade ago, the world’s biggest economies agreed to crack down on multinational corporations’ abusive use of tax havens. This resulted in a 15-point action plan that aimed to curb practices that shielded a large chunk of corporate profits from tax authorities.

But, according to our estimates, it hasn’t worked. Instead of reining in the use of tax havens – countries such as the Bahamas and Cayman Islands with very low or no effective tax rates – the problem has only gotten worse.

By our reckoning, corporations shifted nearly US$1 trillion in profits earned outside of their home countries to tax havens in 2019, up from $616 billion in 2015, the year before the global tax haven plan was implemented by the group of 20 leading economies, also known as the G-20.

In a new study, we measured the excessive profits reported in tax havens that cannot be explained by ordinary economic activity such as employees, factories and research in that country. Our findings – which you can explore in more detail along with the data and an interactive map in our public database – show a striking pattern of artificial shifting of paper profits to tax havens by corporations, which has been relentless since the 1980s.

Global crackdown

The current effort to curb the legal corporate practice of using tax havens to avoid paying taxes began in June 2012, when world leaders at the G-20 meeting in Los Cabos, Mexico, agreed on the need to do something.

The Organization for Economic Cooperation and Development, a group of 37 democracies with market-based economies, developed a plan that consisted of 15 tangible actions it believed would significantly limit abusive corporate tax practices. These included creating a single set of international tax rules and cracking down on harmful tax practices.

In 2015, the G-20 adopted the plan officially, and implementation began across the world the following year.

In addition, following leaks like the Panama Papers and Paradise Papers – which shed light on dodgy corporate tax practices – public outrage led governments in the U.S. and Europe to initiate their own efforts to lower the incentive to shift profits to tax havens.

Profit-shifting soars

Our research shows all these efforts appear to have had little impact.

We found that the world’s biggest multinational businesses shifted 37% of the profits – or $969 billion – they earned in other countries (outside the headquarter country) to tax havens in 2019, up from about 20% in 2012 when G-20 leaders met in Los Cabos and agreed to crack down. The figure was less than 2% back in the 1970s. The main reasons for the large increase were the growth of the tax avoidance industry in the 1980s and U.S. policies that made it easier to shift profits from high-tax countries to tax havens.

We also estimate that the amount of corporate taxes lost as a result reached 10% of total corporate revenue in 2019, up from less than 0.1% in the 1970s.

In 2019, the total government tax loss globally was $250 billion. U.S. multinational corporations alone accounted for about half of that, followed by the U.K. and Germany.

Global minimum tax

How do policymakers fix this?

So far, the world as a whole has been trying to solve this problem by cutting or scrapping corporate taxes, albeit in a very gradual way. In the past 40 years, the global effective corporate tax rate has fallen from 23% to 17%. At the same time, governments have relied more heavily on consumption taxes, which are regressive and tend to increase income inequality.

But the root cause of profit-shifting is the incentives involved, such as generous or lenient corporate tax rates in other countries. If countries could agree on a global minimum corporate tax rate of, say, 20%, the problem of profit-shifting would, in our estimation, largely disappear, as tax havens would simply cease to exist.

This type of mechanism is exactly what more than 130 countries signed onto in 2021, with implementation of a 15% minimum tax set to begin in 2024 in the EU, U.K., Japan, Indonesia and many other countries. While the Biden administration has helped spearhead the global effort to implement the tax, the U.S. has notably not been able to get legislation through Congress.

Our research suggests implementing this type of tax reform is necessary to reverse the shift of ever-greater amounts of corporate profits going to tax havens – instead of being taxed by the governments where they operate and create value.

Ludvig Wier, External Lecturer of Economics, University of Copenhagen and Gabriel Zucman, Associate Professor of Economics, University of California, Berkeley

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Recently Big Pharma bluntly and unashamedly announced price hikes in the United States on more than 350 drugs while continuing to brazenly insist that large price hikes are necessary for innovation. The Lazonick/Tulum research shows that the business model of America’s largest pharmaceutical companies involves far more spending on enriching shareholders and executives than on research and development.

Big business, Big Insurance and Big Pharma industries dominate our government with public health taking a back seat to the need for large private profit. Many government leaders from both political parties share the same ‘profits over public health’ ideology, even though the Covid-19 pandemic clearly showed how our economic system failed to serve our citizens by allowing these groups to privatize, sabotage, fragment and cripple our health, public health and other social services.

No greater disconnect exists between the public good and private interests than in the U.S. system of monopoly, for-profit Big Pharma.

Over forty years of profiteering by Big Pharma and oligarch control of our economy left the public totally exposed and ill-prepared to face the public health crisis of COVID-19. Because Big Pharma rarely invests in prevention, it has very little motivation to invest in preparedness for a public health crisis. Drugs for prevention do not contribute to share-holder value and profit. Instead, cures are designed once a public health crisis strikes.

The sicker we are the more profit they earn.

( Otherwords.org ) – Can you imagine the audacity to fail a multi-trillion dollar audit of public funds, and then ask for even more of those taxpayer dollars?

Pentagon leaders just did exactly that.

This month news broke that the agency once again failed to pass a basic audit showing that it knows where its money goes. And instead of holding out for any kind of accountability, Congress stands ready to give a big raise to an agency that failed to account for more than 60 percent of its assets.

This is a sign of an agency that is too big, plain and simple.

Other major government agencies have long since passed audits. But the Pentagon — with its global sprawl of more than 750 military installations, expensive contractors, and boondoggle weapons systems — is so big and disjointed that no one knows where its money goes.

Here’s a simple solution: the Pentagon needs to be a lot smaller.

After 20 years of war, when government spending is desperately needed elsewhere, the Pentagon’s fifth failed audit in as many years —  it’s never, ever passed — should be the last straw.

Instead, recent reports suggest that Congress is moving toward an $847 billion budget for the Pentagon and nuclear weapons — and that figure may grow even more. The increase alone from last year’s spending would more than double the entire diplomacy budget at the State Department.

This isn’t using our taxpayer dollars wisely. It’s robbing programs that we need, like the discontinued Child Tax Credit expansion that cut child poverty by half. The only winners here are the military contractors who commandeer roughly half of the Pentagon’s budget in any given year.

For what taxpayers spend on Lockheed Martin in a typical year alone, we could instead give every American child a strong start in life through quality childcare and preschool. Which would make us stronger?

It looks like the people in this country are starting to catch on, though: A new poll shows that just 48 percent of Americans trust the military, down from a high of 70 percent in 2018.

It’s not because they don’t trust the troops. It’s because after 20 years of ill-begotten wars, the brass expects to get $847 billion of our hard-earned tax dollars when they can’t even account for half of what they’ve already gotten. Sorry, but we have too many other needs in this country for that to make sense anymore.

With the tide of public opinion turning, the days of endlessly growing Pentagon budgets are numbered.

Lindsay Koshgarian directs the National Priorities Project at the Institute for Policy Studies.

Via Otherwords.org

( Inequality.org) – Every time I hear that we as a nation cannot afford something — whether that might be assuring non-toxic water in Jackson and Flint or universal pre-K or an industrial policy with teeth — I have wondered how many dollars a national wealth tax might yield. So I looked the numbers up.

Wealth turns out to run way bigger than income. Our total U.S. wealth in 2021 sat at $150 trillion. Total income, combining personal income and company profits, amounted to about $25 trillion. A small wealth tax would clearly produce much more government revenue than a much larger income tax.

Like income, wealth in the United States remains highly concentrated. The wealthiest 1 percent of Americans hold about one-third of that $150 trillion in U.S. wealth. That comes to $50 trillion, twice the total annual income of all Americans, everyone from the millions of workers making less than $15 an hour to the corporate executives making multiple millions. Again, you don’t need an algorithm to figure out that even a tiny wealth tax on the top 1 percent could produce as much — or more — than a large income tax on everybody.

A modest national wealth tax could solve a lot of problems and fund a lot of common good, even if that tax only somewhat reduced our savage economic inequality.

Senators Elizabeth Warren and Bernie Sanders have offered pioneering proposals to introduce national wealth taxes to the United States. Critics have raised various objections to these proposals. Collecting a wealth tax would prove impractical, some charge. Others say that taxing wealth at the federal level would be unconstitutional. Senator Warren has convincingly addressed these objections, but I’d just like to add one point: Taxing wealth would provide a nearly inexhaustible source of government revenue. Collecting that revenue may well hit some administrative or political obstacles. But overcoming those obstacles would be well worth the effort.

Via Pixabay

Let’s look at what a 1 percent wealth tax on our top 1 percent could buy and then see how much pain and suffering that levy would impose on those who would pay the tax. A 1 percent wealth tax on the top 1 percent would produce $500 billion a year in revenue, or $5 trillion over the 10-year budget calculation demanded of federal legislation.

That $500 billion could buy something like a revolution in child-rearing. President Biden’s original Build Back Better proposal had elements of such a revolution, but never won full funding because implementing family-friendly policies will always be so damned expensive. With a 1 percent tax on the top 1 percent, we could meet that expense.

Here’s what a plan concentrated on helping children and making parenting more manageable could do with a 1-percent-on-the-1-percent tax:

Sources: Congressional Budget Office, Committee for a Responsible Federal Budget, CNBC.

This package would provide $3,000 per child for virtually all parents, save an average of $11,000 for those now using day care for pre-schoolers, and open up employment opportunities for those parents with pre-schoolers who cannot now afford day care. This would all be great for children’s academic, psychological, and social development — and would transform the economics of parenting, most especially for low- and moderate-income families.

Senator Booker’s Baby Bonds would create and seed a savings account of $1,000 at the birth of every child in the United States and then add up to $2,000 each year depending on household income. The funds would earn income that would not be available for the children until they reach 18. At that point, they could use the money for education, to buy a home, start a business, or continue as a retirement account.

Taken as a whole, this package would cut child poverty by more than half, greatly improve general educational levels over time, and immediately provide substantial support for families during their most challenging years for managing both time and money. A modest wealth tax could provide all this benefit, with money left over to do still more common good. But at what cost? How much harm would a wealth tax do to those elite few who would have to pay the tax?

As illustrated below, the amount individuals would pay in wealth taxes would indeed be very hefty, often running into the millions, even billions of dollars. But in most years and on average, America’s top 1 percent would continue to get wealthier even with this wealth tax in effect. Given that the S&P 500’s annual average stock market return since 1957 has topped 11 percent, a mere 1 percent tax on wealth would amount to little more than a rounding error for anyone in the top 1 percent.

Once established, a wealth tax could easily expand in small increments to a perhaps more reasonable 4 percent, producing $2 trillion a year in revenues, based on current levels of wealth. Or we could tax higher levels of wealth at higher percentages, as Senator Warren proposes, with tax rates on billionaires reaching 6 percent. Even at those higher rates, the wealthy would go on getting wealthier. But taxing the wealth of these wealthy would open a cornucopia of public capital to invest in addressing our multitude of problems and in bettering working people’s lives.

By not taxing wealth we are failing to tap by far the largest source of our potential public revenues. And because the wealth of the wealthy confers both economic and political power, we cannot adequately defend democracy if we go on allowing our economic oligarchy a completely free lunch.

A clear majority of Americans support most of the family-friendly policies listed above. Even larger majorities support the notion of a wealth tax, with nearly two-thirds of Americans favoring a tax on grand fortune. Imagine that. The polls are showing higher support for taxing the rich than for the beneficial programs that taxing the rich could finance. Makes you wonder why our elected representatives, especially Democrats, are not standing in line to support such a combination of policy and pay-fors.

Next time you hear a politician say “we” can’t afford something that clearly needs doing, just stop a moment and think — about what a wealth tax on a very small proportion of Americans could accomplish.

Jack Metzgar, a retired adult educator from Roosevelt University in Chicago, is the author of Bridging the Divide: Working-Class Culture in a Middle-Class Society (Cornell 2021).

Via ( Inequality.org

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That would all soon change, particularly after Ronald Reagan’s 1980 election. “Rich people” would suddenly reemerge as a cultural phenomenon worthy of ample attention. In 1982, the editors at Forbes magazine even started annually profiling America’s 400 richest.

Serious books about the growing maldistribution of America’s income and wealth would, in short order, once again begin appearing. In 2014, one inequality book — Thomas Piketty’s 700-page Capital in the 21st Century — actually became Amazon’s top-selling title. Our new Gilded Age of grand fortune had created a publishing golden age for books that contemplated inequality’s impact upon us.

The books on inequality that abound today offer up important information and insights. They survey our unequal landscape, trace the drivers behind our top-heavy distribution of wealth , and propose serious solutions. Unfortunately, these important contributions to the literature on inequality haven’t had much of an impact. Our grand fortunes remain grand.

One sign of our still unequal times: As of this past September, despite a serious stock-market swoon, the net worth of our richest 1 percent still sits — after taking inflation into account — some 527 percent above the net worth of our richest 1 percent in 1976.

Our income stats tell a similar story. Incomes in our bottom 50 percent now stand, after inflation, just under a meager 30 percent higher than their level back in 1976. American top 0.01-percent incomes have soared almost 600 percent.

Amid numbers like these, books about inequality clearly remain as necessary as ever. And that brings us to a new book about inequality that just might make the sort of difference that books about inequality have so far been unable to make.

This book’s author, Stephen Bezruchka, will already be familiar to folks active in anti-inequality circles. Bezruchka, currently a professor emeritus at the University of Washington’s School of Public Health, has spent the last quarter-century teaching and lecturing all across the nation about the incredibly high price we Americans are paying for letting our wealth concentrate

How high a price? His new book, Inequality Kills Us All, rests on a grim reality: Americans have spent recent decades dying at much higher rates than people living in our peer nations, societies that all spend significantly less on medical care than we do in the United States and yet enjoy significantly longer life expectancies.

Stephen Bezruchka

How could that be? Decades ago, Bezruchka set out on a journey to find out. As a younger physician, he had fully bought in to the standard medical profession perspective. He equated health with health care, as did all the doctors around him. People got sick. Doctors did their best to get people well. End of story.

But real life, as the young doctor began living it, had a nasty habit of poking holes in that story. Bezruchka had spent time early on in his career practicing medicine in Nepal, a nation he had earlier encountered as part of the first Canadian Mount Everest expedition. He also spent years stateside working big-city hospital emergency rooms. All these experiences, bit by bit, had Bezruchka viewing health through a much more open-minded lens. Health care, he was learning, cannot guarantee health. Inequality gets in the way. Inequality kills.

Bezruchka’s new book goes deeply — and clearly — into the how. He walks us through the work of pioneering researchers like the UK’s Richard Wilkinson and Kate Pickett and Harvard’s Ichiro Kawachi and S.V. Subramanian. Inequality, the work of these scholars helps us see, packs a devastating one-two punch.

The first punch: the “psychosocial” stress that living in deeply unequal societies inevitably creates. People in these societies can have “enough resources to provide for basic needs,” Bezruchka explains, but not enough “to support the more lavish lifestyle that they see others enjoying.” The wider the gap, the stronger the pressure to constantly compete for higher status. We envy those above us. We scorn those below. We trust in others ever less. We cooperate ever less.

Bezruchka continually interlaces this status story with his own life’s story. In Nepal, he writes, he “lived with people in remote areas who had only the basic material goods they needed.” These Nepalese didn’t know what they didn’t have: “Their moral compass directed them to share.”

In the deeply unequal United States, by contrast, that sharing seldom shows. One arresting example: Drivers of high-status cars, as researcher Paul Piff has detailed, turn out to be “more likely to cut off other vehicles at intersections and endanger pedestrians at crossings than those in more modest automobiles.”

This unrelenting everyday pressure of “psychosocial status distinctions,” other research has shown, has distinct biological consequences. Such stress changes us. The wear and tear of coping with chronic daily stress — the “allostatic load” — leaves us with elevated blood pressure and immune systems too weak to respond when a “big challenge” emerges. This avalanche of stress, relates the emerging field of epigenetics, can start impacting how our lives unfold even before we emerge from the womb.

Via Pixabay.

In societies as unequal as ours, people do the best they can to cope with the stress they face. But the most common coping mechanisms — be they drugs or high-sugar, high-fat comfort foods — take their own heavy tolls. Life in societies much less unequal than ours, meanwhile, generates significantly less stress.

So why don’t we just take steps to become a more equal society? The basic story: In deeply unequal societies, not just wealth concentrates at the top. Power does as well.

Our rich, Bezruchka points out, see no need to employ that power on behalf of those without fortune. They see no particular reason to extend a helping hand to those without their fantastically good fortune. They believe they worked hard for their success. So why should they help others who didn’t? Keep taxes low, they demand. Keep government off our backs. Let the “free market” determine how our lives shake out.

The more wealthy the wealthy become, the greater their capacity to impose these mindsets on the rest of us. And the rest of us find ourselves split. Bezruchka offers an allegory to help us understand why. He asks us to imagine a billionaire and his chauffeur pulling up to a homeless family along the side of the road. The billionaire steps out of the car and snatches a loaf of bread away from the mom. The billionaire and the silent chauffeur then drive away.

Why does the chauffeur acquiesce to this brutal billionaire behavior? Bezruchka sees “something in the way of a private moral deal between the billionaire and the chauffeur,” a deal that’s left the world “meaner but solves an emotional problem for some people who, given the way their own lives are being squeezed, find themselves with less empathy left over for others outside their social circle.”

Those the furthest outside that social circle, society’s poorest, “do not complain of deep inequality” either. Bezruchka sees them quite understandably focused on their own personal issues, everything from food and housing insecurity to lack of access to medical care. They don’t focus on the reality “the rich have too much.” Their focus remains “ downstream, related to tangible issues nearby.”

Yet Bezruchka still believes that “windows of opportunity for effective change are opening.” His final pages have us, his readers, believing that too. We can, he notes, ready ourselves to seize that opportunity. We can confront the “wealth defense industry.” We can eventually move onto the table antidotes to wealth concentration — like a “maximum wage” — that today seem far beyond the realm of possibility.

What makes Bezruchka’s final chapter so powerful? Books about inequality typically deliver critiques of our top-heavy economy and polity, then send us on our way with pro forma exhortations to get involved in efforts to help make our world less unequal.

Bezruchka’s final chapter gets far more personal and powerful. He clearly takes delight in advocacy and feels we could feel that delight as well. Toward that end, Bezruchka asks us to inventory our skills and the activities we enjoy, then offers us a wealth of options for putting those skills and interests to work. He gets specific. He gives us examples. He guides us where to go to get started.

Tips for turning haphazard conversations with strangers into substantive discussions. Ideas for using photography to tell compelling inequality stories. How-to’s on everything from revising the rules of Monopoly, the world’s best-selling game, to giving talks at retirement homes. Bezruchka’s closing chapter imaginatively covers the sorts of ground books about inequality have never before covered.

And Inequality Kills Us All couples all this useful information and background with leads that can connect readers directly to the groups — and activist resources — now helping to build a more effective struggle for a more equal world. Bezruchka believes we can overcome the public indifference our rich and powerful count on. By the end of his final What Can We Do? chapter, we believe that just as much as he does.

Social movements begin, Bezruchka reminds us, with “people working on critical, timely issues as individuals and then together with others.”

Social movements can also begin with books. Dr. Stephen Bezruchka has given us a book we desperately need.

Via Inequality.org

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The windfall tax on the massively higher profits made by many energy companies in the past months — a model that is also being pursued by the European Commission — is supposed to fund the brake. According to the chancellery paper, the tax will apply to 90 percent of the so-called “coincidental profits” energy producers have amassed since the beginning of Europe’s energy crisis fuelled by Russia’s war on Ukraine.

Taxation rates will be set by the merit order principle, which also sets the price on European power markets, and whereby the most expensive form of energy production used at any given point in time determines the price received by all producers. This means the government will estimate the reference operating cost for different types of power production, from cheap electricity made with wind and solar power installations, to more expensive lignite-fired power plants, add a “safety surcharge” to adjust imprecise estimates, and tax 90 percent of every euro producers earn beyond the reference cost.

Natural gas plants, hard coal plants and biomethane-fired power plants will be exempt from the windfall tax, which the government plans to introduce by 1 December. For gains made on the spot market, the tax is supposed to also apply retroactively from 1 March 2022.

Local utility association VKU said the plans for a power price brake and a windfall tax are “generally comprehensible,” but warned the plans could harm future renewable investments. It warned the government not to go beyond plans tabled by the European Commission, arguing the reference cost model and retroactive application could scoop up more profits from the companies than intended.

“We consider a retroactive application from 1 March 2022 unacceptable,” VKU head Ingbert Liebing said, arguing that such a move could undermine investor trust in Germany’s energy sector. “The trust of market actors in state guarantees and a stable market framework is pivotal to further investments in renewable energy expansion.” Retroactive intervention would clearly violate this trust, Liebing added.

The VKU said the entire approach pursued by the government would be too complex to quickly remedy financial difficulties for customers, proposing instead the introduction of a simpler taxation model to achieve results fast. Renewable power industry lobby group BEE also vehemently rejected the plans, arguing that a retroactive intervention would likely be “unconstitutional” and would “severely” damage investor trust in Germany.

“This massive market intervention comes at a very bad time, when auctions [for renewables] are still undersubscribed after years of putting a brake on expansion,” BEE head Simone Peter said. The renewables industry had just begun to regain its optimism in light of the government’s renewable power expansion plans, she argued, adding the tax would add to problems for investors in renewables, which already include slow licensing procedures, a lack of construction sites and supply chain bottlenecks.

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Via Clean Energy Wire