Yesterday, a group of people associated with the Occupy group in Washington, D.C. took out a full page ad in the San Francisco Chronicle, declaring that, as the Deficit Reduction Super Committee had failed, they had some ideas to offer as to how we might create jobs, reduce the wealth divide and control spending. Their ad can be found below. First, however, I thought that I’d share a few highlights from their incredibly detailed plan.
• Tax the highest income households: From 1960 to 2004, the top 0.1 percent of U.S. taxpayers — the wealthiest one in one thousand — have seen the share of their income paid in total federal taxes drop from 60% to 24.3%. America’s highest income-earners — the top 400 people who have wealth equal to 154 million Americans — have seen their federal income tax drop from 51.2% in 1955 to 18.1% in 2008. If the top 400 paid as much of their incomes in personal income tax as the top 400 of 1955, the federal treasury would have collected $50 billion more in revenue from just those 400 taxpayers. If the top 0.1% of taxpayers — Americans with incomes that averaged $4.4 million — had paid total federal taxes at the same rate as the top 0.1% paid these taxes in 1960, the federal treasury would have collected an additional $250 billion in revenue.
• Merely not extending the Bush tax cuts would add nearly $500 billion each year in tax revenue. Thus in just over two years the goal of the deficit committee would be met. This would be insufficient to correct the wealth divide and does not go as far as Occupy Washington, DC advocates.
• A tax of a half of a percent or less on Wall Street speculation could raise over $800 billion in a decade. The Speculation Tax on the purchase of stocks, bonds and derivatives would be a tiny tax with a big impact. People in the U.S. pay much higher taxes on purchases of food and clothing; it is only fair that the wealthy pay taxes on purchasing wealth instruments.
• A fair tax on capital gains, treating it as ordinary income would raise $1 trillion over a decade. Wealth-based income and work-based income should be treated equally under the law as it used to be. Warren Buffet has received a great deal of attention for pointing out that he pays a lower tax rate than his secretary or anyone who works for him. The reason for this is that investment income is taxed at a much lower rate than income from labor. The United States needs to tax wealth more and work less.
• Congress should enact a “pure worldwide” tax system, in which all profits of U.S. corporations, whether they are generated in the U.S. or abroad, would be taxed by the U.S. This would end “deferral,” i.e. where taxes are deferred until money is brought back into the United States. U.S. corporations would continue to receive a credit against any taxes they pay to a foreign government (the foreign tax credit) so that profits are not double-taxed. Under a pure worldwide tax system, corporations would have little or no tax incentive to move jobs offshore because the U.S. would tax profits of corporations no matter where they are generated. The Treasury estimates that deferral of U.S. taxes on offshore corporate profits costs close to $50 billion each year, and many experts think this estimate is substantially understated.
• Ending deferral does not even address the hundreds of billions lost through tax havens. Tax havens should be shut down through the passage of the Stop Tax Haven Abuse Act. In fact, the U.S. Treasury estimates this costs $100 billion each year. In 2006 the U.S. Senate Permanent Subcommittee on Investigations reported that Americans now have more than $1 trillion in assets offshore and illegally evade between $40 and $70 billion in U.S. taxes each year through the use of offshore tax schemes.
• One million jobs could be created annually by writing down all underwater mortgages to market value. Correcting housing mortgages to the real value of homes would inject $71 billion per year into the economy and save families $6,500 per year on mortgage payments. This would also fix the housing crisis which is an anchor holding back any recovery, according to a new report by The New Bottom Line. One in five mortgage holders owe more on their mortgage than their home is actually worth. Banks should not continue to be able to profit from housing bubble prices – a bubble they created with their poor and unethical lending practices. Adjusting mortgages to the real value of homes is a fair way to fix the housing market.
• Failure to stop the foreclosure crisis will ensure a stalled economy. It is an essential step to economic repair. This could be done without Congress as Fannie and Freddie together hold $1.5 trillion in housing loans or mortgage-backed securities which could be directed to fix the mortgages. The Federal Reserve has just under a trillion and could unilaterally correct loans to reflect real value. And, the banks could be pressured. Last year, the nation’s top six banks paid out more than twice the cost of re-writing mortgages to make them fair ($71billion per year) in bonuses and compensation alone ($146 billion in 2010). The nation’s banks are sitting on a historically high level of cash reserves of $1.64 trillion.
• The American Society of Civil Engineers estimated that failure to fix the nation’s infrastructure has created serious damage so extensive that $2.2 trillion will be required by 2014 just to meet current demands. The ASCE gave the nation’s infrastructure an overall grade of “D.” Its report cited cracking levees, a quarter of the nation’s existing bridges sagging, leaking pipes losing billions of gallons of drinking water per day, aging sewers releasing human waste into rivers and lakes, horrendous traffic congestion and air and water pollution. This is not “make work” but urgently needed work. A public works program modeled after the depression era Works Progress Administration would create 15 million jobs and build the infrastructure needed to create a sustainable economy.
• Spending on the military is a drag on the economy, not just because it makes up 55% of federal discretionary spending, but because more jobs would be created by spending on education, infrastructure, green energy, or even on tax cuts for non-billionaires. Converting a fraction of current military spending to other industries and tax cuts could produce 29 million new jobs, one for every unemployed or underemployed person in the United States, even after finding new employment for everyone displaced during the conversion.
• Putting in place improved Medicare for all would provide a major stimulus for the U.S. economy not only by controlling the cost of health care and reducing deficits but by creating 2.6 million new jobs, and infusing $317 billion in new business and public revenues, with another $100 billion in wages into the U.S. economy.
• The funding of Social Security is easy to fix. Currently, the tax on wages subject to the tax is capped at $107,000. The upward redistribution of income over the last three decades has caused a large share of wage income to escape taxation. If all wage income were subject to the tax, then it would leave Social Security fully solvent for its 75-year planning period…
As I stated above, these are just some of the ideas outlined by the folks from Occupy D.C.. For the rest of the list, which is broken down in a much more logical fashion, and highly footnoted, please follow the link at the top of the post. It’s a lot to go through, and it doesn’t quite lend itself to bumper stickers like other plans (see “Drill Baby Drill”) but I think you’ll find a lot to like in it.
I don’t know what kind of reception it’s likely to get, but I just sent copies to my elected officials. If you’d like to join me, you can find addresses for your representatives in Washington here.