3083 Economic Justice Through Taxation

Beacon Press

Tom Halleck, Associate Publisher of Beacon Press, introduced the topic and speaker, noting the dangerous consequences of inequalities. The substantial media attention to the book is a model for the role books can play in social change.

Chuck Collins, co-founder and program director of United for a Fair Economy and Responsible Wealth, author of several books, including his latest as co-author (with William H. Gates Sr.) of Wealth and Our Commonwealth : Why America Should Tax Accumulated Fortunes , is active with Unitarian Universalists for a Just Economic Community (UUJEC ) and grew up as a Unitarian Universalist. His wife, the Rev. Patricia Brennan, is an associate minister of King’s Chapel (UU).

Collins noted that the topic is particularly timely, since “Congress just passed yet another tax cut” and the estate tax came up for another vote last week in the House. At the same time, states and localities are facing the “worst tax cuts since the second World War,” having to make untenable choices. “The bind we’re in is the result of decades of decision at the state and federal levels.”

And what is the federal government’s response? Collins suggested that it could have been to send money to states in aid, to have a temporary payroll tax holiday, or other ways to help states through this fiscal crisis. Instead, the response has been a $350 billion tax cut, with the “lion’s share to households with high incomes.” And under consideration is the elimination of what Collins called “the most progressive tax.” “If we lose on the estate tax,” he said, in less than three years we’ll be debating how to replace the progressive income tax with a flat tax or sales tax.

Why are we in this situation? Collins attributed it to long-term work by the conservative movement for an agenda that he called “shrink, shift, shaft:”

• Shrink government, or at least those parts that provide equality of opportunity and the safety net – as one official said, shrink government to the “watchtower” state with security, the military, and other such functions still strong
• Shift the tax burden away from corporations and wealth to wages, from progressive federal taxes to regressive state taxes
• Shaft – do away with social services

While Clinton vetoed the elimination of the estate tax, Clinton continued, Bush made clear that the elimination of this tax would be a top priority of his presidency.

Collins described how one day he received an email from Bill Gates – and after determining that it was not a practical joke but actually from Bill Gates, Sr., asking how he could help stop this “un-American” change, they began to work together on the issue. In 2001, the New York Times had a front-page story on Gates’ stand on the estate tax – a “man bites dog” story, Collins said.

Collins’ and Gates’ book and the organization that Collins directs are working to make a “proactive moral case” about why America should have a tax on the transfer of accumulated wealth. Today, 98% of American households won’t pay any estate tax. The 2001 bill has the estate tax phasing out over nine years, and in 2010 repealed immediately. Oddly, this will only be for one year – in 2001 the law is “sunsetted” and the tax would return to what it was in 2001. This would make estate planning difficult – Collins noted that columnist Paul Krugman called it the “Throw Momma from the Train Act” – and currently there’s an attempt to make the repeal permanent. The votes already exist in the House, Collins said; in the Senate it needs 60 votes and has about 57.

Collins outlined some of the history of the estate tax, in existence since 1916, when it was instituted in response to the robber baron era. In the 90s those promoting its elimination managed to portray it as un-American. Collins then listed common concerns (or myths) raised by this group, and some responses to those concerns.

• The effect on the small farmer. Collins pointed out that the opponents of the estate tax have to put out a compelling story, and they’d have a “problem if they put the real beneficiaries before the public.” The American Farm Bureau, though, was asked to give a tour of farms lost to the estate tax – and could not come up with a single example. There are problems with small farms and the estate tax, but Collins pointed out that the all-or-nothing attitude of the opponents has blocked attempts to raise exemptions: “They know they’ll lose their fig leaf.”
• The effect on small businesses: Collins’ organization supports reforms to address some real problems of estate tax and small businesses, and points out that many of the alleged problems already may be addressed through current laws.

Collins then outlined reasons to retain the estate tax on accumulated wealth.

• The tax is “the fairest, most progressive tax we have” – it “raises tax revenue from those who are most able to pay.” When looking at the budget after Social Security is removed from the equation, estate taxes represent 9% of federal revenue. Loss of this income means the tax burden will shift, many more services will be cut, and additional other taxes will replace some of the income.
• The tax is “a tremendous incentive to charity.” The effect of the elimination would be, Collins said, $8-$9 billion less each year given to hospitals, schools, and other institutions, and some experts predict a shortfall two to three times that amount. The estate tax encourages the generous to give much more than they otherwise might, and most of this money comes from estates of $20 million or more.
• Collins cited what he called “the democracy reason:” “How much inequality can our democracy retain?” He detailed more of the history of the robber barons, the 30 year fight to get an estate tax passed, and quoted Louis Brandeis’ statement that American can either have concentrated wealth or democracy. We promote democracy, Collins said, by breaking up generational concentrations of wealth and power.

Is the estate tax fair? It’s “hard to make a claim that you ‘did it all yourself,’” Collins said. Most people have had a tax-dollar-subsidized education or mortgage, or bought a house with the help of what he called (to laughter from the audience) a “parental down payment assistance plan.” Bill Gates, Sr., has suggested that estate tax money could be targeted to programs that broaden wealth, like education. Instead, we see cuts in education, essentially “pulling out the rungs of the ladder.”

In the question period, an audience member challenged Collins to raise the estate tax, rather than compromise on higher exemption limits. Collins countered that it’s essential to not lose this repeal fight, so meaningful reform will be necessary. And reform can be justified philosophically: the real goal is to be an anti-dynasty tax, and at $2-$3 million, the exemption still often hits homeowners on both coasts where house prices are high.

Another audience member recommended making more of the Republican President (Theodore Roosevelt) who helped win the estate tax in the first place, and Collins responded by also reminding us of Andrew Carnegie and Warren Buffet – proponents of a 100% estate tax.

Another asked what busy people can do to help. Collins replied that people can sign up online , work with state organizations, make calls (16,000 calls were generated to five Senators in the last roll call).

Another questioned why people buy the myths; Collins reminded all that the myths have been told so often they’re familiar, and that the media, owned by the wealthy, still largely repeats even the myths that have been clearly discredited. It’s also hard, Collins said, to see the connections between “when your brother loses his meds” and the elimination of the estate tax – those who want to eliminate the tax can feel it more immediately and passionately.

Other questions included whether there’s an inherent anti-tax attitude – Collins said that polls say that people are completely confused, and that there’s a need for “tax literacy” – and about a progressive property tax – Collins recommended checking out the “Georgists” or followers of Henry George.

For more information: http://www.FairEconomy.org

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