Taxing the Rich Dudes — Part II

A week or so ago I posted Robert Reich’s column on taxing the wealthy.  At the time, I thought the odds of any such legislation passing were slim-to-none, but today Mr. Reich is back with a bit more optimism, so … maybe, just maybe the time is coming when we will stop bowing at the feet of the wealthy and start expecting them to be held accountable for paying their fair share to keep this nation rolling.  Heck, if the wealthy paid their share, we could eliminate the federal debt within a year!


Why Biden’s plan to tax the super rich is moving from unlikely to likely

And why it’s really really important

Robert Reich, 5 April 2022

America is on the cusp of the largest inter-generational transfer of wealth in history. As wealthy boomers expire over the next three decades, an estimated $30 trillion will go to their children. Those children will be able to live off of the income these assets generate, and then leave the bulk of them – which in the intervening years will have grown far more valuable – to their own heirs, tax-free. After a few generations of this, almost all of the nation’s wealth will be in the hands of a few thousand family dynasties.

Unless Joe Biden’s new tax plan is enacted — the odds of which is moving from unlikely to likely. I’ll explain in a moment.

Dynastic wealth runs counter to the ideal of America as a meritocracy. It makes a mockery of the notions that people earn what they’re worth in the market, and that economic gains should go to those who deserve them. It puts economic power into the hands of a small number of people who have never worked but whose investment decisions have a significant effect on the nation’s future. And it is antithetical to democracy.

We are well on the way. Already six out of the ten wealthiest Americans alive are heirs to prominent fortunes. The Walmart heirs alone have more wealth than the bottom 42 percent of Americans combined. The richest 1 tenth of 1 percent of Americans already owns almost as much wealth as the bottom 90 percent.

The last time America faced anything comparable occurred at the turn of the last century, in the first Gilded Age. Then, President Teddy Roosevelt warned that “a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power,” could destroy American democracy. Roosevelt’s answer was to tax wealth. The estate tax was enacted in 1916 and the capital gains tax in 1922.

Since then, both of Roosevelt’s taxes have been eroded by the moneyed interests. As the rich have accumulated more wealth, they have amassed more political power — which they’ve used to reduce their taxes. By now, the estate tax affects only a handful of super-wealthy families that are busily setting up “dynastic trusts” to circumvent what’s left of it. And the capital gains tax has been defanged by what’s known as the “stepped-up-basis-at-death” loophole. More on this in a moment.

Last week Joe Biden unveiled two tax proposals that would revive Teddy Roosevelt’s original vision, and could possibly slow or even reverse America’s march toward oligarchy: (1) a minimum income tax that Biden calls a billionaire tax but would in reality apply to households with a net worth of $100 million or more, and (2) a separate tax at death on gains from appreciated assets, even if the assets are not sold.

The odds are growing that at least one of these proposals will get through the Senate in April or May via “reconciliation” requiring only a bare majority (i.e., all fifty Democratic senators plus the vice president). I’m told Joe Manchin is mostly on board (which means the other Democratic holdout, Kyrsten Sinema, will sign on as well).

Let me go into a bit of detail on each:

(1) The minimum tax is a 20 percent levy on households with a net worth of more than $100 million, affecting the top 0.01 percent of earners. It would apply both to taxable earnings and to unrealized capital gains (the increased value of your assets), and would function as a kind of prepayment (analogous to withholding) of taxes that eventually would be owed upon the sale of appreciated assets or death.

For example, suppose someone named Mark Zuckerberg owns $100 billion of Facebook stock, for which he paid nothing when he founded the company, and has no other taxable income. For the first year under the Biden plan, he’d owe $20 billion in taxes even if he didn’t sell any Facebook shares. The next year, if his stock increased in value, he’d owe another prepayment equal to 20 percent of any increase in value beyond $100 billion. (There are other provisions to prevent the very wealthy from being taxed twice on the same income.)

The Treasury anticipates Biden’s new minimum tax would raise $360 billion in the first 10 years from America’s 20,000 richest households.  

(2) Biden’s second proposal would close the “stepped-up-basis-at death” loophole. Under today’s tax code, you pay capital gains taxes on the increased value of assets when you sell them. But if you pass your assets on to your heirs, they can sell them and not pay a penny of capital gains. In other words, you escape capital gains taxes by dying. They escape it by inheriting your wealth. (I remember years ago arguing that this loophole should be closed with then Treasury Secretary Lloyd Benson, who at one point pounded his fist on the table and exclaimed “death is an involuntary conversion!”)

That’s not all. Under current law, if heirs never sell these assets and they continue to gain value (as they almost certainly will), heirs can borrow against them to pay living expenses and then pass them on to their heirs, who won’t pay capital gains taxes either. Put this together with the unprecedented transfer of generational wealth about to occur, from rich boomer to their millennial children, and America’s oligarchy will become thoroughly entrenched in a small group of people who exercise all the power that comes with great wealth but have never worked a day in their lives.

Biden proposes simply to repeal the “stepped-up-basis-at-death” loophole. The value of assets would not be “stepped up” to their market value at the time of death. Their increased value would be subject to capital gains taxes as if they’d been sold before death.

Either of these tax reforms would be significant, and they fit nicely together. But if I were betting, I’d bet on the latter because Second President Manchin has sounded less enthusiastic about the first.

One thing we’ve all learned over the past fourteen months is not to rely on Manchin or on anything he says or commits to, so I’m not holding my breath. But if Manchin gives the green light, and Biden and the Democrats pull this off, it will be an historic rebirth of Teddy Roosevelt’s movement against dynastic wealth — perhaps Biden’s biggest single accomplishment. Taxing big wealth is necessary if we’re ever to get our democracy back and make our economy work for everyone rather than a privileged few.

Open Your Wallet, Rich Dude!!!

It’s no secret that I have very little use or respect for the ultra-wealthy.  Many rose to the top by climbing on the backs of the rest of us, while others were born with the proverbial ‘silver spoon’ in their mouth.  For the most part, those who have millions or billions in their investment portfolio look down on the rest of us and laugh, unwilling to share their wealth, uncaring whether we live or die.  For his 2023 budget, President Biden has included a serious tax on the ultra-wealthy and while I applaud it, I say it should be more, should cover every person who has more than six figures of net worth.  But who am I?  I’m not wealthy, never wanted to be.  To cut to the chase here … Robert Reich has written his thoughts on the proposal to raise taxes on the rich and he is far more knowledgeable than I, so I shall turn the floor over to him.


Really? A billionaire tax? Now? Are you kidding me?

Why it’s still a real possibility

Robert Reich

29 March 2022

President Biden’s budget, which came out yesterday, proposes a new minimum tax of 20 percent on households worth more than $100 million — which the White House says will reduce federal budget deficits by $1 trillion over a decade. The tax would apply only to the top 0.01 percent — the richest 1 percent of the richest 1 percent. Half of the expected $1 trillion in revenue would come from 704 households worth $1 billion or more.

If enacted, it would effectively prevent the wealthiest sliver of America from paying lower rates than middle-class families, while helping to generate revenues to fuel Biden’s domestic ambitions and keep the deficit in check relative to the U.S. economy.

Recall that America’s 704 billionaires have increased their wealth by $1.7 trillion since the start of the pandemic in February 2020, while most Americans have struggled to make ends meet. That means the billionaires could theoretically pay for everything Joe Biden and House Democrats have proposed — from childcare to climate measures — and still be as wealthy as they were at the start of the pandemic. Elon Musk’s pandemic gains, for example, could cover the cost of tuition for 5.5 million community college students and feed 29 million low-income public-school kids, while still leaving Musk richer than he was before Covid.

The dirty little secret is the ultra-rich don’t live off their paychecks. They live off their stock portfolios. Jeff Bezos’s salary from Amazon was $81,840 in 2020 yet he rakes in some $149,353 every minute from the soaring value of his Amazon stocks, which is how he affords five mansions, including one in Washington DC with 25 bathrooms. (Why would anyone want 25 bathrooms?)

So if you want to tax billionaires, you have to go after their wealth.

But does Biden’s plan have a snowball’s chance of getting this enacted in the hell called Washington? The problem is the old political chicken-and-egg: A big reason why the super-wealthy have done so well is they’ve bankrolled politicians who alter laws (such as tax laws) to give them even more wealth. They’ve bought armies of lobbyists to keep their taxes minuscule and create tax loopholes large enough to drive their Lamborghinis through.

ProPublica’s bombshell report last June showing America’s super-wealthy paying little or nothing in taxes revealed not only their humongous wealth but also how they’ve parlayed that wealth into political power to shrink their taxes. Jeff Bezos, the richest man in America, reportedly paid no federal income taxes in 2007 and 2011. Elon Musk, the second richest, paid none in 2018. Warren Buffett, often ranking number 3, paid a tax rate of 0.1 percent between 2014 and 2018.

All previous efforts to tax America’s super-rich have failed amid major political head winds. Republican senators obviously won’t bite the billionaire hands that feed them, and so – yet again – Biden needs every Democratic senator’s vote. But why would any sane person who has followed politics over the last year suppose that Joe Manchin and Kyrsten Sinema will go along? Haven’t we been here before?

Yes, except that for months now Manchin has been on the receiving end of unremitting horse dung — not just from progressives but from establishment Democrats who accuse him of torpedoing any chance Biden and the Democrats have of retaining control over Congress after the midterms. Manchin has also been criticized by the mainstream press for taking big money from coal interests and then voting down climate measures (see yesterday’s New York Times front page feature story, here). In other words, Manchin badly needs some cred.

Manchin has also expressed concern about the size of the federal budget deficit. And in December, he told the White House he would support some version of a tax targeting billionaire wealth.

What really convinces me Biden’s billionaire tax stands a chance is that I doubt the White House would risk another big public loss to Manchin. After getting all hell beat out of them for building public expectations of passing Build Back Better, only to have Manchin kill it, Biden and his staff would not propose another big initiative unless Manchin had already given it the green light.

What about Sinema? She’ll go along with whatever Manchin ultimately votes for.

So a billionaire tax is by no means a dead. Even in this disappointing year, I’m staying hopeful.

We The People Are Losing Our Voice

When I read this newsletter from Robert Reich this morning, my jaw dropped.  Sure, I knew that capitalism has run amok in recent years and that We the People seem to have no value to many of our elected officials, but … even I wasn’t aware to what degree our best interests have been subjugated.  I hope you’ll take a couple of minutes to read and ponder Mr. Reich’s words …


Why isn’t corporate America behind the pro-democracy movement?

Time for the biggest companies to step up and protect what’s left of it

Robert Reich, 14 January 2022

Capitalism and democracy are compatible only if democracy is in the driver’s seat.

That’s why I took some comfort just after the attack on the Capitol when many big corporations solemnly pledged they’d no longer finance the campaigns of the 147 lawmakers who voted to overturn the election results.

Well, those days are over. Turns out they were over the moment the public stopped paying attention.

A report published last week by Citizens for Responsibility and Ethics in Washington shows that over the last year, 717 companies and industry groups have donated more than $18 million to 143 of those seditious lawmakers. Businesses that pledged to stop or pause their donations have given nearly $2.4 million directly to their campaigns or leadership political action committees.

But there’s a deeper issue here. The whole question of whether corporations do or don’t bankroll the seditionist caucus is a distraction from a much larger problem.

The tsunami of money now flowing from corporations into the swamp of American politics is larger than ever. And this money – bankrolling almost all politicians and financing attacks on their opponents – is undermining American democracy as much as did the 147 seditionist members of Congress. Maybe more.

Democratic senator Kyrsten Sinema — whose vocal opposition to any change in the filibuster is on the verge of dooming voting rights — received almost $2 million in campaign donations in 2021 despite not being up for re-election until 2024. Most of it came from corporate donors outside Arizona, some of which have a history of donating largely to Republicans.

Has the money influenced Sinema? You decide: Besides sandbagging voting rights, she voted down the $15 minimum wage increase, opposed tax increases on corporations and the wealthy, and stalled on drug price reform — policies supported by a majority of Democratic Senators as well as a majority of Arizonans. 

Over the last four decades, corporate PAC spending on congressional elections has more than quadrupled, even adjusting for inflation.

Labor unions no longer provide a counterweight. Forty years ago, union PACs contributed about as much as corporate PACs. Now, corporations are outspending labor by more than three to one

According to a landmark study published in 2014 by Princeton professor Martin Gilens and Northwestern professor Benjamin Page, the preferences of the typical American have no influence at all on legislation emerging from Congress.

Gilens and Page analyzed 1,799 policy issues in detail, determining the relative influence on them of economic elites, business groups, mass-based interest groups, and average citizens. Their conclusion: “The preferences of the average American appear to have only a miniscule, near-zero, statistically non-significant impact upon public policy.” Lawmakers mainly listen to the policy demands of big business and wealthy individuals – those with the most lobbying prowess and deepest pockets to bankroll campaigns and promote their views.

It’s likely far worse now. Gilens and Page’s data came from the period 1981 to 2002 – before the Supreme Court opened the floodgates to big money in the Citizens United case, prior to SuperPACs, before “dark money,” and before the Wall Street bailout.

The corporate return on this mountain of money has been significant. Over the last forty years, corporate tax rates have plunged. Regulatory protections for consumers, workers, and the environment have been defanged. Antitrust has become so ineffectual that many big corporations face little or no competition.

Corporations have fought off safety nets and public investments that are common in other advanced nations (most recently, “Build Back Better”). They’ve attacked labor laws — reducing the portion of private-sector workers belonging to a union from a third forty years ago, to just over 6 percent now.  

They’ve collected hundreds of billions in federal subsidies, bailouts, loan guarantees, and sole-source contracts. Corporate welfare for Big Pharma, Big Oil, Big Tech, Big Ag, the largest military contractors and biggest banks now dwarfs the amount of welfare for people.

The profits of big corporations just reached a 70-year high, even during a pandemic. The ratio of CEO pay in large companies to average workers has ballooned from 20-to-1 in the 1960s, to 320-to-1 now.

Meanwhile, most Americans are going nowhere. The typical worker’s wage is only a bit higher today than it was forty years ago, when adjusted for inflation.

But the biggest casualty is the public’s trust in democracy.

In 1964, just 29 percent of voters believed that government was “run by a few big interests looking out for themselves.” By 2013, 79 percent of Americans believed it.

Corporate donations to seditious lawmakers are nothing compared to this forty-year record of corporate sedition.

A large portion of the American public has become so frustrated and cynical about democracy they are willing to believe blatant lies of a self-described strongman, and willing to support a political party that no longer believes in democracy.

As I said at the outset, capitalism is compatible with democracy only if democracy is in the driver’s seat. But the absence of democracy doesn’t strengthen capitalism. It fuels despotism.

Despotism is bad for capitalism. Despots don’t respect property rights. They don’t honor the rule of law. They are arbitrary and unpredictable. All of this harms the owners of capital. Despotism also invites civil strife and conflict, which destabilize a society and an economy.

My message to every CEO in America: You need democracy, but you’re actively undermining it.

It’s time for you to join the pro-democracy movement. Get solidly behind voting rights. Actively lobby for the Freedom to Vote Act and the John Lewis Voting Rights Advancement Act.

Use your lopsidedly large power in American democracy to protect American democracy — and do it soon. Otherwise, we may lose what’s left of it.

I Just Don’t Get It 🤷

Perhaps I’m a bit simple-minded these days, but I’m really confused over something and I’m hoping someone can make sense of this for me.  The issue?  Why is it that the United States Congress can pass, relatively without argument, a bill that allocates $768 billion for a single year to the military, in large part to purchase more tanks, guns, and nuclear weapons … hardware made with the sole purpose of killing humans … but they cannot pass a bill that would help people who are struggling to keep a roof over their heads and food on the table?

To be clear, here is a summary of the major points in the Build Back Better bill (aka BBB) that congressional Republicans are determined to send to its grave:

  • Universal preschool for children
  • Free community college
  • Lower prescription drug costs
  • Tax cuts for families with children and childcare support
  • 12 weeks of paid family leave
  • Housing investments
  • Tax cuts for electric vehicles and other climate incentives

The cost of the Build Back Better bill is $150 billion per year … just under 20% of the cost of the recently passed defense bill.  Build Back Better helps people … people who need the help whether due to the pandemic or other circumstances beyond their control, whereas the defense bill largely helps arms manufacturers.  The refusal of Republicans in Congress to even consider the BBB at this time is a huge hypocrisy and in my view is further proof, as if any were needed, that Republicans largely do not give a royal damn about the average person in this nation, including their own voters.  Their fortunes and therefore their votes are tied to the wealthy corporations and groups like the NRA, arms manufacturers, and fossil fuel industry and to hell with John Doe!

And on another, but related note, why in the Sam Hell are both of the voting rights bills stagnating somewhere in the Capitol, unlikely to see the light of day?  With nearly every state in the nation passing draconian laws that will make it harder for the average citizen to vote and damn near impossible for many who are not white middle-class males to vote, it is not rocket science to figure out that the federal government needs to step in and protect the most important right granted to We the People under the U.S. Constitution!

The two voting rights bills, the John Lewis Voting Rights Advancement Act, and the Freedom to Vote Act, are being held up by not only every Republican senator, but two Democratic senators, Joe Manchin of West Virginia and Kyrsten Sinema of Arizona.  These 52 unconscionable people either do not understand the meaning of a democracy or else are determined to undermine the very foundation of our nation and turn it into a banana republic, an illegitimate dictatorship.

The Republicans in Congress are not in the least bit bothered by spending nearly a trillion dollars of OUR hard-earned tax dollars to build more killing machinery, yet they will not lift so much as a pen to protect our rights, our very lives.  I sincerely hope that the majority of Republican senators and representatives currently sitting in Congress are voted out of office next November for they do NOT represent the people of this country!

The Filibuster, Explained

Many … perhaps most … do not quite understand what is meant by ‘filibuster’. Our friend Jeff’s post will clarify what, exactly, the filibuster is, its origins, and how it has most often been used. Thanks, Jeff!

On The Fence Voters

There’s been much debate in recent years about the efficacy of the filibuster. The Republican Party has used the arcane process to block specific meaningful legislation that would have been beneficial to millions of Americans. To be clear, Democrats have also used the filibuster; blocking judges or presidential appointees, for example.

But it’s time to take a look at what the filibuster is, what are its origins, and what important legislation it has stopped from becoming law. A couple of things stand out. For one, there is nothing in the U.S. Constitution that mentions anything about the filibuster. It’s simply a Senate rule that’s been in place for nearly 200 years. Secondly, the process was born out of pure unadulterated racism — a mechanism that allowed the despicable practice of slavery to continue being used, mostly by wealthy white land owners in the South.

To take a deeper dive into…

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