Raise Our Taxes: RG’s Tax Justice Platform
Taxes are the best way we have of turning private wealth into public good. In the absence of strong, progressive federal taxes, many wealthy people are giving large portions of our wealth away to grassroots social justice movements. But we know that we need change on a scale much greater than what we can achieve as individuals or even foundations, and that taxes can also help redistribute power.
Fighting for higher taxes on ourselves and our families is one way we can structurally ensure wealth does not stay concentrated in the hands of the few. By fighting for more money to be invested in the public good, we are contributing to movements for racial and economic justice that have been leading struggles over how our public resources are spent.
10 TAXES FOR RACIAL AND ECONOMIC JUSTICE*
1.) TAX WEALTH LIKE WORK. Eliminate the Tax Preference for Capital Gains and Dividends. Capital gains are the profit made from selling things like stocks, bonds, mutual funds, and homes. They are currently taxed far below income made from actual work. In 2012, the top 1% took home 71% of all capital gains.[i] These gains are also highly racialized. “Investment income earned from wealth holdings flows disproportionately to Whites and to wealthy Whites in particular. This tax would raise $533 billion in revenue over 10 years.
2.) CLOSE THE “CARRIED-INTEREST” LOOPHOLE. The “carried-interest” loophole legally allows certain types of money managers (private equity and hedge fund managers) to pay the lower capital gains tax rate on income that is actually attained from work. Eliminating this loophole would raise $21.4 billion over 9 years.
3.) ENACT A MORE PROGRESSIVE ESTATE TAX. The estate tax is a tax on the transfer of assets at death (inherited wealth). It applies only to very large accumulated fortunes—an individual may currently pass $5.12 million on without paying any taxes. White families are 11 times more likely than Black and Latino families to have enough wealth to owe any estate tax at all. We should change the estate tax so that taxes are paid on any inheritance over $1 million, with a tax rate that increases the larger the estate is. This would raise more than $500 billion over 10 years.
4.) CREATE A FINANCIAL TRANSACTIONS OR “ROBIN HOOD” TAX. The past 40 years have been marked by a huge increase in speculative and high-frequency trading, which is part of what just crashed the economy. Thousands of transactions happen every second via computer algorithms. A Financial Transactions, or “Robin Hood” Tax would target Wall Street, big banks, and investment firms, and levy a tax of 0.005% – 0.5% on each trade. This tax could generate up to $350 billion a year, and would also serve to discourage high-frequency trading.
5.) END OVERSEAS TAX HAVENS. Offshore tax havens — which are often just mailboxes in another country used to claim that profits were made there–provide cover for banks, hedge funds and corporations to shift taxable income from the United States for the sole purpose of escaping taxation. An estimated $100 billion in tax revenue is lost this way each year.
6.) IMPLEMENT A CARBON TAX. Taxing corporations for carbon emissions and other activities that contribute to air and water pollution could drastically reduce emissions and raise over $2 trillion (yes, trillion) in 8 years. In order for this tax to be applied in ways that don’t continue the practice of placing high polluting industries in poor communities and communities of color, corporations must not be allowed to claim offsets, which would allow them to pollute heavily in one place as long as they reduce pollution in another.
7.) SUBSTANTIALLY RAISE OR ELIMINATE THE CAP ON SOCIAL SECURITY PAYROLL TAX. Workers only pay social security payroll taxes on wages up to $111,000. Because of this cap, earners who make more than that are finished contributing to social security much earlier in the year than other workers. Eliminating the cap on taxable wages would close the program’s long-term funding shortfall.
8.) CREATE ADDITIONAL TAX BRACKETS. All single people earning more than $400,000 dollars a year, and all joint filers earning more than $450,000 a year, are paying the same marginal tax rate (39.6%). One proposal, The Fairness in Taxation Act of 2011, would create five tax brackets for those earning over $1 million a year, to be taxed at rates of 45-49%, respectively, which could raise more than $78 billion dollars a year.
9.) CREATE A NET WEALTH TAX. A “net wealth tax” can be levied on individual or household assets including real estate, cash, investment funds, savings in insurance and pension plans, and personal trusts to tax wealth above a certain level. For example, France’s solidarity tax on wealth is for those who have assets in excess of $1.1 million. Since wealth disparity by race is even greater than income disparity, a tax like this could significantly reduce racial inequality.
10.) APPLY A “TOO BIG TO FAIL FEE ON THE LARGEST FINANCIAL INSTITUTIONS. This tax could help recoup taxpayer losses associated with recent bank bailouts and to offset the cost of future bailouts. The White House has proposed a levy on the liabilities of financial firms with more than $50 billion in assets. While this is no substitute for taxing financial transactions, it would help recover at least a small share of the costs of the crisis and raise approximately $9 billion.
*This list was developed in 2013. For the latest progressive thinking on taxes and public money, check out the Economic Policy Institute, the Institue for Policy Studies, Center on Budget and Policy Priorities (and tons of other rad organizations are out there doing great work on tax justice). Or email us below with suggestions for resources that should be added to our website!