May 23, 2014

Two Sets of Rules in Washington: Remarks by ATF’s Frank Clemente at New Populism Conference

ATF's Frank Clemente at the New Populism ConferenceAmericans for Tax Fairness’ Executive Director Frank Clemente delivered the following remarks at the Campaign for America’s Future’s New Populism Conference in Washington, DC, on May 22, 2014.


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“For too long the conventional wisdom in Washington has been that the country is broke. Congress has slashed spending on government services in order to reduce the deficit — despite the fact that these cuts have slowed our recovery from the worst economic crisis since the Great Depression.

I’m here to tell you, we ain’t broke. We’ve been robbed.

For months, conservatives in Congress have blocked an extension of unemployment insurance benefits because at first it wasn’t paid for. They stonewalled. They said it would increase the deficit by $10 billion. But just two weeks ago the House of Representatives passed a corporate tax break that would add $150 billion to the deficit over 10 years.

In other words, there are two sets of rules and two sets of books in Washington. One is for tax breaks and tax loopholes for the rich and for corporations. The other is for the rest of us.

The right-wing has convinced many Americans that the cause of the deficit is overly generous spending on welfare programs and overpaid government bureaucrats.

They didn’t object to the trillions spent on wars in Iraq and Afghanistan. They demanded the trillion dollar tax break for the top 1% under the Bush tax cuts. And each year House Republicans rubber stamp Paul Ryan’s budget. It would lose trillions more by slashing the tax rates paid by the rich and corporations by one-third.

Hasn’t enough damage been done already?

We already raise $500 billion less than it costs us to run the government each year. $500 billion is the entire amount the government spends on all domestic discretionary programs. That’s aid to schools, college grants and loans, medical research, transportation, environmental protection, food safety, homeland security, housing, energy programs and NASA. It’s Big Bird and the Weather Channel, too. The list goes on and on.

And that $500 billion shortfall is before the bulk of the baby boom generation retires, when the gap grows even more. It’s before we close the Social Security funding gap. It’s before we make investments needed to rebuild our infrastructure, provide universal pre-K, accelerate medical research, develop new clean sources of energy and more.

We’re not going to cut our way to prosperity.

We need to stop the hundreds of billions of dollars that we are hemorrhaging every year because some big corporations and the rich refuse to pay their fair share in taxes.

Take General Electric. It made $28 billion in profits over five years. GE received federal tax refunds worth $3 billion over the same period. Twenty-five other profitable Fortune 500 corporations paid NO federal income taxes in those years, according to our friends at Citizens for Tax Justice. That means you paid more in taxes in one year, than all of these companies paid over five years.

I tell you, we ain’t broke — we’ve been robbed.

Apple Computer, Google and other high tech companies create shell subsidiaries in offshore tax havens so they can claim that their profits weren’t made in the United States. Apple is so good at this game that it avoided paying taxes to any government on $74 billion in offshore profits it made in recent years.

We ain’t broke — we’ve been robbed.

Corporations once paid one-third of the federal taxes that helped make our government strong. That was back in the day when they were very productive, made a fat profit AND they paid their workers a decent wage. Now, corporate profits are through the roof. Workers’ wages are stagnant. But corporations pay just 1 out of every 10 dollars the government raises.

We ain’t broke — we’ve been robbed.

Corporations get large tax deductions for paying their executives with stock options and other bonuses. These bonuses incentivize CEOs to take wild bets with their corporations’ money. But you and I are subsidizing this CEO loophole at a cost of $50 billion.

We ain’t broke — we’ve been robbed.

Billionaires and millionaires are paying lower effective tax rates than secretaries and school teachers. That’s because the tax rate on income generated from the investments of the wealthy is lower than the tax rate on many middle class workers’ wages.

We ain’t broke — we’ve been robbed.

America’s richest families — like the Waltons who own more than half of Walmart AND casino mogul Sheldon Adelson — are exploiting a new tax loophole that virtually guarantees that they will pay little if any tax on the billion dollar estates they pass onto their heirs.

One last time: We ain’t broke — we’ve been robbed.

The good news is the American people feel the same anger that you do when you hear about these tax cheats. People know deep in their hearts that it is not fair.

For decades, conservatives have bludgeoned progressives with the tax issue. They convinced many Americans that their tax dollars were being wasted. They misled people into believing that the country was hemorrhaging money on food stamps and international aid.

Over the decades, too many progressives were in a defensive crouch on taxes. It was considered a topic better not discussed. Many politicians cowered for fear of losing their next election.

Well, I am here to tell you that everything has changed. America has changed.

For decades, conservatives’ number one proposal to create jobs and grow the economy has been the same — cut taxes for corporations and the rich. They argue that cutting taxes on the rich would allow wealth to “trickle down” to everyone else. They claim that cutting taxes on corporations will create lots of jobs.

For them, there is no problem for which “cutting taxes on the rich and corporations” is not the solution.

But a battery of polls by Hart Research Associates shows that the public overwhelmingly rejects that logic. Americans are fed up.

When voters were asked to choose their top priorities among eight different progressive policy planks, one item towered above the others: Ask the wealthy and corporations to pay their fair share of taxes. It was selected by 44%. The next closest issue — retirement security — got 25% support.

Three-quarters (73%) of swing voters prefer a Democrat who favors asking the wealthy and corporations to pay their fair share of taxes over a Republican who opposes raising taxes on anyone (27%).

And two-thirds (64%) of swing voters believe that having the wealthy and big corporations pay their fair share of taxes would help them PERSONALLY.

“One Hart Research poll found that 65% of voters would have a “serious” concern about the fact that “nearly every Republican in Congress has signed an [irresponsible] pledge promising that they will never vote to raise even one penny of revenue by closing tax loopholes for the wealthy and big corporations.”

That Grover Norquist pledge is the very core of conservative ideology. Yet, voters roundly repudiate it.

Tax fairness is not a partisan issue. Polling shows that people across the political spectrum want common sense measures to make our system fairer. Men want tax fairness. Women want tax fairness. Republicans, Democrats, Independents and Tea Partiers want it. College educated and non-college educated people want it.

In short, the world as we have known it for many years has been turned on its head.

Conservative policies to cut taxes on the rich and corporations are a liability.

Progressive proposals to require corporations and the very wealthy to pay their fair share of taxes are an enormous asset.

That’s because the public knows the tax system is stacked against them. They know that the rich and corporations are paying lobbyists and giving campaign contributions to politicians to rewrite the tax code in their favor.

The American public is with us. We need to get with the American public.

In his 2012 campaign, Barack Obama showed that one could actually win a presidential election while being a troubadour for tax hikes on the rich.

As President, his budgets have proposed raising an additional trillion dollars over 10 years from the richest 2 percent of Americans. He has called for closing corporate tax loopholes in order to help provide funding for rebuilding our roads and bridges.

U.S. Senate Democratic leaders have also pushed for a budget that raises at least $1 trillion by eliminating tax breaks for the rich and closing tax loopholes on corporations.

Over in the House, Representatives Keith Ellison, Raul Grijalva, Jan Schakowsky and the rest of the Congressional Progressive Caucus have made fair taxes a centerpiece of their Better Off Budget. They are leaders on this issue.

Taken together, these legislative initiatives serve as our guide for a progressive approach to fair taxation. For starters we should:

  • Eliminate huge tax breaks for corporations that ship profits and jobs offshore.
  • Close tax loopholes so that corporations on Wall Street pay their fair share like small businesses do on Main Street.
  • Tax income from stocks and other investments at the same rate as salaries and wages.
  • Restore a meaningful estate tax to help limit creation of financial dynasties passed from one generation to the next.
  • Assess a very small Wall Street sales tax on financial trades.
  • End tax breaks that subsidize CEO bonuses.

We know that Americans deeply want an economy that works for everyone — not just for the privileged few. Yet we are living in a new Gilded Age. As Robert Reich recently noted, we are moving toward an “oligarchy of inherited wealth, and away from a meritocracy based on labor income.”

Our tax system has helped usher in this Gilded Age. It has created a new system of haves and have-nots — those who can afford to game the system and those who can’t.

To combat income inequality and to create a more equitable America with an economy that actually does work for everyone, we need to make tax fairness central to our mission.

Without a fair tax system, the rich will keep getting richer and the rest of us will keep treading water — if not sink.

Without a fair tax system, we cannot generate the revenue needed to invest in our schools, make college more affordable, find new medical cures, care for our elderly and less fortunate, and rebuild our roads and bridges.

The choice is clear…

  • Modernize our crumbling transportation system, rather than give tax breaks to companies that send jobs offshore.
  • Provide benefits for the long-term unemployed, rather than give corporations tax subsidies for their CEO bonuses.
  • Fund research on sustainable energy sources, rather than give billions in tax breaks to oil and gas companies.
  • Make pre-K education available to all Americans, rather than continue billionaire loopholes in the estate tax.

We know where the American public stands. We need to make sure our elected leaders stand with them. Progressives need to lead. The time is now. Thank you.”