The Campaign for Progressive Taxation

Original Link: http://www.workerscompass.org/robertson_07-07-2010.html

By Ann Robertson

On June 28, 2010, the San Francisco Labor Council sponsored a forum on progressive taxation featuring three prominent speakers: Marty Hittelman, President of the California Federation of Teachers, Sarah Flocks, Policy Coordinator at the California Labor Federation, and Conny Ford, President of Office and Professional Employees International Union, Local 3 and Vice President of the San Francisco Labor Council. The following article constituted the basis for more abbreviated introductory comments by Ann Robertson, who chaired the meeting and is a delegate to the Labor Council from the California Faculty Association.

Virtually every major newspaper in the country has reported that working people are angry: They are angry at the government’s bailout of the bankers who recklessly drove the economy off the cliff, which amounted to rewarding bad behavior.

And they are angry because, although working people did nothing to create this economic crisis, we, and not the bankers, are being handed the bill, not only through our tax dollars that paid for the bailout, but through the devastation that has wracked our lives through loss of our jobs, our homes, our health care — all directly the result of the economic crisis.

The suffering has been intense.

2.5 million Americans have lost their homes to foreclosures, which continue to rise. And according to an AFL-CIO blog, 43 percent of us have been forced to take a pay cut; 38 percent of us, or someone close to us, has lost a job, and 27 percent have lost health care coverage. (AFL-CIO blog, June 7, 2010).

As we know first hand, the devastation in California has been particularly intense.

In California the official unemployment rate is 12.4 percent, but if one factors in those who are involuntarily working part-time and include discouraged workers, then the real unemployment rate is over 20 percent.

The unions have predicted that 36,000 teachers will be laid off this coming year in California. (PBS NewsHour, June 3, 2010).

It was recently reported that the government has been going after the pensions of state workers. Thus far, four unions have made concessions, meaning the state of California will cut its contribution to their pension funds while workers in some cases will have to pay double the amount into their retirement fund than they paid before. (The New York Times, June 19, 2010). The same is happening in many other states.

The California State University Trustees just raised student fees 5 percent and will likely raise them another 5 percent before the end of the year. These raises have come on the heels of a 30 percent raise last year, which in turn followed years of creeping increases.

And here in San Francisco, as many of you know, our schools are facing $113 million budget shortfall, meaning virtually all school programs will be cut to one degree or another. 200 teachers and administrators were laid off this spring. And teachers will be forced to take unpaid furloughs next year, resulting in a cut in their pay and a shortened school year. (San Francisco Chronicle, June 21, 2010).

350 San Francisco city workers were recently laid off, and this has come after 3 years of steady job elimination because of the recession so that our social services have been dramatically cut back.

Labor unions here in SF were just pressured into giving up nearly $300 million in concessions over the next 2 years, and we will pay higher fees for city services. (San Francisco Chronicle, June 3, 2010).

In light of all this palpable suffering, one wonders what the federal government is doing to alleviate the misery. Unfortunately, after enthusiastically embracing the bailout for the banks, the Obama administration has suddenly became worried about the rising deficit and is saying it cannot afford any more major bailouts.

But in direct contradiction to the government’s unwillingness to rescue working people, the labor movement is increasingly stepping up and taking the position that money is available not only for reducing the deficit but for putting people back to work through a massive public jobs program and for saving our social services.

But in order to understand the logic underlying labor’s proposals, it is important to realize that some people are doing fabulously well in the current period. In fact they are doing better than ever before. For example, in the late 19th century, the income of John D. Rockefeller, the richest person at that time was 7000 times the average income of workers. But today the highest income, which went to a hedge fund manager, was 38,000 times the average income. (The New York Times, Paul Krugman, April 27, 2007).

In 1970 the top CEOs made 40 times the salary of the average worker. In 2003 they made 1000 times as much as the average worker. Income inequality has been spiraling out of control in this country during the past four decades, and it continues to get worse.

And even though their income is at an all-time high, the taxes of the wealthiest Americans are at an all-time low: “Taxation has become much less progressive: according to estimates by the economists Thomas Piketty and Emmanuel Saez, average tax rates on the richest 0.01 percent of Americans have been cut in half since 1970, while taxes on the middle class have risen.” (Krugman, ibid.).

To his credit, Warren Buffet has criticized our tax rates because he is only taxed at a rate of 17.7 percent on his $46 million income while his secretary has to pay taxes at a rate of 30 percent. (Dorothy Brown, The New York Times, March 8, 2009).

Moreover, between 1998 and 2005, two out of every three corporations in the U.S. paid absolutely no taxes. (The New York Times, August 12, 2008).

According to the National Education Association, “…the richest Americans pay about $5 for every $100 of their income in state and local taxes. The poorest pay about $11. Also the share of taxes paid by corporations as a percentage of their profits has declined 50 percent over the last 20 years.”

Because the income of the rich is at an all time high while their taxes are lower than those of working people, different sectors within the labor movement have been stepping forward and proposing to create jobs, save public education and save social services by raising taxes on the rich and closing the tax loopholes that have allowed corporations often to avoid paying taxes altogether.

For example, the California Teachers Associaton announced in its publication, California Educator, May 2010, “CTA has collected enough signatures to qualify the Repeal Corporate Tax Loopholes initiative for the November ballot. However, legislators can and should take care of this injustice before November as part of the budget solution.”

In its April 2010 publication, Advocate, NEA reported that it has organized a campaign, called TEF (Taxes, Economic development, and Funding for schools) to address its finding that on the state and local level, the poor pay taxes at more than twice the rate as the rich. It is demanding that taxes be raised on the rich and on the corporations.

Meanwhile, the California Federation of Teachers, after enumerating the devastating cuts to the University of California, the California State University system, and the community colleges, argued:

Wealth has been massively redistributed in California and the nation over the past three decades — in the wrong direction. The top one percent of the economic pyramid own thirty-four percent of the wealth. The very richest people are paying less in taxes and keeping more money for themselves. Their luxury consumption and lower tax rates equal the neglect and decline of our public services.

So the CFT is also calling for higher taxes on the rich and closing corporate tax loopholes.

The California Faculty Association that covers faculty in the California State University system has been promoting an oil severance tax, meaning that the oil companies will have to pay a tax whenever they remove oil from the ground.

Finally, Richard Trumka, President of the AFL-CIO, has called on the government to create a massive public jobs program that would employ 10 million people while taxing Wall Street to pay for it.

Aside from the fact that it is morally offensive to skew the tax structure so that the rich pay taxes at a lower rate than working people, the proposals coming from the labor movement make good economic sense in several respects:

70 percent of the U.S. economy depends on consumption. Yet during the past four decades with the income of working people falling, our ability to engage in consumption has declined accordingly. The economy cannot thrive when most people cannot afford to buy the things they need.

But even more than this: economists have argued that one of the best ways to stimulate the economy is by investing in education. In this way citizens can acquire the skills that they need in order to become highly productive workers.
And a massive public jobs program that would put people back to work while being funded by Wall Street would reduce the deficit because their salaries would be taxed and they would no longer be collecting unemployment.
So the proposals coming from the labor movement are sound economic proposals that will have the force of lifting us out of the recession and raising the standard of living of working people.

And so the battle lines have been drawn. On one side stand the vast majority of the population, working people and the poor, who want to see those who are unemployed put back to work, they want quality affordable education for themselves and their children, and they want quality social services provided to them by their government. On the other side stand a fabulously rich minority who are tenaciously holding on to their wealth while fighting for an even greater share of society’s wealth.

It is important to realize that there are strong grounds for hope. The unions in Oregon just fought the corporations and won. They succeeded in passing two ballot initiatives, one that increased the tax rate on the rich and the other that eliminated some corporate tax loopholes. Also, here in California, Pacific Gas & Electric (PG&E) just spent $50 million in order to pass a measure that would have subverted the will of the majority of voters by requiring a two-thirds vote for a city to municipalize its energy. Yet PG&E lost, which goes to show that money does not always trump democracy. And finally, according to a recent Bloomberg National Poll, two-thirds of Americans support raising taxes on the rich in order to reduce the deficit and they “want their government to create jobs through spending on public works, investments in alternative energy or skills training for the jobless … and most are ready to hand the bill to the wealthy.”

On March 15, 2010, the San Francisco Labor Council passed a resolution calling for the building of a coalition among labor unions, community groups, and interested individuals to mount a campaign to save public education and social services through progressive taxation. This forum is a first step in the direction of implementing this resolution. Today we have brought together representatives from different sectors of the union movement to begin to unify our ranks in order to build a powerful movement.

Raising taxes on corporations and the rich is the moral thing to do. It is what the majority of people want. And it makes good economic sense. We can win this campaign.