New York Times: THE DEMOCRATS’ BEST CHOICES FOR PRESIDENT

What a Bernie Sanders Presidency Would Look Like

For a complementary perspective, read the alternate cover feature, What an Elizabeth Warren Presidency Would Look Like, by Kathleen Geier.

WE HAVE A DECADE TO TRANSFORM THE U.S. ECONOMY TO STAVE OFF CLIMATE CATASTROPHE, and Bernie Sanders has the only agenda to do so and the only mobilization strategy to get it done. No plan for a better future is worthwhile if environmental crisis renders our future unimaginably bleak.

As Naomi Klein notes, this planetary emergency “entered mainstream consciousness” in the 1980s as the Right and big business launched an “ideological war … on the very idea of the collective sphere.” To take the collective action needed to phase out fossil fuels, our next president must build a foreign policy of radical cooperation alongside a new domestic politics of inclusion—or else witness a racist, nationalist, far-right politics expand its divisive power.

Sanders is the only presidential candidate who has put forward a genuine Green New Deal, a plan to radically remake the economy to serve ordinary people rather than just “greening” the economic system that threatens to end human society as we know it. His Green New Deal would dismantle the fossil fuel industry and put a renewable energy system under democratic control, working with governments around the world to achieve what the science demands.

Sanders’ proposals go beyond piecemeal liberal solutions by targeting the unjust economic system that fuels climate change and pushing an agenda that simultaneously empowers workers and saves the planet. This agenda would help millions of workers join unions, give workers an ownership stake in major corporations, provide universal healthcare and tuition-free higher education, build millions of affordable homes and protect (rather than target) immigrants.

Though President Sanders could execute parts of this agenda on his own, much of it would require Congress. How could it pass, given Republican extremism and likely pushback from even a Democrat-controlled House and Senate? The question poses a serious problem for any program that meets our challenge. And it is one Sanders is uniquely positioned to solve.

Sanders understands that change at this scale will require mass movements to pressure Congress and every level of government—and to change their composition. Americans isolated and atomized by cutthroat capitalism must engage in massive collective action. His political program isn’t just about policy, then, but about the capacity of ordinary people to participate in democracy. This disruption includes, critically, his plans to facilitate direct participation in decisions from our workplaces to our energy systems, shifting the balance of power in our society. No one contends that Sanders alone will spark, let alone be, a mass movement. The Sanders campaign slogan, “Not Me. Us.,” conveys precisely that. Sanders, as he puts it, is “gonna be organizer-in-chief.”

Sanders’ Green New Deal plan, which builds on the resolution introduced by Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Sen. Ed Markey (D-Mass.), will take massive organization to make a reality. His plan alone among Democratic candidates takes seriously the massive public spending ($16.3 trillion, to be exact, much more than Sen. Elizabeth Warren proposes) needed to reach 100% renewable electricity and transportation by 2030 with full decarbonization by 2050, a reorientation of public priorities (diverting $1.215 trillion from “military spending on protecting the global oil supply”), the creation of 20 million jobs, and unprecedented levels of public-sector coordination and social mobilization. Sanders is the only candidate who identifies the private ownership of energy as a core problem, calling out the “greed” in our for-profit system, from investor-owned utilities like California’s Pacific Gas and Electric Co. to the fossil fuel companies that collect billions in federal subsidies while contaminating the planet. Saving the planet is impossible without heightening class conflict.

Sanders’ critics who say he would never be able to get much done simply haven’t been paying attention: Sanders’ record of connecting to mass mobilizations and dramatically reshaping public debates sets him apart. Before he ran in 2016, for example, Medicare for All was deemed a pipe dream; now, it’s a center of attention. Unlike Warren, who in her constant equivocation has managed to elicit criticism from all directions, Sanders pledges to introduce Medicare for All legislation during his first week in office. And he has responded to the mainstreaming of Medicare for All by pushing politics in yet more radical directions.

The fight of this generation depends not only on putting forth good policies but on a powerful revival of collective politics. With control of the White House, Sanders and the movements rallied around him could do huge things.

SINCE THE 1970S, American politics has been stunted by neoliberal governance, which invokes “free markets” to protect capital from democratic control and grind down the unions that once checked corporate power. Many came to believe change is impossible, even as capitalism’s costs shifted onto ordinary people and exploited their social bonds to keep the broken system from going off the rails. Young people must borrow for education against their future and their parents’ assets; women can be trapped in abusive relationships because of expensive childcare, low wages and high rents.

Sanders takes neoliberalism’s atomizing points of domination and transforms them into a set of demands for collective freedom, with policies like Medicare for All, free public higher education, universal childcare and pre-K, and the abolition of student and medical debt. These policies would help break the cycle of privatized financial burden and, in doing so, free people to engage in more radicalized struggle.

Sanders’ homes guarantee and Green New Deal for Public Housing, introduced with Ocasio-Cortez, would deliver direct economic benefits while empowering the working class and cutting carbon emissions. Real estate assets, as of 2017, were worth an estimated $228 trillion, “a more valuable asset class than all stocks, shares and securitized debt combined,” according to Savills World Research. As such, they have been a key driver of inequality and household indebtedness. Real estate speculation also, of course, helped spark the global financial crash of 2008.

Building 10 million permanently affordable homes, investing in shared equity homeownership models like community land trusts, enacting nationwide rent control, and upgrading and expanding public housing with local renewable energy would be revolutionary in a country where more than 500,000 people are homeless on any given night, tens of millions pay more than a third or even half their income in rent, and poor people live under the continual threat of eviction. Making housing affordable would make people less urgently dependent on their paychecks. Sanders also pledges to attack the residential segregation and gentrification that consign poor, racialized communities to second-class schools, insecure housing and subpar public services. MORE

RELATED:

What an Elizabeth Warren Presidency Would Look Like

ELIZABETH WARREN: WE NEED A BLUE NEW DEAL FOR OUR OCEANS

Our oceans present an unprecedented opportunity to be a key part of our fight against climate change. Add your name if you agree: we need a Blue New Deal – alongside a Green New Deal – to rebuild our blue economy, protect and restore ocean habitat, and adapt in a climate changed world.


Ocean creatures are moving drastically to escape heating waters.

In September, I attended a CNN town hall on the climate crisis. That night, Bren Smith, an ocean farmer from Connecticut, asked me if I would support a Blue New Deal to restore our oceans, in addition to our efforts to fight climate change on land. I said I would, and I meant it – here’s what I’ll do to rebuild our blue economy, protect and restore ocean habitat, and adapt in a climate changed world.

The world’s oceans are in crisis. Across the planet, more than 90% of global fish stocks are fully exploited or overfished. The ocean has absorbed 93% of the heat trapped by greenhouse gases, warming the waters disrupting migration patternsbleaching coral reefs, and fueling sea level riseAround 30% of the carbon pollution we have pumped into the air has been absorbed in our oceans, leading to ocean acidification, changing the very chemistry of seawater. And pollution from land – whether from manufacturing, agricultural runoff, or plastic waste – is causing dead zones in our waterways and Great Lakes.

Our coasts are flooding and eroding, threatening the 40% of Americans who live in coastal counties. Our safety, public health, food security, and infrastructure are at risk. If we do not act now, things will only get worse, as climate change leads to more severe weather.

I am proud to be one of the original co-sponsors of the Green New Deal, which charts a path to transition to a 100% clean energy future, while rebuilding our economy from the bottom up and creating millions of good paying, union jobs. Environmental justice and economic justice go hand-in-hand, and I am committed to making the climate crisis and the inequality crisis top priorities in my administration.

As we pursue climate justice, we must not lose sight of the 71% of our planet covered by the ocean. While the ocean is severely threatened, it can also be a major part of the climate solution – from providing new sources of clean energy to supporting a new future of ocean farming. That is why I believe that a Blue New Deal must be an essential part of any Green New Deal – helping us fight climate change, protecting our health, and creating good, high-wage union jobs in the process.

REBUILDING OUR BLUE ECONOMY

Oceans already support millions of jobs, underpin our food system and contributes $304 billion to our national GDP. They also have the potential to be one of our strongest tools in the fight against climate change. Three billion people around the world depend on wild-caught and farmed seafood as a major source of protein. Yet decades of overfishing, pollution, and climate impacts have pushed our oceans to the brink of collapse. We know that we can have a highly productive ocean. In fact, ocean-related jobs have grown at three times the rate of the national average. It’s time to restore our oceans and harness the potential of the Blue Economy. SOURCE

 

 

Opinion: Kicking Off The First 100 Days Of My Green New Deal

Elizabeth Warren outlines how she’ll begin the Green New Deal in the opening months of her presidency.

Sen. Elizabeth Warren on a campaign stop in West Des Moines in November.  Scott Olson / Getty Images

The point of no return for climate change “is no longer over the horizon,” the UN secretary-general recently warned. “It is in sight and hurtling toward us.” This was a blunt summary of a new report showing that the world is nowhere on track to prevent the worst impacts of the climate crisis.

America needs a president who won’t just recognize the urgency of this crisis, but one who will lead the country toward a clean energy future at the speed and scale that science demands, while also attacking income and racial inequality head-on. We need a Green New Deal — and here are some of the things I will do in the first 100 days as president to achieve it.

On day one, I’ll issue a sweeping executive order rolling back all of Donald Trump’s disastrous pro-fossil fuels policies, banning new fossil fuel leases offshore and on public lands, and committing the United States to rejoin the Paris Climate Accords. During my first 100 days as president, I’ll introduce 100% Clean Energy For America legislation that will set bold and ambitious sector-specific standards to power our economy with clean energy, and create millions of good new union jobs.

And that’s just the beginning. It’s not enough to merely say we need to act, which is why I have put forward the most detailed climate plans of any presidential candidate. After Gov. Jay Inslee called for a full government mobilization to defeat the climate crisis, I took his advice and adopted his vision with a comprehensive plan to complete the transition to clean energy by decarbonizing our electricity, our vehicles, and our buildings by 2030. My plan for green manufacturing would invest in R&D and federal procurement to develop and manufacture the clean energy technology we need right here at home, creating good middle-class manufacturing jobs across our country. My Green Marshall Plan would export those American-manufactured clean energy products around the world.

My plan for climate risk disclosure would hold corporations accountable for their role in worsening the climate crisis, using market forces to accelerate the transition away from dirty fossil fuels. From trade to agriculture to affordable housing, I have woven ideas to fight climate change while rebuilding the middle class throughout my plans — and I’m not done yet.

Some in Washington question the cost of addressing climate change. But the truth is that the cost of inaction is already impacting millions of Americans, with low-income and communities of color being hit first and worst. Wildfires rage in California. Crops are flooded in Iowa. Climate refugees fleeing natural disasters arrive on our southern border. I’ve seen the effects of environmental racism firsthand, in communities like Detroit and Rosemont, South Carolina. My proposals will lift frontline communities and address decades of discrimination and environmental racism — because in a Green New Deal, we will leave no community and no worker behind.

Inaction in Washington continues, even as our communities suffer. What’s more, too many of the proposals being put forward in Washington and in the presidential race lack the ambition and the urgency required. Today we have a government, and an economy, that works great for the rich and powerful, and not very well for the rest of us. Fossil fuel billionaires like the Koch Brothers and big corporations like Exxon Mobil pay hundreds of millions to lobbyists, so-called think tanks and politicians so that they can keep drilling — and they’ve made record profits along the way. For too long, the fossil fuel companies have gotten away with pouring fuel on the fire of the climate crisis. This ends in a Warren administration.

It’s time for politicians to be honest with the American people about what it will take to defeat the climate crisis, because when Americans decide to go all in on solving a problem, there is nothing we can’t achieve together. Just like we mobilized to defeat the Nazis and put a man on the moon, we too can solve the climate crisis. Just like FDR helped create the modern middle class with the New Deal, we too can rebuild the middle class with a Green New Deal that equitably creates millions of good, union jobs. As president, I’ll unite the nation around a national climate effort, and call on everyone to rise to this challenge. We must dream big and fight hard again, and that’s what my campaign is all about.

Our states and our cities have made it clear to our allies that while our current president may not be in the fight, the American people are still in. And outside the halls of the UN’s climate summit, young people around the world continue to strike for their future. They deserve elected leaders who will fight as hard for them as they are fighting for our future. It’s time for the next president to answer their call. It’s time for a Green New Deal. SOURCE

 

Bill Gates, I Implore You to Connect Some Dots

Bloomberg, Dimon and Gates call liberal tax ideas unfair. But excessive wealth is the real threat.


Credit…CJ Gunther/EPA, via Shutterstock

The billionaire class has begun unloading on Elizabeth Warren. A few days ago, Jamie Dimon of J.P. Morgan Chase — at just $1.6 billion in net worth, a comparative piker — said Senator Warren “vilifies successful people.” Then Bill Gates ($107 billion), in an onstage interview with The Times’s Andrew Ross Sorkin, mused about what his tax bill might be in a Warren presidency and left the door open to voting for Donald Trump should Democrats nominate Ms. Warren. And then Michael Bloomberg ($52 billion), who had previously criticized Ms. Warren as anti-corporate, signaled his intention to jump into the race, obviously out of concern at her rise.

I’m not expert enough to judge the wisdom of Senator Warren’s proposed wealth tax. I know that there are questions about its constitutionality and that several European nations tried a similar approach and found it unworkable (though four countries still have it). I don’t get why the candidates aren’t simply proposing to increase marginal income tax rates on dollars earned above some very high figure. That seems a lot more straightforward to me.

So this column is not a brief for Ms. Warren’s wealth tax or for her candidacy — I don’t have a preferred candidate. Instead, I want to make a simple plea to the country’s billionaires: Multibillion-dollar fortunes are often called excessive and decadent. But here’s something they’re rarely called but ought to be: anti-democratic. These fortunes will destroy our democracy.

Why “anti-democratic”? Why would it matter to our democracy whether Jeff Bezos is worth $113 billion (his current figure) or $13 billion?

This is carnage, plain and simple. No democratic society can let that keep happening and expect to stay a democracy. It will produce a middle and working classes with no sense of security, and when people have no sense that the system is providing them with basic security, they’ll make some odd and desperate choices.

This is obviously not hypothetical. It’s happening. It’s what gave us Mr. Trump (well, that plus the campaign lies). It’s what made Britons vote Leave (well, that plus the campaign lies). It’s what has sparked protests from France to Chile to Lebanon, and it’s what is making the Chinese model — no democracy, but plenty of security — more attractive to a number of developing countries around the world than the American model. Our billionaires ought to ponder this.

I imagine that Mr. Gates is repulsed by Mr. Trump on some level, and at the end of the day probably couldn’t vote for him. But if I could meet Mr. Gates, I’d ask him: Sir, do you not see the link between your vast fortune and the ascendance of Donald Trump? If not, I implore you to connect some dots. Wealth has shifted to the top. It has been taken away from the middle class. That makes people anxious. Anxiety opens the door to demagogues. It’s not complicated.

We need changes in our laws and institutional structures that will alter what economists call pretax distribution. This is a point made by the economist Dean Baker — that income inequality is less a result of tax policy than laws and regulations that have made the rich richer before taxes are even imposed. These changes have to do with

And yes, we do need to tax rich people more. In my lifetime, the top marginal tax rate has gone (roughly speaking) from 91 percent to 77 percent to 50 percent to 35 percent to today’s 37 percent. That’s too low. I’m not with Bernie Sanders, who says there should be no billionaires. That’s too punitive. But I do think Mr. Bezos could get by on $15 billion or so.

Billionaires will protest that they’d rather give it away than trust the government with it. I applaud their generosity. But even someone as rich as Michael Dell, who went on a rather infamous riff along these lines at Davos, could not build a nationwide high-speed rail system, clean the country’s air and water (and keep them clean), create a network of free opioid clinics across the country or give towns that have been hollowed out by the global economy a second chance. Only government can do those things. MORE

The Billionaires Are Getting Nervous

Bill Gates and others warn that higher taxes would lead to lower growth. They have their facts backward.

By 

The editorial board is a group of opinion journalists whose views are informed by expertise, research, debate and certain longstanding values. It is separate from the newsroom.

Bill Gates in New York on Wednesday.
Credit…Calla Kessler/The New York Times

When Bill Gates founded Microsoft in 1975, the top marginal tax rate on personal income was 70 percent, tax rates on capital gains and corporate income were significantly higher than at present, and the estate tax was a much more formidable levy. None of that dissuaded Mr. Gates from pouring himself into his business, nor discouraged his investors from pouring in their money.

Yet he is now the latest affluent American to warn that Senator Elizabeth Warren’s plan for much higher taxes on the rich would be bad not just for the wealthy but for the rest of America, too.

Mr. Gates, the co-founder of Microsoft, suggested on Wednesday that a big tax increase would result in less economic growth. “I do think if you tax too much you do risk the capital formation, innovation, U.S. as the desirable place to do innovative companies — I do think you risk that,” he said.

Other perturbed plutocrats have made the same point with less finesse. The billionaire investor Leon Cooperman was downright crude when he declared that Ms. Warren was wrecking the American dream. Jamie Dimon, the chief executive of JPMorgan Chase, complained on CNBC that Ms. Warren “uses some pretty harsh words” about the rich. He added, “Some would say vilifies successful people.”

Let’s get a few things straight.

The wealthiest Americans are paying a much smaller share of income in taxes than they did a half-century ago. In 1961, Americans with the highest incomes paid an average of 51.5 percent of that income in federal, state and local taxes. In 2011, Americans with the highest incomes paid just 33.2 percent of their income in taxes, according to a study by Thomas Piketty, Emmanuel Saez and Gabriel Zucman published last year. Data for the last few years is not yet available but would most likely show a relatively similar tax burden.

The federal government needs a lot more money. Decades of episodic tax cuts have left the government deeply in debt: The Treasury is on pace to borrow more than $1 trillion during the current fiscal year to meet its obligations. The government will need still more money for critical investments in infrastructure, education and the social safety net.

This is not an endorsement of the particulars of Ms. Warren’s tax plan. There is plenty of room to debate how much money the government needs, and how best to raise that money. The specific proposals by Ms. Warren and one of her rivals, Senator Bernie Sanders, to impose a new federal tax on wealth are innovations that require careful consideration.

But a necessary part of the solution is to collect more from those Americans who have the most.

And there is little evidence to justify Mr. Gates’s concern that tax increases of the magnitude proposed by Ms. Warren and other candidates for the Democratic presidential nomination would meaningfully discourage innovation, investment or economic growth.

The available evidence strongly suggests that taxation exerts a minor influence on innovation. Experts have an imperfect understanding of what drives innovation, but taxation isn’t in the same weight class as factors including education, research and a consistent legal system.

Congress has slashed taxation three times in the past four decades, each time for the stated purpose of spurring innovation, investment and growth. Each time, the purported benefits failed to materialize. President Trump initiated the most recent experiment in 2017. The International Monetary Fund concluded this year that it had not worked.

Moreover, while higher tax rates may weigh modestly against innovation and investment, that calculus is incomplete. It ignores the question of what the government does with the additional money. It also ignores the possibility that higher taxes could result in more innovation.

A study of American patent holders found that innovators tend to come from wealthy families, to grow up in communities of innovators and to receive high-quality educations in math and science. Mr. Gates, one of the most successful entrepreneurs in American history, fits the profile: He grew up in an affluent family and received the best education money could buy.

The implication of that study, and related research, is that public investment, funded by taxation, could give more kids the kinds of advantages enjoyed by the young Mr. Gates.

There is no doubt that it is theoretically possible to raise taxes to prohibitive heights: If people had to pay a tax of 100 percent of the next dollar they earned, they would be likely to call it a day.

But the alarm bells are out of all proportion with Ms. Warren’s plan. Describing his concerns on Wednesday, Mr. Gates at one point suggested he might be asked to pay $100 billion.

The Warren campaign calculates that under Ms. Warren’s plan, Mr. Gates would owe $6.379 billion in taxes next year. Notably, that is less than Mr. Gates earned from his investments last year. Even under Ms. Warren’s plan, there’s a good chance Mr. Gates would get richer.

To his credit, Mr. Gates has said that he thinks the wealthy should pay higher taxes. But that’s not how he behaved on Wednesday. He can demonstrate that he’s serious about tax increases by setting aside the hyperbole and engaging in principled and factual debate about the details. SOURCE

 

This new calculator tells billionaires how much tax Elizabeth Warren would make them pay


[Photo: The New York Public Library]

For the billionaires out there who are confused about how much they’d pay in taxes under Elizabeth Warren’s Ultra-Millionaire tax plan, the Warren campaign has a new calculator to help. “Are you a billionaire?” it asks, and then prompts users to enter their net worth.

If you’re Bill Gates, for example, who criticized Warren’s plan yesterday—prompting Warren to reach out on Twitter and clarify how much he would actually pay—the calculator explains that you’d owe $6.379 billion next year:

WOW — YOU’VE GOT A LOT OF MONEY!
Your wealth puts you in the top 0.0002% of Americans.

Now you have the opportunity to invest some of it back into our society so everyone has a chance to succeed.

You’d pay $6.379 billion next year under Elizabeth’s wealth tax. This amount, which you likely won’t even feel, will help us invest in education from birth through college and help finance health care for everyone.

Good news – you’ll still be extraordinarily rich! And if history is any guide, if you do nothing other than invest your wealth in the stock market, it’s likely that your wealth will continue to grow.

For those of us who aren’t billionaires, the calculator offers links to examples of others, including Jeff Bezos (who would owe $6.697 billion next year under the plan, but who has a net worth of  $112,300,000,000) and Mark Zuckerberg (who would owe $4.249 billion but has a net worth of $71,500,000,000). SOURCE

 

Should billionaires continue to exist?

How taxing wealth could tackle both wealth concentration and the climate crisis

 

Wealth taxation is back on the progressive political agenda. It is both a refreshing new idea and a return to vogue of a policy established decade ago in Europe. Some remember it as part of François Mitterrand’s 110 propositions pour France, a joint electoral platform in 1981 with the Communist Party that carried him into the Élysée Palace. The solidarity tax on wealth survived multiple right-wing presidents, only to fall recently to President Macron.

Even so, it is an idea whose time has come in North America. It continues to exist in three OECD countries, and both Bernie Sanders and Elizabeth Warren, two of the leading three Democratic contenders for U.S. president, have a plan to tax wealth in their platforms. The NDP also included a proposal for a wealth tax in its 2019 election platform, which was met with backlash and bad-faith critiques from the usual suspects.

Matthew Lau, who has written for the right-wing Fraser Institute and Atlantic Institute for Market Studies, called it “class warfare” and “confiscatory” in a Financial Post column. This was followed by another piece in the same publication by the Montreal Economic Institute’s Gael Campman, who claimed taxing wealth would be a “tragic mistake,” seemingly oblivious to the existence of property taxes in Canada. Calling it a “demagogic ploy that ends up being counterproductive,” Campman brings up the prospect of the widely discredited “Laffer effect” of falling tax revenues from increasing taxation.

In a slightly more serious challenge, Robin Broadway and Pierre Pestieau call the wealth tax “Over the Top” in their recent C.D. Howe paper of the same name, stating that it isn’t needed, and it would be more efficient to raise taxes on capital gains. Why not do both? Recent studies such as the CCPA’s Born to Win have shown that Canada’s wealthiest 87 families now own the same amount as the lowest-earning 12 million Canadians, which is approximately equivalent to what everyone in Newfoundland and Labrador, Prince Edward Island and New Brunswick collectively owns. In Canada, just two billionaires (David Thompson and Galen Weston) own as much wealth as a third of Canadians.

A bold tax policy package is sorely needed to address this kind of wealth hoarding, which contributes to soaring inequality. Along with a host of other progressive measures, the wealth tax in particular sits in the enviable position of being at the nexus of both good policy and good politics.

According to a recent Ipsos poll, 67% of Canadians believe that “Canada’s economy is rigged to advantage the rich and powerful.” Another poll conducted by Abacus Data found that 67% of Canadians also support the idea of a wealth tax, including 58% of Canadians self-identifying as “right-wing” and 64% of those who say they are in the political “centre.”

***

In his critique of the NDP’s modest wealth tax proposal, Campman alleges it would force poor farmers to sell their land and cause capital flight. Lau asks how the tax could work when wealth in financial assets can vary day by day depending on the stock market. As the OECD has pointed out, there are ways of getting around all these problems.

The best wealth tax systems have a series of exemptions regarding most forms of middle class wealth, such as pensions and primary homes, as well as exemptions for agricultural property. Assessments can occur every 3–5 years with options to apply for reassessment if a significant change in value occurs, and payments can be made in instalments for those taxpayers facing liquidity constraints.

Wealth taxes can apply to both domestic and international assets, be tied to citizenship and be negotiated by international tax treaties—to eliminate the incentive for capital flight. As proposed by Elizabeth Warren, you can introduce an “exit tax” at the same rate as an estate tax to seize assets from those who do choose to renounce their citizenship. With a rigorous enforcement regime, along with legislation to tackle tax havens, taxing wealth isn’t a pie-in-the-sky or unrealistic idea. It just takes political commitment and good policy design.

Casting aside the nitty gritty, the fundamental question we really should be asking ourselves when we design our wealth tax is should we allow billionaires to continue to exist?

Gabriel Zucman and Emmanuel Saez, two economists at the University of California, Berkeley who advised Elizabeth Warren on her wealth tax proposal, write that the “revenue maximizing rate” runs as high as 6.5%—far beyond the NDP proposal of 1%. According to the economists, such a low rate would provide permanent revenues due to its quite limited effect on wealth concentration. Higher rates of wealth taxation, say, up to 10%, would more effectively dismantle entrenched wealth concentration over time with the trade-off being the loss of a permanent and reliable source of tax revenue.

Bernie Sanders’s recently unveiled wealth tax plan would cut in half the wealth of the typical billionaire over 15 years, according to Saez and Zucman. When the New York Times interviewed Sanders about his plan, they asked if he thought billionaires should exist in the United States. “I hope the day comes when they don’t,” he responded, adding, “It’s not going to be tomorrow.”

Sanders’s wealth tax (see box) is much more aggressive and much more steeply progressive than Warren’s plan, which begins at a 2% tax on wealth above US$50 million and adds an additional 1% surtax above the billion-dollar mark. The revenue differences are large: over 10 years, Warren’s plan would raise US$2.75 trillion while Sanders’s would raise US$4.35 trillion. The other significant difference is how the Sanders plan obliterates wealth concentration while Warren’s plan has a much more limited effect due to the fact that the wealth of the richest Americans grows at an average rate of 6.6% a year.

By comparison, the NDP’s plan for a 1% flat tax rate on wealth above $20 million seems quite modest. The Parliamentary Budget Officer estimates the NDP proposal would rake in approximately $70 billion over 10 years, a value that includes the assumption that revenues from the wealth tax will be reduced by about 35% due to tax avoidance.

Rather than being “confiscatory,” as Lau suggests, Saez and Zucman write that “the marginal utility of a billionaire’s wealth is close to zero” and therefore “the revenue consequences of taxing billionaires outweigh the welfare consequences on billionaires.” Imagine for a moment what we could do if Canada plowed $70 billion into reducing poverty, fighting climate change or tackling the housing crisis. Canada’s oil barons can manage with one less yacht.

***

We can see that a wealth tax would be good for redistribution. What of wealth concentration? Should we not also tax inheritances in order to stop the out-of-all-proportion pooling of family wealth through massive intergenerational transfers? The issue here is political. Sometimes inheritance taxes poll poorly, even when the tax only targets the passing down of unearned wealth. Even so, should we continue to allow oligarchs to control so much wealth and power while other Canadians continue to live in poverty?

The proper design of any wealth tax system ought to both balance revenue generation and target wealth concentration. Which is why if we swear off an inheritance tax, we should be jacking up wealth tax rates. And if we shy away from steeply progressive wealth tax rates, we need to at least implement an inheritance tax.

French economist Thomas Piketty, best known for his best-selling book Capital in the 21st Century, has just put out a new book entitled Capital and Ideology. In it he proposes a wealth tax with a rate that goes as high as 90% for those worth over two billion euros (almost $3 billion). He also states that billionaires actually harm economic growth and should be completely taxed out of existence. In a world in the midst of a climate emergency, it may also simply be necessary.

Piketty writes in Le Monde that “it is increasingly clear that the resolution of the climate challenge will not be possible without a strong movement in the direction of the compression of social inequalities at all levels.” This is because, “at world level, the richest 10% are responsible for almost half the emissions and the top 1% alone emit more carbon than the poorest half of the planet. A drastic reduction in purchasing power of the richest would therefore in itself have a substantial impact on the reduction of emissions at global level.”

When designing our wealth taxes, we should perhaps consider not only their redistributive power but also how they can attack the entrenched power of economic elites—and how this might help us save the planet along the way. As Piketty suggests, a wealth tax could be instrumental in shifting carbon intensive and socially useless elite consumption patterns.

Looking forward into the next decade, when large-scale economic decarbonization is on the agenda, we should also ask ourselves if this should mean moving toward a billionaire-free world. In the future we want to build, if we are asked the question, “Should billionaires exist?”, we should be able to confidently and resolutely answer: no.

SOURCE

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New York Times: The Rich Really Do Pay Lower Taxes Than You

 

The NDP’s Wealth Tax: What the Experts Say

Singh says it will help reduce economic inequality, but new approach is widely debated.

JimmyPattisonWalkOfFame.jpg
The NDP’s tax on the ultra-rich would affect billionaires like Jimmy Pattison. But is such a tax the best way to reduce inequality? Photo by Chris Young, the Canadian Press.

The NDP’s promised wealth tax on the ultra-rich would be a new step to reduce economic inequality in Canada, but quite a modest one compared to proposals being debated south of the border.

And while enthusiasm for a wealth tax is understandable when economic inequality is higher than it’s been since the 1920s, there are better ways to structure the tax system, said David Duff, a University of British Columbia professor who is an expert on tax law.

“I’m not a huge fan of wealth taxes,” Duff said. “Although in principle I would be opposed, I can understand the context for this… We live in a world where we have not taxed, in particular, capital income, certain kinds of income, to the same extent that we tax labour income.”

Policies like taxing capital gains at half the rate of other forms of income or allowing CEOs to be paid in stock options have allowed some people to accumulate large fortunes.

The NDP’s wealth tax would charge one per cent each year on the value of household assets above $20 million. It’s the only party proposing such a tax.

“It’s a wealth tax on those who are very, very, very wealthy,” NDP leader Jagmeet Singh told The Tyee.

The idea is to make sure people at the very top would pay their fair share, he said. The tax would raise about $9 billion a year from fewer than 2,000 people, Singh added.

Reaction to the proposal to tax wealth has been mixed, with progressive commentators more positive than conservative ones.

column by Matthew Lau in the Financial Post called the proposal “class warfare” and said, “The NDP’s plan for a wealth tax, however, breaks a sort of glass ceiling on the worst taxes proposed in Canada.”

Another Financial Post piece by Montreal Economic Institute researcher Gaël Campan said that while the proposal sounds good, it would be a “tragic mistake.” (The institute has been described as “a kind of Fraser Institute in Quebec.”)…

Canadian Centre for Policy Alternatives senior economist David Macdonald, meanwhile, argued that the proposal addresses the rise in economic inequality that he and others have long tracked in Canada.

“The wealthiest families in Canada — representing fewer than 100 families, each with net worth over $1 billion — have accumulated more wealth than the bottom 12 million Canadians combined,” he wrote. Those 100 families would pay half the amount that the NDP’s tax would raise.

Macdonald did sound a warning. “Because this tax applies to a very small group of very well-resourced people, their accountants will be busy looking for ways to avoid or at least mitigate it, as the wealthy in other countries have successfully done,” he wrote.

“For legislation of this sort to be effective it would have to be strong, with loopholes identified and quickly shut down, which can certainly present challenges.”

Erika Beauchesne of the advocacy group Canadians for Tax Fairness wrote that while her organization has been promoting an inheritance tax that would apply at death instead of annually, action on inequality is needed.

“The question and debate should no longer be whether we have increased taxes on wealth and capital, but what form they should take,” she wrote. “We should thank the NDP for getting this debate going in Canada and look forward to seeing what other federal political parties propose.”

The discussion about wealth taxes in Canada echoes the debate in the United States where two of the leading candidates for the Democratic presidential nomination are proposing to tax wealth.

Elizabeth Warren is pitching a two-per-cent annual tax on a household’s net worth over $50 million and three per cent over $1 billion.

And Bernie Sanders is proposing a tax that would start at one per cent on a married couple’s wealth of at least $32 million, then gradually rise in seven steps to a top tax of eight per cent on net worth over $10 billion. MORE

 

 

Bill McKibben: To Confront the Climate Crisis, We Need Human Solidarity, Not Walls & Cages

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Bill McKibben, the longtime journalist and co-founder of 350.org, talks about climate migration, the 2020 Democratic candidates, the Green New Deal and more. McKibben’s latest piece for The New Yorker is titled “Money Is the Oxygen on Which the Fire of Global Warming Burns,” and his cover piece for Time magazine is headlined “Hello from the Year 2050. We Avoided the Worst of Climate Change — But Everything Is Different.”

BILL McKIBBEN: It was so much fun to get to back up Fridays for the Future and all the youth organizers here who were doing this, just to be able to watch how good they are at doing this and to really try and build a multigenerational climate movement, which is precisely what we need.

AMY GOODMAN: So, we are here, yes, right after the Climate Action Summit, though there are protests around climate that are happening all over in the next weeks, but also in a presidential primary season. Some eyes might glaze over. How is it possible that for more than a year now we’re going to go through this primary season with these candidates? But others might say, and I think you’re among them, who say, “No, no, no. This is an incredible opportunity.” Candidates are often senators or governors, politicians who are very insulated, in fact, in between times when they have to run. And now there’s this window where they have to respond to the public. And you are certainly using this moment. So I’d like to ask you, of the, what, 20 presidential Democratic presidential candidates that are still out there, the kind of work you’re doing, pressing these candidates to formulate their positions on the climate crisis.

BILL McKIBBEN: Sure. So, 350 Action, which is the (c)(4) political part of our operation, has been doing its best to turn them all into climate candidates. We set up the kind of original climate scoreboard for the various presidential candidates. And there have been young people out bird-dogging every event, every rope line, or making sure that these guys understand what the bottom line for the climate movement is.

And the bottom line is not having someone say, “I care about climate change. It represents an existential risk.” The bottom line is: Are you signing on to something that looks like the Green New Deal? Are you signing on because it’s within your power as president to do it to announce that there will be no mining and drilling on public lands? And are you saying we’re going to stop fracking around the country?

It’s been incredibly impressive to watch how far this field has moved. Look, four years ago, Bernie broke down this door, you know? He started talking in really serious terms about climate change. You’ll recall in the 2016 debates, in the primaries, at one point they asked, “What’s the most important issue facing the planet?” And Bernie just looked up and said, “Well, I mean, that’s obvious. It’s climate change.” That was something that no American politician really had enunciated before in quite that way.

As with many things, it’s spread across the field now, and so we’re getting remarkable commitments from everyone, pretty much everyone, down the line. Elizabeth Warren, the week before last, said she would stop fracking across America. That’s big deal. It’s all big deal. And it’s all because people are out there making this demand.

We’re not — I mean, assuming that a Democrat wins this time, an assumption on which my future mental health is entirely predicated, because I cannot — I don’t know about the planet, but I can’t take another four years of Trump, OK? Assuming a Democrat wins, we’re not really going to have an open primary next time, you know. There will be an incumbent and whatever. This is our chance in the political system for the next eight years to get these guys fully on the line and as committed as it’s possible to be.

AMY GOODMAN: So, you said making sure they sign on to the Green New Deal. Explain what that is?

BILL McKIBBEN: Well, it’s not at this point a solid, fully fleshed-out piece of legislation, but everybody knows what it means now. It means a commitment to systemic change in order to cut in half the emissions that we’re producing over the course of the next decade. That requires things like a federal jobs guarantee, to allow anybody who wants to be part of this transition to do it. You know, it requires real commitments to environmental justice and climate justice in the most hard-hit communities. It requires a hell of a lot of work.

And so, the people who are saying, “Yeah, we’ll do it,” are, I think, signing up for that. At least they’re saying it in public, so we can hold them responsible once they’re in office. It’s worth remembering that politics doesn’t end on Election Day. In fact, that’s just the beginning. After that, it’s the job of — and you’ll recall, I mean, I worked hard for Barack Obama to get elected, and then we organized the largest demonstrations outside the White House during the whole Obama administration in order to make him live up to his words around things like the Keystone pipeline. MORE

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