TAX FAIRNESS

Josh NassarLegislative Director, UAW

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Tax cuts for the rich

Bush tax cuts for the rich

• Tax cuts were passed during President Bush’s first term that lowered taxes on ordinary income and capital gains and dividends.

• About a third of the tax cuts went to households making over $200,000 with $1.4 trillion over 10 years. With this money alone we could invest in our infrastructure and create 25.2 million jobs!*

* Robert Reich, Economist & Former U.S. Labor Secretary

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6Source: IRS, Tax Policy Center

Estate tax rates fall, while tax-free portion of estates rises

Reagan average 20110%

10%

20%

30%

40%

50%

60%

70%

0

1000000

2000000

3000000

4000000

5000000

6000000

58%

35%

$411,111

$5,000,000

Exemption levels and rates on estates

Rate Exemption level (amount of estate that is tax-free)

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Bottom 95%; 2.8%

95th-99th; 10.7%

Top 1%; 86.5%

Share of total capital income growth claimed, 1979-2007

Source: CBO

Capital income and the rich, like white on rice

Middle quintile Top 1%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

82%

30%

3%

14%

1%

35%

Composition of income

Wages Interest and dividends Capital gains

Source: EPI analysis of CBO data. Excludes transfers, in-kind income, and imputed taxes from income base

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Nearly 50% of Americans don’t pay taxes? Not quite.

• Most still pay Social Security and Medicare taxes, plus state and local taxes

• The rest have either too little income or are elderly (Social Security benefits for most retirees aren’t taxed)

UAW Tax agenda

• Let the Bush tax cuts for rich ($200k and above) expire at the end of the year

• Tax investment and work the same way• Reinstate a comprehensive Estate (inheritance) tax• Financial transactions tax (FTT)• Buffet Rule: millionaires must pay at minimum a 30%

tax rate• Crack down on offshore tax havens

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The UAW’s Tax Fairness Agenda

Make corporations pay their fair share• Citizens for Tax Justice identified 78 profitable corporations that paid

no federal income tax in at least one of the last three years • 30 corporations actually enjoyed a negative income tax rate (meaning

that other taxpayers paid them) over the three-year period.• 68 corporations were identified that paid no state corporate income

tax at all in at least one of the last three years.• Corporations provided only about 7.9% of government receipts in

FY2011, down from 11% in the prosperous 1990s. The effective tax rate US corporations pay is lower than the average of the industrial nations.

• Stop Tax Haven Abuse Act--S. 1346 (Senator Levin, D-MI)/H.R. 2669 (Representative Doggett, D-TX)

Jobs, tax fairness and fiscal responsibility: we can have it all!

The Economic Policy Institute has identified several progressive revenue policies that are fiscally responsible and would generate revenue over a ten year period:

• Enacting a millionaire surcharge ($383 billion);• Taxing capital gains as ordinary income ($168 billion);• Further limiting the tax benefit of itemized

deductions ($888 billion);• Enacting a progressive estate tax ($73 billion);• Enacting a financial speculation tax ($821 billion); and• Ending the deferral of foreign corporate income

($114 billion).

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Consequences of the revenue shortfall

Questions?

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