This week six members of the Congressional Progressive Caucus will be strategizing over how to shift leftward the center of gravity in the debate over taxes and federal deficits. It is not enough, they argue, that some Republicans are grudgingly accepting the end of the Bush administration tax cuts for the wealthiest 2 percent of Americans. They are insisting on a “revenue-positive” rather than revenue-neutral plan that asks the wealthiest Americans and largest corporations to shoulder a greater share of the costs of repairing the economy for the rest of America.
In sharp contrast to the House Republican position, which has been tacitly embraced by much of the Washington establishment in both parties, these six have issued a statement of principles explicitly calling for increased revenue into the federal treasury that can be used for projects that will help grow the economy, put people back to work and enhance economic security for working people and the poor. These steps, in turn, build the foundation for lowering the federal deficit in the long run
This progressive “gang of six” includes Progressive Caucus co-chairs Keith Ellison, D-Minn., and Raul Grijalva, D-Ariz., plus Reps. Michael Honda, D-Calif.; Jan Schakowsky, D-Ill.; John Conyers, D-Mich.; and Barbara Lee, D-Calif.
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“Low- and moderate-income Americans are already contributing to deficit reduction through the Budget Control Act spending caps and are likely to be asked to sacrifice more. Progressive tax reform is the only way that wealthy Americans can share significantly in that sacrifice,” their statement of principles says. That tax reform, their statement continues, would need to raise the level of taxation as a percentage of the nation’s gross domestic product above the 19.5 percent average that existed the last time the federal budget was balanced on an annual basis, in the late 1990s.
“The writing is on the wall: a revenue-neutral approach to tax reform – on either the corporate or individual side of the tax code – is not an option,” their statement says.
Their six principles complement key arguments in this “Smart Talk” on tax reform issued last month by the Institute for America’s Future. That issue brief called for “resisting the seduction” of exchanging lower top-end tax rates for closing loopholes and deductions. “Tax ‘reform’ that begins with lower top tax rates is likely to end by enriching the already rich and cutting off needed revenues,” that document argues.
The Progressive Caucus has laid down these six principles for tax reform:
- “The corporate contribution to our deficit reduction must increase from the status quo” of less than 2 percent of the nation’s gross domestic product, about 40 percent of what it was in the 1950s.
- We need to get rid of tax incentives that encourage outsourcing of jobs, sheltering profits overseas and excessive debt financing, while enhancing tax incentives for job-creating investments here at home.
- We reject a “territorial” tax system, advocated by the U.S. Chamber of Commerce and other corporate lobbying groups, which would increase the incentive for American corporations to park profits overseas rather than invest them here at home.
- Individual taxes must reflect more progressiveness; the more income a person earns, the higher their effective tax rate should be. Key to making that happen is eliminating the lower tax rate for investment income, which enables the wealthiest Americans to pay a lower effective tax rate than ordinary workers.
- There should be additional, higher tax brackets for multimillionaires and billionaires, up to 49 percent for the highest-income earners.
- “We must prioritize our spending through the tax code to remove expenditures that disproportionately benefit the wealthy, while protecting those that create ladders of opportunity, reward work, and protect the poor.”