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The 'Government' is Us

[Note: Not all political messaging involves framing specific words or phrases. Framing a political message involves longer story-telling, as well. It's about creating a picture in people's minds of who you are and what you stand for, whether it's by using individual "catch phrases" or a larger narrative.

In this installment, The Winning Words Project is attempting to paint the larger picture of who and what "government" really is: "We, the people." It's a critical aspect of why the Democratic Party has so often failed in combating the Republican narrative—Republicans have defined "government" as a monolithic, non-living entity that needs to be slayed like a dragon that is destroying our country with its fiery breath and gigantic talons.

Until we create our own image of government that is not a deadly dragon, all of our messaging can be overpowered by the impression that no matter what policies we are fighting for, and no matter how moral we make them, all we are doing with them is feeding the dragon, not taming it or taking it down. But if people stop seeing "the government" as a dragon, but come back to recognizing it for what it is—US—it becomes harder and harder for the Republican narrative to be supported. People don't want to see us destroyed! Here is the story we should be telling ...]

"We the People of the United States, in Order to form a more perfect Union ..."

There's a reason the Preamble to our Constitution begins with those words: Government is us. So when Republicans say they want to choke government and make it small enough to drown in a bathtub, they mean they want to "choke" and "drown" us ... you and me; we, the people.

Government is us. So when Republican leaders get on television and attack the government, they're attacking us. They're telling us our services aren't wanted or needed to build and maintain this country's infrastructure, operate 911 switchboards, code the military's computers, represent defendants who cannot afford an attorney, lay pipe that takes sewage away from our homes, drive city buses, nurse our returning veterans at VA hospitals, process small business loan applications, or tens of thousands of other jobs we do that keep this country running, prosperous, and safe.

Mitt Romney says he's "going to do something to government." And just so we're clear, when Romney says he's going to "do something" to government, he means he's going to do something to you and me. As in fire us. "Choke" us. "Drown" us in a bathtub. Romney says, "I'm going to make it simpler and smaller and smarter. Getting rid of programs, turning programs back to states, and finally, making government itself more efficient."

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Federal Election Commission filings released this week showed that conservatives groups are amassing an ocean of cash for the 2012 presidential campaign. Thanks to the likes of the Koch brothers, the Walton clan and other of the usual suspects on the right, in 2011 conservative SuperPAC's outraised their liberal counterparts by more than seven to one. But if they win, rich Republican donors could more than get back the millions they invested. As it turns, just one law they are trying to buy - the elimination of the estate tax - could put billions of dollars back into their families' bank accounts. Of course, that gaping hole would have to be filled by all other American taxpayers.

As Mother Jones reported, as of December 31, 2011 conservative SuperPAC's reaped $60 million of now-unlimited contributions, compared to just $8 million for liberal groups. That tidal wave of corporate cash and play money from the wealthy has filled the coffers of Karl Rove's American Crossroads, Mitt Romney's Restore the Future, Newt Gingrich's Winning the Future and a litany of other right-wing SuperPACs. And as Amanda Terkel detailed, at a secret conclave last week, the Koch brothers pledged to raise much more to defeat President Obama:

At a private three-day retreat in California last weekend, conservative billionaires Charles and David Koch and about 250 to 300 other individuals pledged approximately $100 million to defeat President Obama in the 2012 elections.

A source who was in the room when the pledges were made told The Huffington Post that, specifically, Charles Koch pledged $40 million and David pledged $20 million.

But that figure is chump change compared to the eye-popping return on investment the Kochs can expect if their side wins in November. Ending the estate tax, a policy endorsed by Mitt Romney and every other Republican presidential candidate, would literally be worth billions of dollars to the heirs of Charles and David Koch. As ThinkProgress explained last year:

According to a quick back-of-the-envelope calculation, the Koch brothers' heirs' would save a combined $17.4 billion in estate taxes thanks to Romney's plan.

Each of the Koch brothers -- Charles and David -- is worth about $25 billion. They are each married, so they would receive an exemption on the first $10 million that they pass down, and then theirs heirs would pay a 35 percent tax, or $8.7 billion, on the rest of their vast fortunes.

Now, this is an exceedingly rough calculation, as it's almost certain that the Koch's have engaged in extensive estate planning and would pay nowhere near that amount. But 35 percent is the rate on the books, and Romney's plan to eliminate the estate tax entirely would undeniably save the Kochs a boatload of money.

Here's why. Despite Republican mythology about family farms and businesses being lost to the so-called "death tax," by 2009 only 0.24 percent of estates even paid the levy. And that was before the December 2010 compromise President Obama inked with Congressional Republicans extending the Bush tax cuts further slashed the estate tax. The reduced 35 percent tax is now applied only to couples with estates greater than $10 million, a change which will cost Uncle Sam roughly $15 billion a year. Now, the Tax Policy Center calculated, only 0.1 percent of estates are impacted. Only 50 family farms and small businesses will be affected, and they contribute "less than one tenth of 1 percent point of the total revenue the tax will collect." Who pays the estate tax?

TPC estimates that 8,600 individuals dying in 2011 will leave estates large enough to require filing an estate tax return (estates with a gross value under $5 million need not file a return in 2011). After allowing for deductions and credits, an estimated 3,270 estates will owe tax. Roughly 90 percent of these taxable estates will come from the top ten percent of income earners and nearly half will come from the top one percent alone./em>

Estate tax liability will total an estimated $10.6 billion in 2011. The top ten percent of income earners will pay 98 percent of this total. The richest 1 in 1,000 will pay $5.4 billion or 51 percent of the total.

Among that richest 1 in 1,000 are the Koch brothers and the family behind Walmart, the Walton clan.

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Gingrich Proposes New Tax Rate for Mitt Romney: Zero

As the outcry grows over Mitt Romney's shockingly low 15 percent tax rate, his bitter rival Newt Gingrich rushed to his defense. "My goal is not to raise Mitt Romney's taxes," Gingrich declared," It's to let everybody pay Mitt Romney's rate." Of course, as with his marriage vows, Newt isn't telling the truth. As it turns out, Gingrich has proposed a new capital gains tax rate - zero - that would almost eliminate Mitt Romney's already meager payment to Uncle Sam.

In South Carolina yesterday, Gingrich for once passed on an opportunity to take Mitt Romney to task. As ABC reported:

"We can confirm that I paid a 31 percent rate, and although let me be clear, the 21st century Contract With America has an optional 15 percent for every American," Gingrich said at a press availability in South Carolina. "My goal is not to raise Mitt Romney's taxes. It's to let everybody pay Mitt Romney's rate. And so I'm not going to criticize Mitt Romney. I'm going to say, shouldn't we all have the option of a flat tax at the same rate he was paying."

But that's not what Newt has actually proposed. His optional 15 percent flat tax rate is for ordinary income, not capital gains. And it is the capital gains rate which, thanks to the "carried interest" exemption for private equity managers, accounts for the minimal tax bill Mitt Romney pays on the millions he continues to earn each year from his former employer, Bain Capital.

In a nutshell, President Gingrich wants Governor Romney to pay 15 (and not 35) percent on his regular income and nothing on the millions in investment income that makes up most of his cash flow.

Here's how Gingrich's scheme for a budget-busting payout works for denizens of the gilded class like Mitt Romney. Like his former rival turned supporter Rick Perry, taxpayers could choose to pay an optional flat tax rate (15 percent in Newt's case, 20 percent in Perry's proposal). The corporate tax rate would be slashed from 35 percent to 12.5 percent. Like, Perry, Gingrich would eliminate the capital gains tax altogether. (As the Washington Post recently explained the impact of the already historically low 15% capital gains tax rate, "Over the past 20 years, more than 80 percent of the capital gains income realized in the United States has gone to 5 percent of the people; about half of all the capital gains have gone to the wealthiest 0.1 percent.")

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The GOP's Winner-Take-All Tax Cuts

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While the Occupy Wall Street movement and a shocking report from the Congressional Budget Office have shone a bright spotlight on America's record income inequality, the GOP's 2012 presidential field is proposing massive new tax cuts certain to expand that Grand Canyon-sized gap between the fabulously rich and everyone else. Of course, the gilded-class giveaways from Rick Perry, Mitt Romney and Herman Cain are just the latest chapters in the GOP's decade-long campaign of upward income redistribution. As a quick glance at the plans of George W. Bush, John McCain and Paul Ryan shows, winner-take-all tax cuts have long been the defining feature of the Republican Party.

Rick Perry

Five days after reporting "GOP presidential candidates' tax plans would benefit the rich," the McClatchy Papers detailed the Texas Governor Rick Perry's pay day for plutocrats.

As McClatchy explained the chart above:

Rick Perry's proposed optional flat tax would be a windfall for wealthier Americans, giving millionaires an average tax cut of $637,418, according to an analysis by the nonpartisan Tax Policy Research Center released Monday.

While the tax cuts would be greatest at the top of the income scale, Perry's proposal would give all taxpayers at least some tax cut, according to the analysis. Those making less than $10,000, for example, would get an average tax cut of $28.

It's no wonder that when John Harwood said on CNBC that the richest Americans would get back "hundreds of thousands, maybe even millions of dollars" annually from the U.S. Treasury courtesy of Perry's tax plan, the Governor replied, "I don't care about that."

Which is quite evident from Perry's plan. His optional 20 percent flat tax rate would allow the top income earners to pay Uncle Sam at a much lower rate than the already low 35 percent level they pay currently. And Perry would not merely eliminate the estate tax, he would zero out the capital gains tax as well.

Which is also why Perry's reward for the rich would cost the Treasury an estimated $995 billon a year in lost revenue. Despite his balanced budget pledge, Perry claims that red ink is no problem. "There's nothing wrong," he said, "with lower revenue."

Herman Cain

As James Fallows pointed out Tuesday, Herman Cain's taxpayer-funded payback to the rich also runs off the page.

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Herman Cain's now ubiquitous 9-9-9 tax plan went from the ridiculous to the sublime during Tuesday night's Republican presidential debate. While House Republicans and Grover Norquist had complained that the pizza mogul's proposals constituted a tax increase, some of Cain's fellow White House hopefuls actually expressed concern that it would be lower and middle income Americans paying it.

And that is a very shocking development, indeed. After all, while he differs in his particulars, Herman Cain like Paul Ryan and George W. Bush would deliver a massive tax cut windfall for the wealthy. And like the Ryan budget voted for by 98 percent of Capitol Hill Republicans, the 9-9-9 plan would dramatically shift the tax burden to lower income Americans.

This week, the nonpartisan Tax Policy Center added its devastating analysis to the growing list of negative assessments of the Cain 9-9-9 plan. Cain's opponents seized on it to punish him throughout last night's CNN debate. "The worst part about it," Congressman Ron Paul fretted, "It's regressive. Rick Santorum explained why:

"[R]eports are now out that 84 percent of Americans would pay more taxes under his plan. That's the analysis. And it makes sense, because when -- when you don't provide a standard deduction, when you don't provide anything for low-income individuals, and you have a sales tax and an income tax and, as Michele said, a value-added tax, which is really what his corporate tax is, we're talking about major increases in taxes on people."

Which is exactly right. As the Washington Post's Ezra Klein showed using TPC data, while raising taxes on most Americans Cain's payday to the richest is literally off the charts. As Klein explained today, "One problem with trying to graph the 9-9-9 plan is that the tax cuts for the rich are so large that it's hard to see what the policy is doing to the poor and the middle class. That's why I posted a table [above] rather than a chart earlier."

That's what necessarily happens when you cut the top income tax rate from 35 percent to 9 percent, eliminate the Earned Income Tax Credit for working Americans, and zero out the capital gains tax. (According to the Joint Committee on Taxation, two-thirds of all capital gains are reported by those with incomes over $1 million.) As Center for American Progress Vice President for Economic Policy Michael Ettlinger put it:

"[Herman Cain's 9-9-9 plan] would be the biggest tax shift from the wealthy to the middle-class in the history of taxation, ever, anywhere."

Bigger even than the Paul Ryan budget passed by House Republicans in April. Just not by much.

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If nothing else, Herman Cain is a man who is very sure of himself. This week, Cain once again declared God told him to run for President. But on the same day Senate Republicans continued their unprecedented obstructionism by blocking President Obama's jobs bill, Cain's own 9-9-9 plan finally started to come under scrutiny. As it turns out, Cain's simple scheme -like virtually every other recent GOP proposal - would produce mountains of debt and massively shift the tax burden to middle class Americans as the wealthy received yet another windfall from the U.S. Treasury.

Of course, you'd never know from Cain's confident prediction during Tuesday night's Bloomberg GOP presidential debate. His prescription?

Two things. Present a bold plan to grow this economy, which I have put my 9-9-9 plan on the table, and it starts with throwing out the current tax code and putting in the 9-9-9 plan.

Secondly, get serious about bringing down the national debt. The only way we're going to do that is, the first year that I'm president and I oversee a fiscal year budget, make sure that revenues equals [sic] spending. If we stop adding to the national debt, we can bring it down.

The former pizza magnate might want to check his math. Because even Herman Cain never cut a slice so big.

To "make sure that revenues equal spending," Herman Cain would have to cut roughly $1.8 trillion (or 47 percent!) from the nation's $3.8 trillion budget. Because as Bloomberg News explained, Cain's two-step plan to blow up the current income tax, end both the capital gains and estate taxes and replace them with flat 9 percent individual, corporate and sales tax rates would unleash new rivers of red ink:

Following the broad contours of Cain's plan, the U.S. would have collected almost $2 trillion in 2010, according to a Bloomberg News calculation based on data from the Commerce Department's Bureau of Economic Analysis. The U.S. actually collected almost $2.2 trillion that year, according to the White House Office of Management and Budget...

Using 2010 figures, Cain's plan would have collected $922.1 billion in revenue from the national sales tax with no exemptions, $912.7 billion at a 9 percent individual income tax with few deductions or other tax benefits, and $127.7 billion from a 9 percent tax on U.S. corporate income with no deductions.

The federal government in 2010 actually collected $898.5 billion from individuals, including levies on capital gains; $191.4 billion from the corporate income tax; $864.8 billion from Social Security and retirement taxes; $141 billion in other taxes, such as estate and gift taxes; and $66 billion in excise taxes. This doesn't include the taxes levied by states on retail sales and property.

If anything, Bloomberg's analysis understates the magnitude of the revenue problem. For example, in pre-recession 2007, total tax revenue was $2.6 trillion. The Center for American Progress estimated Cain's 9-9-9 plan would have brought in only $1.3 trillion and thus "cut federal revenue in half." It's no wonder CAP's Michael Linden concluded President Cain's would be "bigger than any deficit since WWII, including the deficits of the past three years."

But that's hardly the only poison in pizza man Herman Cain's secret sauce for Americans.

As Center for American Progress Vice President for Economic Policy Michael Ettlinger put it:

"[Herman Cain's 9-9-9 plan] would be the biggest tax shift from the wealthy to the middle-class in the history of taxation, ever, anywhere, and it would bankrupt the country."

Because Cain's 9 percent national sales tax makes no mention of a personal exemption, as economists including former Reagan Treasury official Bruce Bartlett:

This means that the 47 percent of tax filers who now pay no federal income taxes will pay 9 percent on their total income. And elimination of the payroll tax won't even help half of them because the earned income tax credit, which Mr. Cain would abolish, offsets both their income tax liability and their payroll tax payment as well.

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True or False? Over 50% Do Not Pay Income Taxes

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[h/t Heather]

True. Earlier this week I had a little tussle with Pastor Rick Warren because he made a statement (later acknowledged to be mean-sounding) about how the 50% who paid no taxes were perfectly ok with having the 50% who did pay more.

I jumped on his claim because it's one Fox News likes to make all the time too, and it's without justification. However, a new study does prove that less than 50% of taxpayers pay federal income tax, and shows why. I'll bet the answer won't surprise anyone here.

Donald Marron:

Low incomes (or, if you prefer, the standard deduction and personal exemptions) account for fully half of the people who pay no federal income tax.

The second reason is that for many senior citizens, Social Security benefits are exempt from federal income taxes. That accounts for about 22% of the people who pay no federal income tax.

Tax Policy Center (PDF):

About 46 percent of American households will pay no federal individual income tax in 2011, roughly half of them because of structural features of the income tax that provide basic exemptions for subsistence level income and for dependents. The other half are nontaxable because tax expenditures— special provisions of the tax code that benefit selected taxpayers or activities—wipe out tax liabilities and, in the case of refundable credits, result in net payments from the government. Most important of those tax expenditures are provisions that benefit senior citizens and low-income working families with children. While those factors particularly affect lower-income households, different provisions eliminate taxes for other households. Itemized deductions and credits for children and education are more important for middle-income households, while the relatively few high-income nontaxable households benefit most from above-the-line and itemized deductions and reduced tax rates on capital gains and dividends.

The next time you hear someone sneer about all the deadbeats in this country who don't pay income taxes, you might want to suggest that if they earned more, they'd pay more.

Oh, and with regard to Rick Warren....We're going to be having a more extensive discussion about the whole thing in a couple of weeks. Stay tuned.



When is the last time you've heard a billionaire say this?

Our country is having an extremely important argument about taxation. We have lived the trickle-down theory since the Reagan years, and are now having a great debate about whether it does or does not work. Clearly, it does not.

Those words came from venture capitalist Nick Hanauer in a conference call with Bill Gates, Sr., father of Microsoft founder Bill Gates, and they were music to my ears. Hanauer and Mr. Gates are the leading voices in a Washington state initiative to shift some of the tax burden away from the poor and middle class onto the richest residents in the state.

Hanauer's words were refreshing to hear:

"The public sphere is as essential to the creation of wealth in a democratic society as the private sphere. They are inextricably intertwined. And, to the degree to which we have as citizens the capacity to invest strategically in the public sphere, defines our ability to create wealth for ourselves and our fellow citizens."

Prop 1098 cuts property taxes by 20%, gives small business owners a credit for the state-imposed Business and Occupancy Tax, and imposes a 1.2% income tax on residents who earn in excess of $400,000 (or in the case of a couple, $500,000).

As you might imagine, it has split the wealthy in Washington right down the middle, but Hanauer is undeterred by their arguments. As he pointed out on the call, if libertarian utopias worked the way they are supposed to, there would be many of them everywhere, and if income taxes were such a terrible thing, Silicon Valley would be in Wyoming and Wall Street in North Dakota.

But they're not, and this is because there is value in community and investing in it. The revenues from this proposition would be put directly into Washington public schools and their health care program, which currently has nearly 100,000 on a waiting list according to Mr. Gates.

The most refreshing part of the conversation with these men was hearing their passion and commitment for making their communities better by changing the tax system to benefit the middle class and ask the rich to pay a small piece of their annual income for that to happen. Hanauer's arguments were strong, passionate and heartfelt. This initiative is one to watch on election night. It's good that the leadership for it stems from private, wealthy citizens, because it takes the stain of a "tax increase" away from embattled candidates like Patty Murray.

More like this, please. It is very, very good for everyone.



10 Inconvenient Truths for Tax Day

With Tax Day again upon us, two story lines will predictably dominate the media coverage on April 15th. In their perpetual war on taxes, conservatives will claim that rates are too high even as those Americans who receive tax credits get "welfare." Meanwhile, frothing-at-the-mouth Tea Partiers will protest about being "Taxed Enough Already."

Sadly, the numbers tell a different tale. After a decade of the Bush tax cuts, it's clear that only one side is fighting - and winning - the class war. As for the Tea Baggers, they aren't merely, as Jon Stewart suggested last year, "confusing tyranny with losing." They are confused about so much more.

Here, then, are 10 Inconvenient Truths for Tax Day:

  1. Over 95% of Working Households Got Tax Cuts
  2. Only 2% of Tea Baggers Know Obama Cut Their Taxes...
  3. ...and 52% of Tea Partiers Think Their Taxes are Fair...
  4. ...and Think the Federal Tax Level is Over Double What It Is
  5. 1% of Families Earned 24% of All Income...
  6. ...and 57% of All Capital Income
  7. 400 Richest Taxpayers Saw Incomes Double, Tax Rates Halved
  8. Only 1 in 500 Families Pay the Estate Tax
  9. Corporate Taxes Have Plummeted as a Share of GDP
  10. The U.S. Loses $345 Billion a Year to Tax Evasion and Fraud

The details and data on each follow below.

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Mike's Blog Roundup

Bring It On: Most corporations, including the vast majority of foreign companies doing business in the United States, pay no income taxes, according to a Government Accountability Office report released Tuesday.

Drexel Dems: Meet John McCain's policy director. We already know about his idiotic, neocon foreign policy advisor. At least one rightie blogger is concerned that the McCain campaign is antagonizing their own supporters.

Lost in Tarnation: A position of strength? Actually, the POTUS is just a lowly spectator.

The Debatable Land: Did you know Putin is really another Hitler?

Alas, a blog: We don't need no stinking environmentalists...Jesus already saved the planet!

Our Future: Confronting rising drug prices