Some rich Americans are leading a tax revolt of sorts -- to pay more, not less.H/t to Derek Birnie.
They have signed a Tax Fairness Pledge to take the money they saved as part of tax cuts enacted under President George W. Bush and donate it to groups working to overturn those policies.
The tax cuts were "based on the erroneous assumption that the trickle-down effect would somehow benefit everyone," Pigott said. "What we have now is the greatest wealth disparity since the Great Depression."
She is part of a group called Responsible Wealth, a project of the non-profit United for a Fair Economy. The network of 700 individuals who are among the wealthiest 5 percent in the United States includes Jeffrey Hollender, the co-founder of Seventh Generation natural products, and Eric Schoenberg, an economist at Columbia University and former investment banker.
United for a Fair Economy, which has worked to prevent permanent repeal of the estate tax, is now trying to counteract "Tea Party" protests over higher taxes, and argues that eliminating the tax cuts for the wealthiest Americans is one solution to the country's deficit.
They want Congress to restore the 39.6 percent and 36 percent rates on the highest income earners (those with household incomes over $200,000) and end special treatment of dividends and capital gains.
"Half the deficit comes from taxes that weren't taken from people who could have afforded to pay those taxes," Pigott said.
She has supported the effort for four years. Last year she donated about $600,000, half of which was savings from tax cuts, she said.
Why not just keep giving the surplus away?
"I think it is the national government that can deal with clean air, water, national transportation systems, education," she said. "l see those things are in trouble on a state level and on a national level because we don't have the money. Yes we can do a lot, but we can't do what the federal government can do."
Pigott, co-founder of Personal Safety Nets, is the daughter of the late Formula One race car driver Pat Pigott and the granddaughter of Paul Pigott, who owned the truck company that is now Paccar. Paccar CEO Mark Pigott is one of her cousins.
Asked whether she has approached members of her family about the tax cuts, Judy Pigott said she has talked to her cousins. "I'll just say we have a large enough family that we cover all points of view and a solid enough family that we can agree to disagree."
Another member of the network is Arul Menezes, who came to the U.S. as a graduate student with $250 and earned his wealth over the past 20 years at Microsoft. Investments made decades ago created the universities and research systems that helped him succeed, he said.
Menezes said that while the tax cuts have saved him more than $20,000 a year, he worries about the long-term impact.
"The tax cut was paid for entirely with borrowing," he said, while funding for schools, roads and research was cut. With a deficit of $1.5 trillion this year, "that's just robbing the bank," he said.
Menezes said has stepped up his charitable giving as a result of the tax savings. But that won't have the same effect as reworking the tax system, he said.
Menezes said that while he paid 15 percent in capital gains tax, a person making $30,000 to $80,000 would pay 40.3 percent for federal income tax plus Social Security and Medicare."It's grotesquely unjust," he said. "It embarrasses me to go into a grocery store and know that the person at the checkout stand is paying a higher tax rate than I am."
Saturday, April 10, 2010
"Half the deficit comes from taxes that weren't taken from people who could have afforded to pay those taxes"