Memo: Tax Revenue Options to Avoid “Sequestration” Cuts
By Mel Fabrikant Saturday, February 23, 2013, 03:52 PM EST
Unless Congress acts to avert it by March 1st, $85 billion in arbitrary, across-the-board federal spending cuts—called a sequester—will result in the loss of 750,000 jobs nationwide, according to recent testimony by the director of the Congressional Budget Office, threatening the economic security of many middle class and vulnerable Americans. The spending cuts – 5% for non-defense discretionary spending and 8% for defense discretionary spending – will affect many vital services such as education, research and innovation, veterans’ mental health, food safety, emergency responders and more. (To find out more specifics, including to your state, see below.)
Americans for Tax Fairness believes there is a better approach to remedying this impending sequester than taking a meat ax approach to vital federal services – require the richest 2 percent and big corporations to pay their fair share of taxes.
President Obama has called for a “balanced approach” to addressing the sequester cuts – replacing with new revenues raised by closing loopholes on the wealthy and corporations and from targeted cuts rather than across-the-board cuts.
House and Senate Democrats have also introduced specific proposals for replacing the sequester with a balanced approach (their proposals would raise about $110 billion in 2013, more than the $85 billion in sequester cuts). Among other things, their plans would raise nearly two-thirds ($54 billion) of the $85 billion in cuts by enacting the “Buffett Rule,” which would require that people who make at least $1 million a year pay a 30% minimum tax – just slightly above the 28% marginal tax bracket paid by millions of middle-class Americans. The House bill would also end $25 billion in tax subsidies over 10 years to oil and gas companies.
Congress and the President have already achieved $2.4 trillion in deficit reduction since 2011, according to the Center on Budget and Policy Priorities. About $1.5 trillion has come from spending cuts and another $600 billion from new revenues on the richest 1%, with the remainder coming from related interest savings on the debt. That means for every $2.50 in spending cuts there has been just $1 in new revenues – clearly not a balanced approach. In December, House Speaker John Boehner said a deal that was 1:1, spending cuts to revenue would be “balanced.”
Americans for Tax Fairness has prepared a tax revenue options paper that provides scores of ways to raise more than $1 trillion over 10 years from the richest 2 percent and big corporations – money that could be used to address both the $85 billion in across-the-board cuts in 2013 and the $1 trillion in sequester cuts slated over the next 10 years. Options include:
1. End corporate tax breaks for shifting jobs and profits offshore: $221-$606 billion
2. Close other corporate tax loopholes and tax breaks: $162 billion
3. Place a small sales tax (3 cents on each $100, or .03%) on Wall Street trading: $353
4. Limit tax deductions for the richest 2%, as President Obama proposes: $513 billion
5. Close loopholes that allow the very wealthy to shield income from taxation: $1.5-$1.7 trillion
6. Place a 5%-5.6% surtax on the incomes of millionaires or multimillionaires: $107-$453 billion
A recent national survey released by Hart Research shows two-thirds of voters nationwide now say that the richest 2% (by 66% of voters) and large corporations (by 64% of voters) should pay more in taxes. The nationwide survey, conducted January 18-22, 2013, also found that only 28% of voters believe that the fiscal-cliff bill passed on New Year’s Day raised taxes on the rich enough, while more than twice as many (59%) say that we still need to do more to make sure the wealthy pay their fair share of taxes.
RESOURCES: UNDERSTANDING THE CUTS BY SEQUESTRATION
--White House fact sheet outlining major hits on the middle-class: http://1.usa.gov/TUTd9S
--US House Appropriations report on state impact: http://1.usa.gov/12gjymE
--US Senate Appropriations report on federal department impact: http://1.usa.gov/ZhAaK0
THE FIGHT IN THE STATES:
Americans for Tax Fairness – through the more than 275 national and state organizations in our coalition – is mobilizing Americans with partner groups in 18 target states to push for more tax revenue through national days of action, lobby visits, calls to Senate offices, and online activity. The actions and message focus on closing tax loopholes and tax breaks for the richest 2 percent of Americans and for big corporations. If you care to speak with us or with a representative of one of our partner organizations in the states below, please contact us.