Sockeye Blog

This November, Kevin Mannix wants Oregon voters to pass a new tax break for the richest 2% of Oregonians— forcing hundreds of millions in cuts to schools, senior care, and other state services. His measure would repeal the Estate Tax, which would only benefit estates worth more than $1 million. It would also create a massive new tax loophole that would allow rich families to avoid paying taxes on their wealth. (Read more about the bad policy here.)

Mannix is the one bringing this terrible idea to Oregon, but it’s not an original concept. This is part of a nationwide coordinated effort by lobbyists for large corporations and the rich to cut taxes for the wealthy—even while states are struggling just to keep school doors open. This all-out effort is a major part of the strategy on the right to increase the amount of wealth concentration at the very top, while the middle-class plummets.

Here’s who’s driving this effort across the country:

ALEC: The American Legislative Exchange Council (ALEC) is an organization that serves to pair up elected officials with representatives from oil, tobacco, banking, and other corporate interests, providing an opportunity for corporations to write state laws and deliver them directly into the hands of the those politicians. Last year, the Center for Media and Democracy (CMD) discovered a trove of 800 “model bills” that big corporations like ExxonMobil and Bank of America wrote and sent back to state Legislatures around the nation.

While we know ALEC has several Oregon members, we don’t know the full extent of ALEC's involvement in Oregon politics and with Oregon politicians. What we do know, though, is that the corporate interests at ALEC crafted a model bill directing state legislatures to resolve a repeal of the federal Estate tax. Turns out, the resolution’s talking points are nearly identical to Mannix’s campaign talking points.

The fact that Mannix is carrying an ALEC-inspired proposal shouldn’t be surprising. For many years, Mannix has pushed for Oregon to adopt the so-called “Stand Your Ground” law that ALEC got passed in numerous states—including Florida, where it led to the death of Trayvon Martin.

The Koch Brothers:  One of the most active nation-wide organizations that works to repeal the estate tax around the nation is the Policy & Taxation Group. Not only does this group work to abolish the federal estate tax, they also work to “coordinate the efforts of other tax reform organizations to eliminate the duplication of effort and present consistent data” (from the Policy & Taxation Group website.) If the Policy & Taxation Group was involved in Mannix’s efforts, why wouldn’t he reveal this partnership? Probably because a report by Public Citizen and United for a Fair Economy identifies the individuals behind the group – including Charles and David Koch.

We don’t know the extent to which these national groups are funding Mannix, because he’s hiding the identities of his political donors. But it’s clear that giving the wealthy a major estate tax break is part of a concerted effort to let the rich get richer, while the rest of us pay the costs.

What’s that? You think the rich are paying their fair share? Umm…

From the New York Times: 

It so happens that this summer the Internal Revenue Service released data from the 400 individual income tax returns reporting the highest adjusted gross income. This elite ultrarich group earned on average $202 million in 2009, the latest year available. And buried in the data is the startling disclosure that six of the 400 paid no federal income tax…

[The] data demonstrates that many of the ultrarich can and do reduce their tax liability to very low levels, even zero. Besides the six who paid no federal income tax, the I.R.S. reported that 27 paid from zero to 10 percent of their adjusted gross incomes and another 89 paid between 10 and 15 percent… So more than a quarter of the people earning an average of over $200 million in 2009 paid less than 15 percent of their adjusted gross income in taxes.

Our schools are struggling, public safety has been slashed, and basic health care services for our seniors and people with disabilities have been drastically reduced. So, yeah, forgive us for thinking the rich don’t need any more tax breaks at the expense of our community needs.

But here in Oregon, that is exactly what Kevin Mannix is proposing. The Oregon Estate Tax Repeal (Measure 84) is a new tax break for the wealthiest Oregonians and will force the state to make cuts to vital services like education, health care, and public safety. Mannix has made his priorities clear: tax breaks for the rich are more important that funding our shared community needs, like schools.

So when you cast your ballot this November, it’s important to ask yourself: What are your priorities? Do you think the rich need more tax breaks? Or do you believe we should preserve stable funding for our schools and other important community services by saying ‘no’ to Measure 84?

Over the past five years, our spending priorities have grown out of balance.

In one infographic:

Thanks for sharing on facebook and twitter.

(For more information, check out this post from when we first explored these numbers.)

The Atlantic has a great article this week on income inequality in America. Duke University Professor Dan Ariely writes about the discrepency between actual income inequality and the (much more optimistic - and incorrect) perception of wealth distribution. 

Imagine that we took all Americans and sorted them by wealth along a line with the poorest on the left and continuing as wealth increases until on the right we have the richest. Now, imagine that we divide them into five buckets with an equal number of citizens in each. The first bucket contains the poorest 20% of the population, the next contains the second wealthiest tier, and so on down to the wealthiest 20% (see Figure 1).

With this in mind, from the total pie of wealth (100%) what percent do you think the bottom 40% (that is, the first two buckets together) of Americans possess? And what about the top 20%? If you guessed around 9% for the bottom and 59% for the top, you're pretty much in line with the average response we got when we asked this question of thousands of Americans.

The reality is quite different. Based on Wolff (2010), the bottom 40% of the population combined has only 0.3% of wealth while the top 20% possesses 84% (see Figure 2). These differences between levels of wealth in society comprise what's called the Gini coefficient, which is one way to quantify inequality.

It goes to show why it can sometimes be a challenge to discuss the issue. Turns out, many American's belief systems on taxes and economic fairness are formulated from an inaccurate baseline.

Further, Ariely asked respondents to indicate their ideal level of wealth distribution. Check it out:

As it turns out, Americans wish that wealth was distributed more fairly than they think it is -- and yet they think that it's distributed more fairly than it actually is. 

In other words, we've got a long way to go to get to where most of us want to be. We should start by saying no to politicians and tax policies that want to further cater to big corporations and the wealthy at the expense of the rest of us.

And there are some opportunities available to us now. In Oregon, we can vote this fall to repeal the corporate kicker tax break. At the national level, we should be calling on our electeds to let the Bush tax cuts expire for the wealthiest who don't need any more tax breaks.