The public is well aware of the unfairness in our tax system and wants change. This sentiment is explicitly found in a just-released CBS/New York Times poll, where 55 percent said upper-income Americans pay less than their fair share of taxes, compared to just 11 percent who said they pay more than their fair share and 24 percent who said they pay about the right amount.
One way to make upper-income Americans pay a fairer share of taxes is to treat capital gains and dividends—currently taxed at only 15 percent—the same as income from work. In the same poll, the public approved of taxing capital gains at the same rate as work income by 52-36.
Given current high levels of inequality, the case for tax reform that promotes fairness has never been more compelling. The public is clearly ready for change and no amount of conservative sputtering about “class warfare” is likely to dissuade them.
Ruy Teixeira is a Senior Fellow at the Center for American Progress. To learn more about his public opinion analysis, go to the Media and Progressive Values page and the Progressive Studies program page of our website.
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The committee's inquiries into the Justice Department office were included at the top of a long list of questions from Republican and Democratic members following Holder's appearance before the panel in December to testify on other matters.
The pardon-related questions were written by Rep. Bobby Scott, D-Va., who serves as ranking member of the House Subcommittee on Crime, Terrorism and Homeland Security and represents a district where African-Americans make up more than half the population. “I am troubled by recent reports outlining persistent and significant problems at the Office of the Pardons (sic) Attorney,” Scott said in a statement to ProPublica. Scott said he is “awaiting a response” from Holder.
Each year, the pardon office sifts through hundreds of requests for presidential pardons, selecting a few for the president's signature. The vast majority of applications are discarded by the pardon attorney and never seen by the White House.
At his confirmation hearing in January 2009, Holder spoke at length about presidential pardons and lessons he had learned while serving as deputy attorney general during the presidency of Bill Clinton. “I think we have to work to improve the pardon process within the Department of Justice,” Holder told members of the Senate Judiciary Committee.
In his questions to Holder, Scott wrote that ProPublica's stories on pardons, co-published with The Washington Post, showed “significant and persistent problems within the Office of the Pardon Attorney. You testified when you were confirmed that you would study the problems with the clemency advisory process and fix them. Please let us know what you have found and what changes you have made or plan to make,” Scott wrote.
Holder, who became embroiled in the pardon of fugitive financier Marc Rich at the end of the Clinton administration, declined repeated requests from ProPublica to be interviewed about the pardons process. His deputy, James Cole, has also declined interview requests.
Justice Department spokeswoman Laura Sweeney said the agency has received the questions “and will respond accordingly.” Sweeney said the department is continuing to evaluate ProPublica's statistical analysis showing a racial disparity in pardons. During his two-term presidency, George W. Bush pardoned 189 people, including seven African-Americans. President Obama has pardoned 22 people, including two minorities.
ProPublica's analysis also showed that married applicants were twice as likely as single applicants to be pardoned and that an applicant with congressional support was three times as likely to succeed. Scott specifically inquired about the effect of political support on pardons.
Known as “Questions For Response,” the committee's lengthy list of inquiries, which included questions on a variety of Justice Department issues and programs, was sent to Holder on Jan. 20. The questions will be made public and entered into the committee record along with Holder's answers once they are received.
Scott provided his questions regarding pardons to ProPublica.
Questions for Attorney General Eric Holder
Following are questions about the Justice Department's Office of the Pardon Attorney sent to Attorney General Eric Holder by the House Judiciary Committee:
On December 3, the Washington Post printed an article that reported significant and persistent problems within the Office of the Pardon Attorney. You testified when you were confirmed that you would study the problems with the clemency advisory process and fix them. Please let us know what you have found and what changes you have made or plan to make.
It has been reported that the pardon attorney no longer assigns commutation cases to staff attorneys, and does not write a recommendation in the large majority of these cases.
How does this fulfill the Department's responsibility to advise the president about the merits of each case?
Doesn't this make the commutation process meaningless for most applicants?
How can the pardon attorney himself conduct a meaningful review of thousands of commutation petitions?
Even if most of these should be denied, if no one is really looking at them, how do you know each one is without merit?
We can all agree that no system is perfect. The legal system is no exception. There are mistakes. The Constitution gives the president a role in fixing such mistakes. How does this procedure help the president do that?
How does the pardon office identify the rare exception that deserves a closer look? Political support? Media attention? If so, is that the best way — the most fair way — to make these decisions?
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In response to growing pressure from voters and competitors, Republican presidential candidate Mitt Romney released 550 pages of tax returns Tuesday, covering two years of income. As one of the richest men ever to run for President, Romney's filings are enormously complex, and the subject of close scrutiny. News organizations are making their way through the returns. Here's our guide to where to look to make sense of the numbers.
The Washington Post, one of the news outlets with early access to the returns, reports that Romney got most of his income -- $21.7 million in 2010 and $20.9 million in 2011 — from profits, dividends or interest from investments. As you can see in the Post's annotated guide, none of that money came from wages or salaries, which is the main source of income for most Americans. Because most of his earnings came from capital gains, Romney paid just under 14 percent of his income in taxes in 2010. In comparison, in 2010 Obama was taxed at 26.3 percent and Gingrich at 31.7 percent. Even these figures understate the difference: Romney paid Medicare taxes on only his speech fees, while most Americans pay the 1.45 percent Medicare levy on nearly all of their income. See more candidate comparisons in this New York Times chart, or this one from CNN.
The American Enterprise Institute blog notes that Romney actually pays a higher effective tax rate than 60 percent of Americans (a family making around $45,000 would have an effective tax rate of 7.4 percent). But as Reuters explains, 14 percent is less than half the top rate on ordinary wages, which can be taxed up to 35 percent. Romney paid or will pay a total of about $6.2 million in taxes on his income from 2010 and 2011. Over those two years, he and his wife Ann have given about the same amount in charitable donations, including $4.1 million to the Church of Jesus Christ of Latter-day Saints. The Salt Lake City Tribune notes that Romney is one of the Mormon Church's biggest benefactors, and pays about a tenth of his income in tithe.
The Times' Caucus blog is keeping a live blog of findings as reporters comb through the returns. Some of their latest discoveries:
Speaking fees: Last week Romney told a crowd in South Carolina: “I get speaker's fees from time to time, but not very much." Turns out his author/speaking fees amounted to precisely $528,871 in 2010, and $110,500 in 2011.
The top 0.006 percent: According to the IRS, anyone who makes more than $10 million would be in the top 0.006 percent of taxpayers (according to their latest numbers from 2009). With an income of $21 million in 2010, Romney would be even higher.
Mortgage? Like Gingrich, Romney doesn't seem to have a home mortgage, as neither took a deduction in 2010. Obama, on the other hand, took a home mortgage interest deduction of $49,945.
Romney's 2010 tax return indicated he had a "bank account, security account or other financial account" in Switzerland, but the account was closed in 2010, his aides told the Wall Street Journal. The return also reports financial accounts in Bermuda and the Cayman Islands.
As noted in Bloomberg Businessweek, the recent release is likely to spark renewed controversy over how the tax code treats the extremely wealthy. The phrase at the center of this debate is “carried interest.” Partners in private equity firms, hedge funds and real estate developments get most of their compensation through carried interest, and since those earnings don't count as ordinary income, they are taxed much less.
Put simply, carried interest is a share of a partnership's profits that is taxed as a capital gain as opposed to ordinary income. It is a good deal: The top rate on gains held longer than a year is 15%, so the tax on carried interest is usually less than half the top 35% rate on ordinary income. There aren't FICA or Medicare taxes, either.
Benjamin Ginsberg, the Romney campaign's chief counsel, disclosed to the New York Times that Romney earned $7.4 million in carried interest from private equity firm Bain Capital in 2010.
Obama has repeatedly called the tax code's treatment of carried interest a “loophole” that's “just not fair,” and Warren Buffett mentioned it earlier last year when he demanded that the government stop coddling the mega rich. New York Mayor and billionaire Mike Bloomberg told the Wall Street Journal that “If it were up to me, I would end the concept of carried interest.”
Yet James Stewart, a Pulitzer Prize winning reporter who writes a business column for the New York Times, doesn't see it that way. Last year he wrote that carried interest is “indistinguishable from nearly all other forms of compensation that are treated like capital gains, such as stock options, deferred stock grants for corporate executives and many forms of incentive compensation, which is widespread across many industries. Like all capital investments, carried interest entails risk, since there's no way of knowing what it will be worth until long after the labor is performed, often years later.”
Ad Buy Highlights Gulf Restoration Bill Support Before Florida Debate, Primary
An environmental organization launched a two-day, $30,000 radio ad blitz in Florida Thursday to highlight congressional, editorial and voter support across the political spectrum for a multi-billion dollar Gulf Coast restoration bill funded by BP oil spill fines.
Environmental Defense Action Fund says that it timed the ad buy to Thursday's GOP presidential candidates debate in Jacksonville, and following primary election in the Sunshine State.
Last week, Reuters reported that BP is likely to agree next month to pay $20 billion to $25 billion to settle all charges around the unprecedented Gulf oil spill — including fines for violating the Clean Water Act (CWA) — before the scheduled start of legal hearings in New Orleans on February 27.
"Florida, the Gulf Coast states, and the nation's economy are still suffering from the BP oil disaster, so we wanted to highlight this vital issue before the nationally televised presidential debate tonight and the first Gulf state primary on Tuesday," says Elizabeth Thompson, director of congressional affairs & president of Environmental Defense Action Fund. "All candidates for public office need to know that newspapers and voters in Florida and the Gulf Coast across the political spectrum consider support for this Gulf restoration bill an important litmus test to determine which candidates they will support."
The bipartisan Gulf restoration bill in the Senate and House — the RESTORE the Gulf Coast States Act (S. 1400/H.R. 3096) — would dedicate the CWA fines for the Gulf oil spill to restoring the Gulf Coast ecosystem and economy.
The 60-second ads will air a total of 55 times Thursday and Friday on news-talk radio stations in Jacksonville (WOKV-690AM/106.5FM), Tallahassee (WFLA-100.7FM Tallahassee) and Tampa Bay(WFLA-970AM Tampa).
The ads cite a recent poll that shows more than 70 percent of Florida Republicans, tea party supporters, independents and Democrats are more likely to support candidates who support the RESTORE Act.
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President Barack Obama's previous State of the Union speeches have pushed passage of such hallmark initiatives as the stimulus bill, health-care reform, the drawdown of troops in Iraq and Afghanistan and repeal of the military's "don't ask, don't tell" policy on gays. But some big ideas from previous SOTU addresses have been abandoned.
The Washington Post's Glenn Kessler has done a line-by-line analysis of some of the specific promises made in the 2010 and 2011 addresses, and how they've held up. Here we track the evolution of a few of Obama's promises in the SOTU addresses — and why he's struggled to keep them.
Energy and Infrastructure
Obama's speeches have pushed investment in alternative energy technology and major green infrastructure projects as a linchpin of his overall economic recovery plan, but Republicans in Congress have stymied these ambitions. Obama's 2009 speech claimed the stimulus bill would double the U.S. supply of renewable energy in three years and vowed to invest $15 billion in research and development for alternative energy and fuel-efficient cars. In 2010, U.S. energy from renewables averaged around 8 percent, unchanged from 2009; an updated figure is not yet available.
In his 2010 speech, Obama appeared to acknowledge Republican interests, mentioning “tough choices” on new nuclear power plants and offshore oil and gas exploration. But that year's climate-change bill languished in the Senate over disagreements on carbon caps and new efficiency standards.
Obama's 2011 speech kept to the theme of technological advance under the rubric “Winning the Future.” He vowed that by 2035, 80 percent of the country's electricity would be from clean energy and again called for increased funding for research and development. The U.S. Chamber of Commerce bluntly called the 2035 goal “impossible.” Obama's plan to give 80 percent of Americans access to high-speed rail within 25 years has made essentially no progress. The one project that did begin — in California — since has stalled.
Obama's energy goals have run up against a Congress hostile to costly projects in general and particularly suspicious of environmental regulation. The bankruptcy of solar-panel maker Solyndra Inc., which had received a $535 million federal loan guarantee, furthered the case of critics who argued that spending on clean energy was wasteful.
Taxes
In every SOTU to date, Obama has called for a tax on the wealthiest 2 percent of Americans — in other words, an end to the George W. Bush tax cuts for those making more than $250,000 a year. Obama agreed to temporarily extend the Bush tax cuts in 2010 as part of a deal with Republicans that also extended jobless benefits. Last year, Obama and congressional Democrats abandoned plans for a millionaire's surtax in return for Republican backing to extend a payroll tax cut.
Then there is tax reform. Each year, Obama has called for a simplifying the individual tax code and for a lower corporate tax rate. Cutting the 35 percent corporate tax rate has support from some Democrats and Republicans as well as many corporations and business groups. But as Marian Wang explained last year, any effort to overhaul the tax code inevitably means opposition — from groups that benefit from loopholes and tax breaks that reformers hope to repeal.
Guantanamo
In his 2009 SOTU, Obama pronounced the closing of Guantanamo Bay a centerpiece of his foreign policy. “In words and deeds, we are showing the world that a new era of engagement has begun,” he said. As ProPublica's coverage has shown, the administration continued to make periodic calls for Guantanamo's closure but could not overcome opposition to it. In March 2011, the administration revised its stance on Guantanamo, allowing for military trials of prisoners there to resume instead of moving them to federal criminal courts.
The DREAM Act
In last year's SOTU, Obama spoke at length about the need for comprehensive immigration reform, and he expressed support for legislation to grant legal residency to some undocumented immigrants who were brought to the country illegally as children. The DREAM Act failed to pass Congress in 2010 or 2011. Without a new immigration policy, the administration changed enforcement strategy, and exercises “particular care” in deciding on deportations, especially in the cases of students and young people. According to The New York Times, this approach has been applied unevenly and has caused confusion among enforcers and immigrant families alike.
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Pollster: SOTU Provides 'Powerful Framework For Having an Election'
President Obama's State of the Union address Tuesday night should "help him a lot" in his fight for re-election this year, according to longtime Democratic pollster Stan Greenberg, citing results of a focus group of swing voters held during the speech.
The themes the president laid out during his annual televised address to a joint session of Congress cut across party lines and provide a "powerful framework for having an election," Greenberg says in a briefing with reporters held after the president's speech.
Reaction from 50 swing voters in Denver, Colo., show that Obama's populist defense of the middle class and their priorities in his State of the Union scored with voters, according to Greenberg's polling organizations, Democracy Corps and Greenberg, Quinlan and Rosner.
The president generated strong responses on energy, education and foreign policy, but most important, he made impressive gains on a range of economic measures, the pollsters say in a memo released after the news briefing.
These swing voters, even the Republicans, responded enthusiastically to his call for a “"Buffet Rule"” that would require the wealthiest Americans to pay more taxes. As one participant put it, “"I agree with his tax reform -- the 1 percent should shoulder more of the burden than the other 99 percent. He [Obama] talked about being all for one, one for all -- that really resonated for me."
These reactions by voters make it very clear that defending further tax cuts for those at the top of the economic spectrum puts Republicans in Congress and on the presidential campaign trail well outside of the American mainstream, the pollsters say.
These voters overwhelmingly liked what they heard from Obama-- even those who voted against him in 2008 appreciated the address, the pollsters say. But they continued to show deep skepticism that the president would be able to translate these words into actions.
The more Democratic participants mostly blamed Republican obstructionism while the more Republican participants insisted that Obama might talk a good game, but his actions in office did not reflect the words in this speech. However, participants across the political spectrum all agreed that Washington is broken and that progress on the important issues would be difficult until Congress addresses the corrupting influence of lobbyists and special interests.
This was not the easiest audience for Obama; although slightly more participants voted for him than McCain in 2008, it was a significantly Republican-leaning group (44 percent Republican, 32 percent Democratic), the pollsters say.
Within the focus group, Obama's approval rating jumped 8 points, to 58 percent. Further, his personal standing jumped 16 points, to 66 percent favorable.
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Conservatives treat any suggestion that our current economic system unfairly favors the wealthy as tantamount to calling for socialism. In doing so they should realize they’re attacking the opinions of most Americans who do, in fact, believe the system unfairly favors the wealthy. In a December poll, the Pew Research Center found that 61 percent of Americans believe this is the case compared to just 36 percent who disagree.
And in a just-released poll, ABC News/The Washington Post found that 55 percent of Americans believe unfairness in the economic system that favors the wealthy is the bigger problem in the country, compared to 35 percent who believe overregulation of the free market that interferes with growth and prosperity is the bigger problem.
Conservatives should be careful who they’re accusing of being socialists. Most Americans do believe the economic system is unfair and the wealthy are the benefactors of that unfairness. So far, all the bluster on conservatives’ part is doing little to change that view.
Ruy Teixeira is a Senior Fellow at the Center for American Progress. To learn more about his public opinion analysis, go to the Media and Progressive Values page and the Progressive Studies program page of our website.
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A professional journalist who lives with his family outside Washington DC, Scott Nance has covered Congress and the federal government for more than a decade. He is also a regular contributor to The Democratic Daily.
