Ten Fair Ways to Reduce the Deficit and Create Jobs
Republicans in Washington, D.C. want to balance the budget by slashing Social Security, Medicare, Medicaid, food stamps, education and other federal programs that millions of Americans rely upon.
I have a better idea. At a time when we are experiencing more wealth and income inequality than at any time since the 1920s, and when Wall Street and large corporations are enjoying record breaking profits, I believe that we should be asking the very wealthiest people in this country to start paying their fair share of taxes. That way, we will not only lower the deficit but we will bring in enough revenue to invest in our economy and create the millions of new jobs we desperately need.
From both a moral and economic perspective, we must not balance the budget on the elderly, the children, the sick, working families, and the most vulnerable.
Here are 10 examples of how we can raise revenue and reduce spending in a fair way.
Stop corporations from using offshore tax havens to avoid U.S. taxes. Each and every year, the United States loses an estimated $100 billion in tax revenues due to offshore tax abuses by the wealthy and large corporations. The situation has become so absurd that one five-story office building in the Cayman Islands is now the “home” to more than 18,000 corporations.
The wealthy and large corporations should not be allowed to avoid paying taxes by setting up tax shelters in Panama, the Cayman Islands, Bermuda, the Bahamas or other tax haven countries. The first bill that I introduced in the Senate (the Corporate Tax Dodging Prevention Act) would raise more than $580 billion over the next decade by eliminating the most egregious corporate offshore tax haven abuses.
- Establish a Robin Hood tax on Wall Street speculators. Both the economic crisis and the deficit crisis are a direct result of the greed and recklessness on Wall Street. Creating a speculation fee of just 0.03 percent on the sale of credit default swaps, derivatives, options, futures, and large amounts of stock would reduce gambling on Wall Street, encourage the financial sector to invest in the job-creating productive economy, and reduce the deficit by $352 billion over 10 years, according to the Joint Committee on Taxation.
- End tax breaks and subsidies for big oil, gas and coal companies. If we ended tax breaks and subsidies for big oil, gas, and coal companies, we could reduce the deficit by more than $113 billion over the next ten years. The five largest oil companies in the United States have made over $1 trillion in profits over the past decade. Exxon Mobil is now the most profitable corporation in the world. Large, profitable fossil fuel companies do not need a tax break.
- Establish a Progressive Estate Tax. If we established a progressive estate tax on inherited wealth of more than $3.5 million, we could raise more than $300 billion over 10 years. In 2010, Sen. Sanders introduced the Responsible Estate Tax Act that would reduce the deficit in a fair way while ensuring that 99.7 percent of Americans would never pay a penny in estate taxes.
- Tax capital gains and dividends the same as work. Taxing capital gains and dividends the same way that we tax work would raise more than $500 billion over the next decade. Warren Buffet has often said that he pays a lower effective tax rate than his secretary. The reason for this is that the wealthy obtain most of their income from capital gains and dividends, which is taxed at a much lower rate than work. Right now, the top marginal income tax for working is 39.6%, but the top tax rate on corporate dividends and capital gains is only 23.9%.
- Repeal all of the 2001 and 2003 Bush tax breaks for the top two percent. In January, Congress finally repealed the Bush tax breaks for the top one percent – households making more than $450,000 a year. But the Bush tax breaks have been continued for the top two percent – households with incomes between $250,000 and $450,000 a year. Repealing the Bush tax breaks for all of the top two percent would reduce the deficit by about $400 billion over the next decade. After President Clinton increased taxes on the top two percent, the economy added over 22 million jobs. After President Bush reduced taxes for the rich, the economy lost over 600,000 private sector jobs.
- Eliminate the cap on taxable income that goes into the Social Security Trust Fund. If we are serious about making sure that Social Security can pay all of the benefits owed to every eligible American for the next 50 to 75 years, we don’t do that by cutting benefits, we do that by scrapping the cap on taxable income so that a millionaire and a billionaire pays the same percentage of their income into Social Security as someone making $40,000 or $50,000 a year. Right now, someone who earns $113,700 a year pays the same amount of money in Social Security taxes as a billionaire. This makes no sense. Applying the Social Security payroll tax on income above $250,000 would ensure that Social Security remains solvent for the next 50 years. This plan would only impact the wealthiest 1.3 percent of wage earners; 98.7 percent of wage earners in the United States would not see their taxes go up by one dime.
- Establish a currency manipulation fee on China and other countries. As almost everyone knows, China is manipulating its currency, giving it an unfair trade advantage over the United States and destroying decent paying manufacturing jobs in the process. If we imposed a currency manipulation fee on China and other currency manipulators, the Economic Policy Institute has estimated that we could raise $500 billion over 10 years and create 1 million jobs in the process.
- Reduce unnecessary and wasteful spending at the Pentagon, which now consumes over half of our discretionary budget. Much of the huge spending at the Pentagon is devoted to spending money on Cold War weapons programs to fight a Soviet Union that no longer exists. Lawrence Korb, an Assistant Secretary of Defense under Ronald Reagan, has estimated that we could achieve significant savings of around $100 billion a year at the Pentagon while still ensuring that the United States has the strongest and most powerful military in the world.
- Require Medicare to negotiate for lower prescription drug prices with the pharmaceutical industry. Requiring Medicare to negotiate drug prices, similarly to what the VA currently does, would save more than $240 billion over 10 years.