Finally, Higher Taxes for the 1% -- Is Occupy Behind Governors' Moves to Make the Wealthy Pay Their Share?

By Sarah Jaffe, AlterNet 

Thursday 8 December 2011 -- Is the narrative around taxes finally shifting? Thanks to heavy public pressure, Governors Cuomo and Brown propose taxing their states' ultrarich.

This week the New York State Senate and Assembly near-unanimously passed a measure that would increase the top tax rate on the state's wealthiest citizens — at Gov. Andrew Cuomo's request.

It was not even two months ago that Cuomo made his infamous statement that his defense of low taxes for the rich was just like the stand his father, former Gov. Mario Cuomo, took against the death penalty in New York State.

“The point is, we don’t elect — the governor isn’t a big poll-taking machine. And that’s what we do, we take a poll and do whatever the poll says, and you wouldn’t need me … so the fact that everyone wants it, that doesn’t mean all that much. I respect the people — their opinion matters — but I’m not going to go back and forth with the political winds.”

Well, the wind appears to have shifted behind Cuomo — but what changed?

Perhaps the momentum created by the Occupy Wall Street movement helped change Cuomo's mind. 

He has denied it, but Nelini Stamp, a community organizer with the Working Families Party who's been with Occupy Wall Street since the beginning, notes that Cuomo had essentially "written off" any tax increase on the 1 percent. She tells AlterNet, “What they did in Albany, where they had the sign 'Welcome to Albany, home of Governor 1%,' that had an effect.”

Taxing the rich, it should be noted, has been popular in America for a while, polling consistently at well over majority support. But politicians of both parties are so dependent upon money for campaigns that they've been completely in the pockets of the wealthy for years — and thus any talk about taxing the rich has been written off as “class warfare.”

No more, it seems. It's not just New York that is seeing a move to tax the rich — California's Gov. Jerry Brown also has a proposal that will be a ballot initiative in next election that would raise taxes on his state's 1 percent as well, and progressive groups are pushing him to go even further. 

“We know that the mood of this country and the mood of this state right now is to tax those who can pay more and who have most benefited from the system,” says Rick Jacobs, founder and chair of the Courage Campaign.

It seems that the shift in the public conversation over Occupy Wall Street is starting to actually change our politics. Since the beginning, OWS and the other Occupy movements have faced complaints that it has no strategy for affecting legislative change. But Stamp notes, “We are transforming the political narrative into small legislative wins — and that doesn't mean that we stop.”

Governor 1% and the Millionaire's Tax

As I reported in October, the massively popular millionaire's tax, a surtax on the very wealthy, was set to expire Dec. 31, resulting in an effective near-$5 billion tax break for the richest. The surcharge, instituted in 2009 after Wall Street's financial crisis, crashed the economy, created two new tax brackets, taxing families with incomes of $300,000 at a rate of 7.85 percent and those over $500,000 at 8.97 percent.

That surcharge is still being allowed to expire, but instead, those making over $1 million (or families making over $2 million) will see their tax rate go up to 8.82 percent on Jan. 1. The State Senate unanimously passed the deal, 55-0, on Wednesday night, and Thursday morning the Assembly voted 130-8 for it. The Associated Press described what else is in the package, which features a tax break for 4.4 million middle-class New Yorkers:

“The tax increase will raise $2 billion to pay for the middle-class tax break, a break in the New York City transit tax for small businesses, a public-private infrastructure repair fund, a tax break for manufacturers, and $50 million in aid to upstate communities trying to recover from historic flooding in the late summer. The funding is also expected to avoid another year of cuts to education and health care.”

Still, lots of observers are less than thrilled with Cuomo's deal. “Does it make the system more 'fair?' Yes. It does. That said, New York once had a very progressive tax code. That all got flattened in the last 30-40 years,” says Phillip Anderson, blogger at The Albany Project and veteran New York political activist. “This is a very small but not entirely insignificant step in the direction of fairness.”

Stamp notes, “The fact that he kind of did a 180 is a victory. But it is also a reform that is not going to really solve anything. We're going to have a deficit of four or five billion dollars; this is just going to be able to provide about $2 billion of that, and he's going to continue to cut schools.”

And Olivia Leirer, spokesperson for New York Communities for Change, says, “It's still a tax cut for millionaires. It doesn't cover the lost revenue for letting the millionaire's tax expire. It's going to lead to another nasty fight over the budget in the spring.”

The deal, in other words, lets Cuomo and Republican State Senate Majority Leader Dean Skelos claim to be looking out for the middle class and still point out to the very rich that it might have been worse. Occupy Albany was distributing flyers that called it “More of the Status-Cuomo” and said it was “$3 billion less revenue for the 99%.”

Yet Stamp points out that weeks ago, Cuomo had written off any suggestion that the millionaire's tax should be extended or that the rich should pay any more in taxes. “We can call this a quasi-victory,” she says. “The next steps are really making sure that we go big, making sure that we're protecting students, making sure we're protecting schools and hospitals.”

California Moves to Tax the Rich Too

Facing a projected $13 billion budget deficit, Gov. Brown has proposed a tax hike on those making $250,000 from 9.3 percent to 10.3 percent. Incomes between $300,000 and $500,000 would see the rate go to 10.8 percent. Incomes above $500,000 would pay 11.3 percent. Currently, Californians who make more than $1 million are taxed at 10.3 percent.

Brown's proposal would be a ballot initiative after he failed to gain approval from the state Legislature for $11 billion in taxes and fees. "I am going directly to the voters, because I don't want to get bogged down in partisan gridlock as happened this year," he said in a statement. California law requires two-thirds of the Legislature to agree on any increase in taxes, a near-impossible task when the state's Republican minority controls enough seats to simply dig in and refuse to pass anything. A ballot measure may be the only hope.  

But Brown's plan also includes a statewide sales tax hike, to 7.75 pe

cent from 7.25 percent, and the Courage Campaign, a California progressive advocacy group, estimates that it would cost the average Californian $123. “The sales tax is regressive, everybody knows that,” Rick Jacobs of the Courage Campaign says. “It certainly is hard to get a grassroots movement around raising the sales tax.”

They're proposing instead their own ballot initiative, the Millionaires Tax to Restore Funding for Education and Essential Services Act of 2012, for a tax increase by three percentage points on those who make between $1 million and $2 million, and five points on those who make over $2 million. Three-fifths of the revenue raised from their plan would go to K-12 and higher education (including the cash-strapped California university systems, where students are protesting and occupying over tuition hikes). The rest would go to local governments for infrastructure and safety.

Jacobs says “without any question” the Occupy movement has provided pressure for a tax increase on the rich, and particularly for funding for higher education. The graduate students union and the University of California Student Association are just some of the groups supporting the millionaire's tax. “If you look at the unrest that we've seen on college campuses, the root of it is money. There's just not money anymore for what was the sterling public university system in the world,” Jacobs says.

It will require 500,000 signatures to get the millionaire's tax on the ballot for next November — Gov. Brown's measure, because it would amend the state constitution, would require over 800,000. Jacobs says they plan to continue talking to the governor and working with allies to try to get the best possible measure on the ballot. “I'm glad the governor did what he did, and there's a lot of room for improvement,” he says.

Moving Forward

Nelini Stamp, speaking to AlterNet from inside an occupied home in East New York, where a family was moved into a foreclosed empty house by Occupy Wall Street activists, says that the next move in the spring, around the New York state budget, is going to have to be big. “We need to be really putting pressure on those powers. We've challenged the power of the status quo — I hope we're going to move to challenging particular pillars of power.”

And Olivia Leirer points out, “It's a continuation of the same fight — it's heartening to know that we've made some progress, but every victory is a small step in the right direction.”

The refusal of the Occupy movement to be satisfied with small electoral victories and the new vigor and interest in the work of those Stamp calls the “traditional left” have left Democrats scrambling to catch up. Public opinion on tax issues, as I noted above, hasn't really changed, but the visible, growing movement is finally pushing politicians to act. And continued pressure on those politicians can help keep them moving toward real solutions.

Stamp says, “I don't think anybody is going to chill out and relax. We are transforming the political narrative into small legislative wins, but that doesn't mean that we stop. That means we continue. This is a first example of the shift in power.”