Aaron is Right, Aviv is Wrong: The Wealthy Cannot Keep Escaping Taxes

Aaron Dorfman

Quito   A number of the big dog, nonprofit charities trooped over to visit with Congress to try to protect every dime of their tax breaks, especially the blanket deductions that favor the rich and superrich.   They were led by Diane Aviv, the longtime head of Independent Sector, the big nonprofits trade group that has recently been squealing like a stuck pig about any change in their favored loophole status.   Having run nonprofits for decades, I have to say it’s an embarrassing spectacle.  There is no way that Aviv and the mega-charities speak for progressive nonprofits.

Luckily, Aaron Dorfman, head of the National Center for Responsive Philanthropy, does, or at least tries to, according to the statement his organization released that was quoted in the New York Times:

 “If nonprofit leaders don’t want changes to the charitable deduction, it is imperative that we get behind the president’s call for higher tax rates on the wealthy,” said Aaron Dorfman of the National Committee for Responsive Philanthropy in a statement. “The majority of nonprofits know this is true,” Mr. Dorfman said, “and I urge the hundreds of nonprofit leaders who have traveled to our nation’s capital for visits with members of Congress today to clearly advocate for higher tax rates on the wealthy in addition to their advocacy in opposition to any changes to the charitable deduction.”

Ok, well he doesn’t quite speak for all of us, since the deduction does need some changes, as I argued a couple of days ago in these pages.   Nonetheless, Aaron, whom I have known back to his days as an ACORN organizer in Minnesota and Florida knows better and still has to work with these people and get invited to their club meetings from time to time, so this was clearly the best he could do by at least siding with the White House on the need for reform and more taxes on the wealthy, which was miles farther than the rest of these folks and the Independent Sector seem willing to do.

Their position is becoming a shameful case of self-dealing in the face of the clear and obvious need for equity and justice in the country.  How can so many of these big timers like Catholic Charities stand for that?  United Way, who is surprised, since they have been a business plaything for years in countless communities, but jeez!

And, for what?  Even Mitt Romney’s position was better than theirs!

There’s also pretty clear reasons to believe that Aviv and the Independent Sector are fudging on the potential impact of even the White House’s modest proposal to lower the cap on the deduction from 35% to 28% for families with incomes over $350,000 per year.   Also from the Times:

Capping the value of the deduction, as the White House has suggested, might reduce giving by as much as $7 billion a year out of $300 billion over all, according to an estimate by Independent Sector.  But other estimates have proved more moderate. For instance, the Center on Philanthropy at Indiana University last year analyzed the Obama administration’s proposal to increase marginal tax rates and cap the value of charitable giving. It estimated that itemized giving would have declined just 0.4 percent in the first year after being put in place and 1.3 percent in the second. “This suggests a relatively small direct impact, but combined with the weak economic climate, funding reductions and increased demand for services already affecting some nonprofits and their constituents, these changes are likely to have an additional negative effect in the long term,” Patrick M. Rooney, executive director of the Center on Philanthropy, said in a statement.

So, not only is Aaron right and Aviv wrong.  Aviv may be gilding the lily for her big time  backers and padding the facts, when we need a clear and united voice for nonprofits that it is time for more equity and justice for all Americans not just protection of special benefits and deals for Aviv and her buddies.

As Aaron says, “…it is imperative that we get behind the president’s call for higher tax rates on the wealthy.  The majority of nonprofits know this is true…”

Aaron speaks for us.  Please listen to him, not Aviv, and give us tax reform, including reform on charitable deductions!

Locating Housing for the Poor: Good Intentions, Expediency, and Living with the Consequences

Robert Moses, seated at left in 1959, used his position as head of the Mayor's Committee on Slum Clearance to mass-produce thousands of units of public housing, often near the shoreline.

 Quito    One of the ironic outcomes of recent disasters, whether New Orleans or now New York, is that the public, policy makers, and politicians are finally forced to reckon with where the poor are, and often, where they have put the poor in ways that are hard to escape.  In a smaller way this is true of politics and elections as well, as we have recently seen in the sudden realization of the Republican Party that there are a whole, whopping lot of people out in America that don’t look or think like them.   Like disasters, democracy is an equally transforming experience, as I am also seeing daily in Quito and throughout Ecuador, as new and old parties try to calculate their appeal and power in places they do not know and with people they do not completely recognize because they are foreign to their daily experience.

In New Orleans ignoring the failure of public protection and the levee system, many areas that flooded were in places like the 9th Ward where land had at one time been cheap enough to allow African-American families to buy and build or where swamps had been filled sufficiently to allow developers to create cheaper land for housing expansion as the city grew.  In Quito or Mexico City or Lima, poorer and lower waged workers, immigrants, or migrants moved to where there was land, squatted, and tried to make the best of it, until cities were slowly forced to deal with the burgeoning populations and politicians were forced to figure ways to deliver to leverage their support. 

In New York an interesting piece today in the Times, “How the Coastline Became a Place to Put the Poor,” by Jonathan Mahler, looks at the role of legendary power broker and public developer, Robert Moses.

The Rockaways were irresistible to Moses. Once a popular summer resort for middle-class New Yorkers, who filled its seaside bungalows and crowded into its amusement parks, the area had fallen on hard times when cars, new roads and improved train service made the beaches of Long Island more accessible.

Never one for nostalgia, Moses saw the Rockaways as both a symbol of the past and a justification for his own aggressive approach to urban renewal, to building what he envisioned as the city of the future. “Such beaches as the Rockaways and those on Long Island and Coney Island lend themselves to summer exploitation, to honky-tonk catchpenny amusement resorts, shacks built without reference to health, sanitation, safety and decent living,” he said, making his case for refashioning the old summer resorts into year-round residential communities.

What is more, the Rockaways had plenty of land that the city could buy cheaply, or simply seize under its newly increased powers of eminent domain, swaths big enough to accommodate the enormous public-housing towers Moses intended to build as part of his “Rockaway Improvement Plan.” Though only a tiny fraction of the population of Queens lived in the Rockaways, it would soon contain more than half of its public housing.

In fairness of a sort, Mahler even concedes that maybe some of these re-locations might have not just been based on cheap land and eminent domain, but even “good intentions,” citing the efforts of Mayor Fiorello LaGuardia to clean up the slums on New York’s Lower East Side, pushing new housing towards the waterfront, which also flooded in the wake of Hurricane Sandy.

What interests me is not that plans go awry over time, that good intentions can create their own hells, or that concentrated high rises for the poor, the old, the infirm, and the challenged can re-ghettoize areas into new wastelands “…without reference to health, sanitation, safety and decent living” in the earlier words of Robert Moses, but the inability of governments, politicians, and the public to abandon their nostalgic notions of what they had hoped might be developed when they pushed the poor out of sight and fully meet the challenge of resolving the handiwork of earlier decisions and their consequences.  Without a doubt, cheap land is going to attract poorer families and poorly funded public works.  This is simply reality, regardless of the intentions, so let’s get past that.

The real problem is that whether governments push people there as in New York City or turn their heads and finally find them there in New Orleans, Quito, Lima, Mexico City, and thousands of other cities, small and large, ignorance of the government is not bliss, and the challenges created by reality have to be faced.  For want of a better way to say this, if housing is going to be separate, at least citizens and families have to be assured that it is equal.  Services have to be provided.  Transportation has to be affordable and accessible.  Jobs and work locations have to have incentives to move nearby.  Decent retail outlets have to be located in accessible areas and subsidized if necessary to ensure success.  Public schools, police, fire, health clinics and hospitals have to be built, supported, and guaranteed to perform at the same or better quality as provided anywhere else in the government’s jurisdiction.

The social contract between government and citizens cannot guarantee that there will never be mistakes or that perfection is possible, but has to warrant that every effort will be made to create equity and in simpler terms, to fix whatever is broken.  Ironically, doing so not only provides more citizen wealth, city stability and security, but on the long run saves money as countless studies have established.

Democracy encourages us to not avoid the messes we create and the problems around us because it allows people to have a voice and creates occasions where these voices cannot be ignored or silenced.  Disasters by definition are terrible and force us to stop ignoring the precarious problems we have created and reckon with the largeness of our “community” in terms of morality and human rights, easily swept aside in the hurry of everyday lives, but now no longer invisible, and recommit to the minimum standards that must be equitably guaranteed to all.

Land use is a public decision and commitment, not a matter of fate and possible fatality.

Elizabeth Warren’s Two-Income Trap

NElizabeth-Warren-Sheriffew Orleans With the passage of Dodd-Frank and the advent of the coming Consumer Protection Finance Agency there was a huge hubbub from business and others opposing the appointment of Harvard Law Professor and bankruptcy expert Elizabeth Warren to run the agency.  Supposedly she was opposed by Treasury Secretary Timothy Geithner, the bank bailout Wall Street buddy-boy, which made me like her in a kneejerk sort of way:  anyone who was his enemy was surely my friend!  She had a hardscrabble personal story that started in red dirt Oklahoma with a father pushed over the financial edge, and knowing that country also biased me towards her, even though her being at Harvard stuck in my craw.  All of that is over now.  I read the book she wrote with her daughter, Amelia Tyagi, called The Two-Income Trap:  Why Middle-Class Mothers & Fathers are Going Broke, and now I’ve gotten my head together on the true facts and her core arguments, and I totally get it.  Count me as a fan!

I also get why so many were lined up against her:  first, she’s an equal-opportunity offender zinging left, right and in-between on the issues whether banks or unions, and, secondly, she’s an iconoclastic feminist arguing a totally womanist line with women and children in front, but questioning the normally unchallenged assumptions about women in the workplace.  That’s a deadly set of variables for any political calculation.  No doubt she only got this far because most people – like me! – didn’t ever bother to read the book!

Some examples:

  • She zings Citibank before the meltdown for an average mortgage interest rate of about 17% and in a tell-all story relates the tale of a one-day consulting gig she did for them about bankruptcy and families in which she argued that Citi should simply not lend to people overstretched, and a senior executive dismissed the entire argument because jacking the overextended with more products and predatory interest rates was essentially their golden goose and business model.
  • She tells a moving story of a meeting with Hilary Clinton as a former First Lady and how quickly Clinton got the importance of opposing the passage of a proposed new corporate-backed bankruptcy law and committed her support to the fight, but then once elected as a U.S. Senator from New York, turned around completely to support her new constituency on Wall Street rather than women.  She everything but says that Clinton and senior Senator Chuck Schumer were bought and paid for by campaign contributions.
  • She comes out for universal school vouchers and total school choice for good reasons perhaps, but based on the fuzziest of political and economic premises about what would really create “equity” in school offerings, all of which must have driven the teacher unions up a wall.

Generally she drives the hammer hard on the nail.

Over-consumption is roundly dismissed as the economic trigger of the debt crises, which she argues sprang directly from middle class parents trying to find two critically essential things for their children:  good schools and safety.  In the midst of a national education crises and too often random urban crime, both parents were not only forced to work, but also ended up doubling down on inflated house mortgages in the best school districts:  the two-income trap.  Unfortunately, doing so eliminated in the Warrens argument, the historic bench strength of having a reserve worker ready (the wife) that could go to work in a crisis brought on my job loss, medical bills, or family breakups.  Folks were already stretched over the line so tautly that the least twist and they were pulled under.

I can’t say how happy I was to read this book and find out that Elizabeth Warren is fellow traveler on the citizen wealth bus.  I could go on and on, but every once in a while it’s such a pleasure to go back to the first sources and find with total surprise that someone is even better than I could have imagined.

Props to President Obama for stepping up and finding a way for Warren to work in the White House and make the Consumer Financial Protection Agency happen!  The beginnings always prejudice the ends, so she’s in the right space, regardless of whether or not she can run the show.  Better to have a toe smasher than a tiptoe dancer protecting the financial futures of desperate families!