Letter to the Senate on The American Family Economic Protection Act
February 28, 2013
On behalf of the more than three million members of the National Education Association (NEA), we would like to express our support for the American Family Economic Protection Act and our opposition to the rival GOP proposal—a deeply cynical political ploy that would slash funding for programs that benefit working families and schoolchildren while preserving tax loopholes for the wealthy and corporations. Votes associated with these issues may be included in the NEA Legislative Report Card for the 113th Congress.
The American Family Economic Protection Act would generate significant revenue by asking the wealthiest individuals to pay their fair share. For too long, the burden of deficit reduction has fallen on those least able to make sacrifices. Funding for discretionary programs like education has already taken a $1.5 trillion hit in the Budget Control Act and last year’s funding bills.
We are particularly pleased to see that the American Family Economic Protection Act includes the “Buffet Rule,” which would ensure that multi-million-dollar earners pay at least a 30 percent effective tax rate. The current system is skewed in favor of those who can best afford to contribute to economic recovery and against those who struggle the most. Implementing the Buffet Rule would help choose the right vision for America—the one in which every American contributes to economic recovery and all have the hope and the help they need to succeed.
We also support the proposals to close an oil industry tax loophole and end tax breaks for shipping jobs overseas. The increasing erosion of the corporate tax base has brought us to the point where, measured by either corporate taxes as a percentage of GDP or corporate taxes as a percentage of overall tax revenues, the United States ranks substantially below other OECD nations. As many as two out of three U.S. corporations paid zero in federal income taxes over much of the previous decade, according to the Government Accountability Office (GAO). The share of federal revenues coming from corporate taxes has shrunk by two-thirds in the last 50 years. This is seriously undermining our ability to make the necessary investments in education that are sorely needed in order to return our nation to prosperity.
For example, over the last decade, the Big Five oil companies—BP, Chevron, ConocoPhillips, ExxonMobil, and Shell—made nearly $1 trillion in profits. And for every penny that the price of gasoline increases, Big Oil makes an additional $200 million per quarter. At the same time, millions of middle class families are struggling to make ends meet, and too many families find themselves falling into poverty. These large inequities run completely counter to our values as a nation.
Over the coming decade, the federal government could gain $600 billion in revenue by closing the loophole that allows corporations to defer taxes on offshore profits—nearly twice the $337 billion needed to fully fund the federal share of the Individuals with Disabilities Education Act (see attachment, “Corporate Loopholes & IDEA”) ( PDF, 307 KB, 2 pp.). The amount of U.S. taxes avoided indefinitely by shifting U.S. profits to foreign tax havens for just 10 companies represents the entire discretionary budget of the U.S. Department of Education (see attachment, “Corporate Loopholes & Education Funding”) ( PDF, 208 KB, 1 pg.).
In contrast, the GOP is calling for more of the same—continuing the job-killing, economy-slowing deep cuts of $85 billion this year, while refusing to bring forward any semblance of the type of balanced approach widely supported by voters. Instead of closing corporate tax loopholes, the GOP plan would still force destructive cuts that put essential services like education at even greater risk.
These cuts will mean fewer educators, students crammed into already overcrowded classrooms, shorter school weeks, 4-year-olds cheated out of early childhood education, and dreams dashed for aspiring college students. The impact will be harshest on the students who are in most need of help and can least afford to take more hits, including students in high-poverty communities and students with disabilities.
Millions of children will be hurt if deep, arbitrary, across-the-board cuts go into effect just hours from now. Congress can’t wait any longer—you must act now. It is time for Congress to put politics aside and do what is right for our nation. We urge immediate passage of the American Family Economic Protection Act.
Director of Government Relations