If you told us right before our summer break that within two weeks Congress would pass a historic deal that taxes the wealthy to pay for investments in health care and climate change solutions, we would’ve had trouble believing you.
 
INEQUALITY.ORG
THIS WEEK
If you had told us just a few weeks ago, right before our annual summer break, that by the time we resumed publishing Congress would have passed a historic deal that taxes the wealthy to invest in health care and fighting climate change, we would have scoffed.

But that’s exactly what has happened, to our pleasant surprise. The new Inflation Reduction Act features a 1 percent excise tax on stock buybacks, a 15 percent corporate minimum tax, and much-needed funding to beef up an IRS crackdown on wealthy tax cheats. For the IRA’s climate impact, check this Newsweek analysis from our own Bob Lord and Basav Sen.

We have more on this new legislation in this week’s issue. Our core takeaway: The Inflation Reduction Act makes for a great start at generating significant revenue from those who really should be paying more. But we can and should, as a nation, think bigger and bolder. As always, stay tuned to Inequality.org each week for the latest on how we can — how we will — make this bigger and bolder our law of the land.

Chuck Collins and Rebekah Entralgo,
for the Institute for Policy Studies Inequality.org team
 
INEQUALITY BY THE NUMBERS
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FACES ON THE FRONTLINES
Years of Blasting Greedy Stock Buybacks Pay Off
“I hate stock buybacks.”

Senate Majority Leader Chuck Schumer — a politico from Wall Street’s home state — uttered those words just before he and his Democratic colleagues voted to pass a historic tax on buybacks as part of the new Inflation Reduction Act. What better proof that people pressure works!

Americans for Financial Reform, a coalition of over 200 civil rights, labor, and other public interest groups, has been blasting buybacks for more than a decade. Firms that buy up their own shares, the coalition’s Natalia Renta explains, artificially inflate stock values, making wealthy shareholders and CEOs even richer. And every dollar spent on buybacks represents a dollar not spent on worker wages or other productivity-boosting investments.

Renta sees the new tax as a “big win.” But she’ll keep pushing for a ban on open-market buybacks. Reining in stock buybacks, she notes, “can help reorient our economy to one that prioritizes the long-term needs of companies, workers, consumers, communities, and the planet.”
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WORDS OF WISDOM
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PETULANT PLUTOCRAT
OF THE WEEK
A Big Pharma CEO with an Epic Blindspot on Crime
People who spread misinfo about Covid rate as “criminals,” Pfizer CEO Albert Bourla pronounced last fall, “because they literally cost millions of lives.” And how would Bourla rate pharmaceutical chiefs — like himself — who’ve seen their annual pay soar during the pandemic? Mega rewards for drugmakers, the Pfizer top exec told Axios after Rep. Katie Porter labeled his Big Pharma giant “hypocritical,” simply amount to the “cost of innovation.” Pfizer currently has 76 lobbyists working to keep that cost high, and those lobbyists suffered a rare setback earlier this month when the Senate finally okayed legislation — the Inflation Reduction Act — that requires the makers of 10 high-priced drugs to either negotiate the pricing of those drugs with Medicare or face a new excise tax. Bourla has labeled this provision “to single out” his industry as just plain “wrong.” What else is Pfizer’s chief doing to justify his $24.7-million annual pay? He’s okaying billion-dollar deals to buy out smaller drugmakers, Reuters reports, “to capitalize” on Pfizer’s revenue surge from COVID.
 
BOLD SOLUTIONS
Finally, a Serious Step Forward on Tax Fairness
The just-passed Inflation Reduction Act doesn’t match the bold agenda Congress came close to passing last year. But, the new IRA does take a major step toward taxing the rich to pay for urgent human and environmental needs. Big corporations now face a 15 percent minimum tax on their profits and a 1 percent tax on CEO pay-inflating stock buybacks. Together, these new taxes will raise more than $300 billion over the next decade. The law also beefs up our IRS capacity to close the loopholes that let the ultra-rich get away with hiding their wealth through complex accounting tricks. And in a move that has Big Pharma highly displeased, the law also gives Medicare the power to negotiate prices on certain high-priced medicines. Inequality.org Managing Editor Rebekah Entralgo and co-editor Sarah Anderson have more on CNN.com.
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GREED AT A GLANCE
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TOO MUCH
Baseball Immortality, Meet Ungodly Inequality!
The game of baseball’s most preternatural young talent, the 23-year-old Juan Soto, has just exited his original team. The Washington Nationals traded him away earlier this month after the young superstar nixed a 15-year, $440-million contract offer. A little perspective: The family fortune of the 96-year-old billionaire Nats owner, Ted Lerner, has so far this year jumped by $365 million, notes the Bloomberg Billionaires Index. In just seven months, the Lerner clan has amassed most of the $500 million Soto’s agent wants for the rest of his client’s entire career. Baseball has always, of course, had wealthy team owners. But the intense concentration of wealth in the United States over the past 50 years has fundamentally altered the sport’s landscape. Inequality.org’s Sam Pizzigati has more.
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MUST READS
What's on Inequality.org 

Rebecca Karpen, Dismantling the Lucky Sperm Club, One Baby Bond Program at a Time. Cities and states are experimenting with trust fund accounts to narrow the racial wealth divide.

Omar Ocampo, A Proposed Wealth Tax on Colombia’s 4,700+ Richest Would Raise $1 Billion. The progressive tax proposed by incoming Colombian president Gustavo Petro, an Institute for Policy Studies analysis shows, would impact a small percentage of the nation’s wealthiest while raising millions to address widening inequality.

Chuck Collins and Helen Flannery, The Rise of the Monster DAFs. Rising like monsters from the deep, donor-advised funds have finally caught up with foundations as the wealthy donor’s charitable warehousing vehicle of choice — and are poised to eclipse them.

Sam Pizzigati and Sarah Anderson, From the Wall Street Journal: A Deeply Flawed CEO Pay Analysis. The paper’s ‘corporate effectiveness’ lens mischaracterizes the views of management visionary Peter Drucker on pay equity and employee empowerment.

Dedrick Asante-Muhammad and Briana Shelton, Why the Great Migration Did Little to Bridge the Great Racial Divide. Real and lasting economic opportunities for Black families will come only through a serious national reckoning on race.

Sarah Anderson, Biden Should Wield the Power of the Public Purse Against Excessive CEO Pay. The president has the power to use federal contracting standards to encourage pay equity and respect for labor rights at companies like Amazon.

Elsewhere on the Web

Bob Lord and Basav Sen, Trillionaires and a Burning Planet: A Package Deal, Newsweek. The compulsion of billionaires to accumulate ever-larger fortunes drives them to crush any effort to increase their taxes. Starved of the revenue needed to fund meaningful climate mitigation programs, policy makers kick that proverbial can down the road.

Sarah Anderson and Rebekah Entralgo, Americans are fed up with billionaires. Washington needs to get the wealthy to pay up, CNN Business Perspectives. Imagine if America's ultra wealthy invested their financial gains during the pandemic in real human needs — instead of space jaunts and super yachts.

Nicole Gallucci, “Billionaires Shouldn’t Exist”: Maya Rudolph Has an Epiphany in Exclusive ‘Loot’ Clip, Decider. Billionaires rate as probably the worst people to be talking about changing the world: “Why would we want to change a system that lets us live like kings?”

Colombia’s Petro pushes tax reform to fund ambitious social agenda, Financial Times. Colombia’s new president calls higher taxes on the rich “simply a solidarity payment that someone fortunate makes to a society that has enabled them to generate wealth.”

Samantha Jacoby, Added IRS Funding Would Help Ensure High-Income Households, Businesses Pay Their Taxes, Center for Budget and Policy Priorities. The newly passed Inflation Reduction Act will start rebuilding the IRS capacity to audit high-income returns, a capacity that fell by over 70 percent in the decade after 2010.

Amy Hanauer, Inflation Reduction Act is Biggest Corporate Tax Reform in Decades, Institute on Taxation and Economic Policy. Some 55 large, profitable corporations paid no federal income taxes in 2020. The Act’s 15 percent minimum tax for wealthy corporations with over $1 billion in profits will directly address this tax massive avoidance.

Robert Kuttner, Our Bewildering Economy, American Prospect. Our nation’s intensely concentrated wealth means that the new stock buyback tax in the Inflation Reduction Act will mainly hit taxpayers in the top tax brackets. 

Amanda Pérez Pintado, When billionaires like Bill Gates give away 'virtually all' their wealth, where does it go? USA Today. Philanthropy has become “a taxpayer-subsidized form of private power and influence for the ultra wealthy.”
 
 
A FINAL FIGURE
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