Air Force veteran Ashli Babbitt survived stints in Iraq and Afghanistan, where she helped guard military bases at the peak of America's wars in those regions in the mid-to-late 2000s. Instead, she lost her life fighting her own government in the corridors of the U.S. Capitol on Jan. 6 — gunned down by a Capitol Police officer at the front of a crowd trying to smash toward the nearby House chamber and prevent the counting of 2020 Electoral College votes that would make Joe Biden president. Seconds before the fatal shot, a video captured her compatriots smashing a window and shouting, "We don't ...
The number of multimillion-dollar individual retirement accounts has soared in the past decade, as more wealthy Americans use the tax-advantaged vehicles to shield fortunes from income taxes, according to new data released by Congress today.
The data reveals for the first time the staggering amount of money socked away in tax-free mega Roth accounts: more than $15 billion held by just 156 Americans.
The new data also shows that the number of Americans with traditional and Roth IRAs worth over $5 million tripled, to more than 28,000, between 2011 and 2019.
The data was requested by Senate Finance Chairman Ron Wyden, D-Ore., and House Ways and Means Chairman Richard Neal, D-Mass., following ProPublica's story last month exploring the rise of mega Roth IRAs. The story, based on confidential IRS data obtained by ProPublica, revealed that tech mogul Peter Thiel has the largest known Roth IRA, worth $5 billion as of 2019.
In a Senate Finance hearing on retirement on Wednesday, Wyden said such massive accounts underscore the country's inequalities. “Individuals at the very top — at the very, very top — are able to game the rules to get ahead and basically abuse taxpayer-subsidized accounts with pricey accountants and lawyers," Wyden said. “This increases the already existing retirement inequality between retirement haves and have-nots to an extreme level."
Roth IRAs were established in 1997 to incentivize middle-class Americans to save for retirement. Congress imposed strict limits, including a cap on how much can be contributed to the accounts each year, which today stands at $6,000 for most Americans. The average Roth account was worth $39,108 at the end of 2018.
But a select set of the ultrawealthy have managed to get around limits set by Congress and transformed the vehicle into a powerful onshore tax shelter. One way they've done that is by buying nonpublic shares of companies with extremely low valuations. That allows them to tuck a huge volume of shares into a retirement account. Congressional investigators have previously found that the IRS has struggled to enforce rules around these investments, including whether the valuations are legitimate.
Once money is deposited into a Roth account, any proceeds from investment gains are tax free. So, for example, a Roth owner who sells a successful tech investment for a $1 million profit gets to keep all of the money, saving a potential $200,000 in federal taxes. The savings can then be reinvested, tax free, as long as the Roth holder waits till he or she is at least 59 and a half before withdrawing the money. Owners of traditional IRAs, by contrast, enjoy tax-free growth but must pay income tax on withdrawals. The Roth is considered the more powerful tax-avoidance tool for the wealthy.
The latest numbers come from analysts at Congress' nonpartisan Joint Committee on Taxation. They update a widely cited study from the Government Accountability Office that released figures on large IRAs in 2011.
The new figures show that, as of 2019, nearly 3,000 taxpayers held Roth IRAs worth at least $5 million. (The total of more than 28,000 people holding IRAs of that size includes both traditional and Roth IRAs.) The aggregate value of those Roth IRAs was more than $40 billion.
Both Wyden and Neal said in statements that the new figures show the need for reform. Neal said that “IRAs are intended to help Americans achieve long-term financial security, not to enable those who already have extraordinary wealth to avoid paying their fair share in taxes and deepen existing inequalities in our nation." Neal said earlier this month, in the wake of the ProPublica article, that the Ways and Means Committee would draft a bill to “stop IRAs from being exploited."
For his part, Wyden said, “As the Finance Committee continues to develop proposals to make the tax code more fair, closing these loopholes will be a top priority." Wyden first proposed an overhaul of IRA rules to prevent the accounts from being used as large tax shelters several years ago. One reform that is being discussed would prohibit investors from putting assets that are not available to ordinary Americans, such as shares of startup companies, into retirement accounts.
Wyden and Neal's push for reforms comes as Congress is considering bipartisan retirement legislation. The bills are being pitched as helping ordinary Americans save for retirement, including by proposing to automatically enroll workers in employer-sponsored retirement plans. But they also include perks for the retirement and financial industries, such as relaxing rules in ways that are seen as a boon for insurers. And buried deep inside the two complex bills are provisions that could make it harder for the IRS to crack down on the ultrawealthy who dodge tax rules.
Actor Susan Sarandon organized a demonstration outside the Bronx office of Rep. Alexandria Ocasio-Cortez, D-N.Y., on Monday, reminding the progressive lawmaker that she had made "a lot of promises" to her constituency but has failed to pull out all the stops achieving her healthcare agenda.
"I'm here to say to The Squad, and especially AOC, who, you know, did make a lot of promises, that we still have faith in you and we would like to see if you have a better plan than we've been able to see, please share it," Sarandon said to a crowd. "If there's a pathway you've got that we're not aware of, please share it. Because we're losing hope here that you represent us."
The crowd specifically gathered to protest against the apparent lack of action shown by The Squad in expanding Medicare forAll when roughly 30 million Americans lack access to healthcare.
"You campaigned on Medicare for All. But you didn't demand a floor vote on it when you had the power to leverage the Speaker vote. You didn't demand that single-payer be included in the pandemic recovery bill," the petitioners wrote online, adding: "You moved the introduction of the House bill till after the stimulus bill passed reducing your own leverage. You have never demanded that Biden use Section 1881A of the Social Security Act to expand Medicare to every American by executive action."
For remedy, the petition demands that President Joe Biden – who last year said he'd veto Medicare for All – declare a pandemic health emergency and "expand Medicare to every American using Section 1881A of the Social Security Act."
Back in 2019, Rep. Pramila Jayapal introduced H.R.1384, dubbed the "Medicare for All Act of 2019," which would have offered a single-payer health care system to all Americans, who would effectively be enrolled upon birth or residency. The plan also bars cost-sharing (e.g., deductibles, coinsurance, and copayments), putting the onus on the government to cover all health expenses.
The bill – which Ocasio-Cortez co-sponsored – was referred to a number of committees that same year, with subcommittee hearings held in December. However, the measure failed to see a floor vote, preventing it from getting to the Senate.
"It's so difficult for people that are independent to get elected in the first place," Sarandon said, "and then to see the very people that sponsored the bill not stand up for it, is very disheartening."
Throughout 2020, Congress passed a number of COVID-19 relief bills aimed at helping Americans struggling under the weight of the pandemic, though none of these bills comprehensively expanded Medicare
“There's been a movement called critical race theory spreading across our country, into many of our schools in Texas, sadly teaching that we should judge a person by the color of their skin and not on the content of their character," the Mineola Republican said, his voice measured and resolute. “It's obviously the inverse of what Dr. King taught us, and what as Americans we strive toward."
Ironically, the bill Hughes was presenting actually seeks to remove an upcoming legal requirement that students learn the very King speech the lawmaker referenced — though it will remain mandatory under current state curriculum standards. Meanwhile, experts say the rhetoric Hughes and other Republicans use misconstrues what critical race theory, which isn't taught in Texas schools, does.
And Martin Luther King Jr.'s oldest son told The Texas Tribune that Hughes and other state lawmakers are taking his father's words out of context to defend legislative attempts the late civil rights icon likely would have opposed.
“Yes, we should judge people by the content of the character and not the color of their skin — but that is when we have a true, just, humane society where there are no biases, where there is no racism, where there is no discrimination," Martin Luther King III said. “Unfortunately, all of these things still exist."
Hughes' bill was eventually passed by the Senate, but isn't likely to become law because Texas House Democrats left the state earlier this month to deny the lower chamber the number of present members needed to pass legislation. Their decampment to Washington, D.C., was largely focused on an attempt to block another Republican legislative priority: a voting bill that would curb some local voting options and add new steps and requirements to the voting process.
Many Democrats, especially those who are people of color, see GOP officials' attempts to rewrite elections laws this year as another attempt to further marginalize people like them in the halls of power. It's also another Texas bill that Martin Luther King III condemns, especially because it comes 53 years after his dad was killed and 56 since the Voting Rights Act.
“It's gravely disappointing," he said.
Last year, when a Minneapolis police officer killed George Floyd, a Black man, the murder galvanized the nation and revived a national movement against police brutality and systemic racism in American institutions. Universities and public schools across the state reckoned with their own histories of racism as students and community members demanded changes to their curriculum, school traditions, teacher hiring practices and other areas they identified as centering whiteness.
But in the first regular Texas legislative session after that historic year, the Republican-controlled Legislature that is far more white and male than Texas' population advanced with varying degrees of success a slew of bills that critics said would harm marginalized and vulnerable people. Among the bills that made it to Gov. Greg Abbott's desk was House Bill 3979, the so-called “critical race theory" bill that goes into effect Sept. 1.
The regular legislative session ended in May, but Abbott called a special legislative session to tackle a key Republican priority that failed earlier this year: the voting restrictions bill. He also told lawmakers he wanted them to do more to limit teaching what he calls “critical race theory."
Martin Luther King III denounced Hughes' legislation, saying that teaching about race is as important as ever while the country continues to reckon with its treatment of race in the past and present, and as efforts to harm people of color mount.
“This was a literal effort to whitewash history," he said. “You literally have white women and men who are trying to whitewash, and really dramatically erase, what occurred in the history of our nation, and depriving all our children — that's all children — of knowing what the true facts are, what true history was in our nation."
New “critical race theory" law
HB 3979, the “critical race theory" bill that goes into effect Sept. 1, says teachers must discuss current events from “diverse and contending perspectives," bans teachers from incentivizing or requiring political activism and places restrictions around accepting private funding and training teachers. It also bans a list of concepts from being taught — including that “one race or sex is inherently superior to another race or sex," or that someone should feel guilt or “psychological distress" because of their race or sex.
Although GOP lawmakers have positioned the legislation as counteracting “critical race theory," the law doesn't mention that term. Experts, meanwhile, reject the way that Republican politicians portray critical race theory.
Hughes said in an interview that the law doesn't mention “critical race theory" because lawmakers wanted to address particular ways critical race theory is being applied in K-12 classrooms.
“Different people have different definitions of critical race theory, but we want to specifically address those harmful, racist teachings," he said.
Republican lawmakers and politicians — including former President Donald Trump — have repeatedly cited one line from Martin Luther King Jr.'s “I Have a Dream" speech as a definition for “critical race theory" and a justification for their targeting of teaching about race.
“Critical race theory is the belief that we judge people by the color of their skin, not the content of their character," said Republican state Rep. Steve Toth of the Woodlands, who authored the bill that became law, in a recent interview.
“Critical race theory says, don't point at that individual white person and say, it's all your fault," Kevin Kruse, a history professor at Princeton specializing in the U.S. 20th century, said. “Instead, point at redlining and housing, point at discrimination in the banking industry, point at the uneven application of the criminal justice system."
Kruse said the idea that Martin Luther King Jr.'s work is opposed to critical race theory is “baffling," given his focus on systemic issues driving racial inequity.
“Martin Luther King Jr. spent his entire career attacking the same things that critical race theorists are drawing our attention to, and he was killed for it," Kruse said. “And to turn around and say, he actually was opposed to this thing he gave his life for, is deeply offensive."
In an interview, Toth pointed out that King made his famous declaration prior to the 1964 Civil Rights Act, when racial segregation, racial employment discrimination, redlining and racial steering by realtors were legal.
“There was actual government sponsored racism in that day and age," he said. “That state sponsored racism is gone."
Kruse pointed out that King's work, particularly Letter from Birmingham Jail, highlights how racism persists despite seemingly race-neutral laws.
“[King] said explicitly that sometimes a law might look race-neutral on the surface, but it is employed in a way that has racist ends and that supports white supremacy," Kruse said.
Martin Luther King III, like many Americans, still sees how systemic racism in the country's institutions disproportionately hinder the personal wealth, quality of life and freedom of people of color. He pointed out the worsening wealth gap and poverty as one example of persisting racial disparities. According to the Brookings Institute, in 2019 the median white household held $188,200 in wealth, 7.8 times as much wealth as the median Black household's $24,100.
In 2019, 18.6% of Black Texans lived below the poverty line, according to the U.S. Census Bureau, compared with 18.7% of Hispanic Texans and 8% of non-Hispanic white Texans. Black people have been much more vulnerable to the economic effects of the pandemic, with far less liquidable assets.
In 2019, about a third of Texas prisoners were Black, a third were white and a third were Hispanic, according to the U.S. Bureau of Justice Statistics. That same year, about 13% of Texas' population was Black, 41% was non-Hispanic white and 40% was Hispanic, according to the U.S. Census Bureau.
“There's a huge disparity," Martin Luther King III said. “When you say well, everything is equal for everybody — no, that's just not true."
“There always are setbacks"
The new “critical race theory" law lists documents, figures and events that the social studies curriculum must include. But the special session's Senate Bill 3, a separate bill Hughes authored, seeks to strip out most mentions of women and people of color in that section. That amounts to more than two dozen requirements, including Martin Luther King Jr.'s “I Have a Dream" speech and “Letter from Birmingham Jail." It would leave intact items like the Declaration of Independence and the Constitution, and add excerpts from Alexis de Tocqueville's Democracy in America.
Even if the special session bill were to become law, that doesn't mean the list of items removed would be forbidden from being taught in Texas schools or removed from the existing curriculum. Most of the items in the law passed earlier this year are already included in the state education standards and taught in schools.
In a committee hearing this month, Hughes said that the bill is trying to provide a broad framework for American history instead of trying to dictate every single thing teachers should teach, and that they want to trust the State Board of Education to go through their curriculum review process and decide on the specifics.
He emphasized that in addition to Dr. King, George Washington and Thomas Jefferson were struck from the requirements in Senate Bill 3 but remain in the standards.
“We love talking about Dr. King, studying what he wrote and what he said — we all need to listen to him," he said. “Dr. King, George Washington, Thomas Jefferson — all those men are going to be taught in Texas. There's no question."
But Martin Luther King III said it's ironic that Texas state legislators approved Martin Luther King Jr. Day as an official state holiday in 1991, and then would try to take some of his most famous speeches out of the law — even if it's still in state standards — in 2021.
Martin Luther King III connected the current backlash against teaching and learning about race to the increased national attention toward racial justice since last summer.
He said the Texas GOP's efforts across the board echo a cycle that was true during the civil rights movement as well.
“During my father's era, every time there were gains, or the perception of gains were made, there always are setbacks," he said.
Nuanced accounts of history
As he advocates for the second critical race theory bill that is likely to die in the special session, Hughes said he emulates Martin Luther King Jr. in looking forward to a society where people are judged by the content of their character. He pointed out that the civil rights icon's words and legacy have touched and impacted people around the world.
“Dr. King belongs to all of us," he said.
Although he doesn't think the Texas Republican is accurately invoking his father's words or intent, Martin Luther King III says he's become accustomed to politicians having conflicting interpretations of his work.
“People in a lot of different genres use dad's words to justify what they think, whatever they want to promote," he said.
To King, his father's work was about fighting the deeply rooted issues of “poverty, racism, and militarism" that he identified in his 1967 speech against the Vietnam War. Education is the foundation of that work, he said.
Martin Luther King III said that students are resilient enough to hear hard truths and think critically about them, and that attempts to protect them from feeling distressed are misguided. Instead, learning a complex, nuanced account of history, including how systemic racism has operated throughout American history, ensures that the mistakes of the past won't be repeated, he said.
“It gives students the ability to help correct it so that it never happens to any other group of people, ever," he said. “When you know better, you do better."
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This article originally appeared in The Texas Tribune at https://www.texastribune.org/2021/07/28/texas-critical-race-theory-martin-luther-king-iii/.
The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.
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