No doubt you are bitching right about now about taxes. Tax day, after all, is April 15.
In election after election, the political challenger always attacks based on tax rates – property tax, income tax, sales tax – doesn’t matter what kind of tax or how tied to reality the complaint of “high taxes” is. And generally Republicans are the ones who base their campaigns on promising to cut taxes – for the rich and powerful, that is (they ended the expanded child tax credit that cut child poverty in half), while attacking Democrats as the “tax-and-spend party.”
So it is really interesting that Republicans don’t pay a penalty for the biggest tax increase for New Yorkers: capping the deduction for SALT (State and Local Taxes) at $10,000. It was an overt tactic to punish “blue states,” which tend to have higher state and local taxes (as well as incomes, better schools and infrastructure) and wind up being the “donor states,” sending billions more to the “gimmee red states” that boast low state and local taxes.
In fact, even after the Long Island Republicans tried to repeal the SALT cap (around the Feb. 13 special election that sent Democrat Tom Suozzi back to Congress), the measure was blocked by House Republicans.
Capping the SALT deduction was a tool to pass the Trump tax cut that almost entirely benefited the wealthiest 1% and corporations, but increased taxes for middle-class families and added $2 trillion to the national debt. And Republicans’ entire tax policy today consists of making the Trump tax cuts permanent beyond their 2025 sunset, which would add $3 trillion in deficits over 10 years. They intend to pay for it with $1.5 trillion in cuts to Social Security, take away Medicare’s ability to negotiate prescription drug costs, repeal $35 insulin and $2,000 out-of-pocket cap, and privatize Medicare. The Republicans are demanding these cuts in order to allow another $5.5 trillion in tax cuts for billionaires and big corporations.
The discredited “rationale” for the Trump/Republican tax scam is that if you let billionaires and corporations keep more money, it will magically “trickle down” to middle class and working class families. That has never happened, but the fantasy persists.
But billionaires like Trump don’t even pay the taxes they owe. Researchers estimate that if the top 1% of Americans paid the full amount of taxes they owed, it would raise $175 billion a year. “That’s just unpaid taxes. Not new or higher taxes.”
The IRS, on the other hand, has done what it is supposed to with the $80 million in funding from the Inflation Reduction Act: collected $500 million in unpaid taxes from 2,000 delinquent millionaires, launched enforcement action against 25,000 millionaires who have not filed a tax return since 2017, and cracked down on high-end tax evasion like deducting personal use of corporate jets as a business expense. The IRS is projecting it will collect $561 billion in additional revenue over the next decade because of better enforcement.
Even with better enforcement, the top 1% have done extremely well with the Biden’s “growth from the middle out and the bottom up” economy. This group now possesses a record $44 trillion – 30% of the nation’s wealth. Elon Musk’s wealth has grown from $2 billion in 2012 to $245 billion in 2024; Jeff Bezos’ from $18.4 billion to $168 billion; Mark Zuckerberg’s from $17.5 billion to $116.6 billion. Meanwhile, the minimum wage is fossilized at $7.25.
At the same time, the CEO-to-worker compensation ratio of top U.S. firms has gone from 20 times the median worker’s pay in 1965 to 344 times in 2023. For example: Steven Schwarzman, CEO of Blackstone and a major Trump donor in 2020, was paid $253,122,146 in 2022, over 1,000 times more than the company’s median worker. Michael Rapino, Live Nation CEO, who cashes in on fees Ticketmaster slaps on for concerts and other events, makes $139,005,56, or 5,414 times his average Live Nation worker.
U.S. Sen. Tammy Baldwin (D-WI) introduced the Billionaires Income Tax Act to close loopholes that let the wealthiest Americans avoid paying their fair share in taxes: “buy” (assets that appreciate in value), “borrow” (against the asset’s growing, untaxed value to fund their extravagant lifestyle instead of earning actual taxable income), and “die” (pass assets to beneficiaries tax-free). Indeed, the average tax rate of the top 1% is just 8%, a fraction of what firefighters and teachers pay. Her proposal would apply to taxpayers with more than $1 billion in assets or more than $100 million in income for three consecutive years. https://www.baldwin.senate.gov/imo/media/doc/billionaires_income_tax_one_pager.pdf)
Here’s another idea: a refinement of the Alternative Minimum Tax on these folks tied to what they spend – after all, they have to have gotten the money from somewhere. This might be an adaptation of the Value Added Tax system used in 170 countries including Europe.
President Biden has a detailed, workable fair-tax plan, incorporated into his proposed 2025 budget, which is calculated to reduce the national debt by $3 trillion over the next decade and notably would not raise taxes on anyone earning less than $400,000 a year:
Make Big Corporations Pay Their Fair Share: Raise the corporate tax rate to 28% and the corporate minimum tax to 21%. Deny corporations a tax deduction when they pay over $1 million to any employee. Quadruple the stock buyback tax from 1% to 4%. Crack down on corporate jet loopholes. And Biden wants for-profit commercial space companies like SpaceX to start paying aviation excise taxes to support the air traffic control system like the rest of the aviation industry.
Make the Wealthy Pay Their Fair Share: Require the wealthiest 0.01 percent – those with wealth of more than $100 million – to pay at least 25 percent of income in taxes. Increase the Medicare tax rate on income above $400,000, close loopholes that allow some high-paid professionals and wealthy business owners to avoid the tax, and direct all Medicare tax revenue into the Medicare Hospital Insurance (HI) Trust Fund as was originally intended. Ensure that the IRS can continue to collect taxes owed by wealthy tax cheats.
I would add: raise or eliminate the cap on income for the Social Security 6.2% tax, now $168,600 (it has been raised each year since 2016 when it was $118,500); if eliminated, the tax could be lowered for everyone.
Cut Taxes for Working Families and the Middle Class: Increase the Child Tax Credit for 66 million children. Expand the Earned Income Tax Credit to benefit 19 million working-class Americans. Make lower ACA health insurance premiums permanent.