Thanks to tax-dodging Donald Trump, we now know we really need to fix our upside down tax code.
By Josh Hoxie
Soon, this
election will be over, and the task of governing will fall on the winning
candidate and the reshuffled Congress. At the top of the list of issues to
address in the early months of 2017 should be reforming our broken tax code.
Why should tax reform take
center stage among the many issues plaguing the country?
Because Americans desperately
want to see rising inequality addressed. Concern over the issue drove the
insurgent Bernie Sanders presidential campaign and is top among issues of
importance to Democratic voters.
Lest one think Sanders’ primary
loss gave the green light for inaction on inequality, note that the socialist
senator from Vermont is currently the most popular politician in the country.
The growing divides between the rich and the rest of us rank consistently among the most pressing issues facing all voters, not just Bernie supporters. In short, the public’s appetite for action is high, and the next president as well as Congress would do well to listen to them.
There are a number of drivers of
inequality, but none are so obvious and so fixable as the deeply unfair tax
code.
A review of tax returns by the New York Times last year showed the top one thousandth of
1 percent — the richest of the rich — pay just 17.6 percent of their income in
taxes. For context, the top tax rate in the country, intended to tax these very
people, is more than double that figure, at 39.6 percent.
Perhaps the most egregious
poster child for the broken tax code is Donald J. Trump. The billionaire
appears to pay zero federal income taxes.
In other words, the major party
presidential candidate has contributed nothing to the development of our roads
and bridges, our schools and public parks, or any of the other essential public
services that taxpayers make possible.
But Trump’s far from the only
offender.
Wealthy households and their
armies of lawyers and accountants are able to dodge paying their fair share
through loopholes they helped put in place.
The same goes for the most
profitable corporations, many of which have also dropped their federal income
tax rate to zero. Plenty of these corporations are exploiting offshore tax
shelters to avoid paying over $700 billion in taxes.
It’s now commonplace for these
elites to spend millions to save billions on tax reform. Meanwhile, working and
middle class families, who don’t have millions to spend on lobbyists or
“creative” accountants, are left to fill the hole.
The solutions to fix the tax
code and thus make a dent in reversing inequality are straightforward.
Close the expensive loopholes
and offshore tax havens that only exist to encourage tax evasion.
Update the
tax code to ensure those who make their money via investments or inheritance
pay taxes on their income the same way people who punch a time clock do.
Of course, the simplicity of a
solution doesn’t imply it’ll be easy. Powerful forces aligned to create the
unfair tax code we have now, and they’ll go to great lengths defending it.
An
equally powerful movement will be required to overcome this, on par with the social
movements required for all the major steps forward our country has taken in its
history.
The conservative anti-tax
activist Grover Norquist famously said, “You win the tax issue, you win all the
issues.” On this point, he was right.
Josh Hoxie directs the Project on Taxation and
Opportunity at the Institute for Policy Studies. Distributed by
OtherWords.org.
