Leaked IRS data proves the rumors are true: Many billionaires pay no income taxes. Will that spur reform?
This has Senate
Minority Leader Mitch McConnell up in arms—but not because of what the scandal
reveals about our rigged tax system. Instead, McConnell wants to go after the
whistleblowers who exposed the scandal.
.
"Whoever
did this ought to be hunted down and thrown into jail," McConnell said in
a radio interview.
What I suspect
really bothers McConnell is that this data is likely to increase the pressure
on him and other lawmakers to raise taxes on the wealthy. For the first time in
decades, serious proposals to do just that are actually on the table in
Washington. And the timing couldn't be better.
Poor and
low-income Americans have paid the biggest price for the pandemic, while U.S.
billionaires have seen their fortunes increase by more than $1
trillion. Now is the moment for America's ultra-rich to
contribute their fair share to an economic recovery that will make the nation
stronger in the face of future crises.
How are
billionaires getting away with paying so little to Uncle Sam now? A key reason
is that our current tax system rewards wealth, not work.
The top tax rate on paycheck income is nearly double the rate at which Wall Street windfalls are taxed. But while you and I rely on our paychecks to make ends meet, the very rich make most of their money from financial investments.
In fact,
America's top 1 percent hold more
than half of all U.S. wealth invested in stocks and mutual
funds.
In short, their
wealth makes their money for them. Yet they're taxed at far lower rates.
President Joe
Biden wants to get rid of this perverse tax preference for the wealthy. He's
proposing that we tax
wealth the same as work for people who earn more than $1
million a year.
Another Biden
proposal would close a loophole that allows the wealthy to escape capital gains
taxes altogether on assets they pass on to their heirs. Under his plan,
individuals who inherit family businesses and farms—and continue to operate
them—would not be
affected.
In 12
recent polls, voters, including independents, support these and
other Biden tax proposals by 60 percent or more.
Some
Congressional Democrats are calling on the president to go further to tax the
top 1 percent. Senators Bernie Sanders and Elizabeth Warren have proposed an
annual wealth tax on fortunes over $50 million, as well as levies on Wall
Street speculation and excessive CEO pay.
Equitable
reforms like these are critical if we want to modernize our public
infrastructure and give families the economic security they need to fulfill
their potential in the world's richest country.
If we don't unrig our tax code, billionaires will keep getting away with stiffing Uncle Sam—and sticking the rest of us with the bill.
Sarah Anderson directs the Global Economy Project of the Institute for Policy Studies, and is a co-editor of Inequality.org.
