We must focus on tax inequality to bring about tax justice
By Gerald E. Scorse, Progressive Charlestown guest columnist
For
decades, time and again, America’s tax code has been twisted and tweaked to
give tax breaks to the top and crumbs (or nothing) to the tens of millions on
the bottom and in the middle. (Tim Foley for the Center for Public Integrity)
Levels of wealth and inequality have become so gross that experts are clamoring for change, painting unflattering portraits of the country those laws have created.
In the latest example, Senators Manchin and Sinema joined Republicans to throw 5.1 million children into poverty. Of course nobody knew the exact number, but they knew exactly what would happen when they blocked the renewal of a more generous Child Tax Credit.
Now let’s get to the inequities, along with some proposals for balancing the scales.
The
modern income tax
began in 1943, and from the start we’ve had “two income tax systems,
separate and unequal. One burdens most people. The other makes the rich much
richer.” The first is an information system for wage and salary workers;
the second is an honor system for business owners and high-income
professionals.
Workers have their taxes withheld and their incomes reported to the Internal Revenue Service by employers. The privileged self-report: the IRS gets their work income figures only from them.
Ordinary workers have a near-perfect tax compliance record. Self-reporters underpay by the hundreds of billions, a level of tax evasion that law professors Joshua Blank and Ari Glogower believe could be (and should be) sharply reduced. They lay out their ideas in the Iowa Law Review’s just-published “The Tax Information Gap at the Top”.
The Biden Administration wanted banks to report to the IRS all transactions of $10,000 or more. Instead, the authors suggest, focus on taxpayers with incomes and net worth above certain thresholds—say, $2 million and $10 million.