One inevitable result of November’s election will be the failure of any effort–at least in the short term– to make the rich pay their fair share of the national budget. Instead, we will see another gift to the super-wealthy, as the Trump administration rewards its billionaire donors with further tax cuts.
In all likelihood, that gift to the richest among us will be accompanied by cuts to the IRS budget. That budget was finally increased under Biden, in an effort to allow the agency to do its job. Ironically, it is the GOP that really wants to “defund the police”–in this case, the folks policing compliance with tax laws. Republicans have led the decades-long effort to defund the agency, ensuring that there will be fewer audits for the very rich. (Back in the 1990s, the IRS audited more than 20 percent of estate tax returns, but more recently it has been able to audit fewer than 4 percent.)
Congressional Republicans cut $20 billion for law enforcement at the I.R.S. in a recent spending bill. I guess GOP opposition to “defunding the police” depends upon which police you’re proposing to defund…
Policies that confer favorable tax rates (and ensure limited enforcement of those on the books) have a number of negative consequences. There is, of course, the matter of fundamental unfairness–I still remember when Warren Buffett pointed out that he paid taxes at a lower rate than his secretary. But there are notable, negative social consequences as well, as a site called “Fight Inequality” enumerates.
The most important rationale for a wealth tax is to reverse the age-old trend of rising inequality. Wealth taxes are meant to move society in the opposite direction, that of promoting equality. Economist Jomo Sundaram stresses the need to “get more revenue from those most able to pay while reducing the burden on the needy.”
Surprisingly, both the World Bank and the International Monetary Fund (WB-IMF) have come out in support of a wealth tax to counter rising global inequalities. This surfaced in a joint WB-IMF conference on Oct. 19, 2021, which noted “the persistence in income inequality” and concluded that a “progressive tax policy is one of the prime tools for addressing such inequality.”
The mere fact of inequality does not, in and of itself, justify imposing a greater tax burden on wealthy taxpayers. Rather, it’s the results that flow from that inequality. Social unrest is one: many uprisings seen around the globe over the past few years have been triggered by resentment of corporate greed, and the accompanying disproportionate exercise of economic and political power–the creation of plutocracies at odds with democratic principles.
Research tells us that systems of significant inequality are incompatible with social stability.
The bias in our tax code and especially the fact of lax enforcement against wealthy tax evaders is a major assault against the rule of law, which rests on the premise that the rules apply equally to everyone. (That is particularly damaging at a time when Trump’s escapes from accountability have already undercut that premise.)
The richest people are also notorious for rampant tax evasion.
The world’s top billionaires, particularly the owners of Amazon, Apple, Facebook, Google, Microsoft, and Netflix have avoided paying billions of dollars in taxes by transferring their wealth to tax havens outside the United States where they also set up shell companies.
Researches have revealed that tax rates by the top billionaires like Warren Buffet, Jeff Bezos, Michael Bloomberg and Elon Musk range from 0.10% to 3.27% while corporate tax rates hover at 35%.
It isn’t just the U.S.
In the Philippines, the richest are not necessarily the top income taxpayers. The Department of Finance’s Tax Watch service showed that for 2012, “only 25 out of the 40 richest Filipinos (as reported by Forbes) are on the Bureau of Internal Revenue’s (BIR) list of top individual taxpayers.”.
Even when identified and charged accordingly, rich tax evaders are also able to escape prosecution or penalties. The BIR’s “Run After Tax Evaders” project has a pitiful accomplishment record. Out of 929 cases against tax evaders from 2005 to December 2018 with total tax collectibles of P148.35 billion, only 14 have been resolved, with only 10 convictions.
It’s difficult for most of us non-billionaires to understand the levels of greed involved, the apparent need for constant acquisition–the grasping for more, more, more. When I was growing up, my mother used to comment that, rich or poor, one could wear only one pair of pants at a time. Presumably, the rich can only sail on one yacht at a time…
There’s a lot wrong with our society today. Tax policy isn’t the reason for all of it, but it’s a big part of the problem.
If the wealthy are in power, it follows that they will benefit from it. Would the “peasants” ever rise up against the plutocracy / oligarchy in this country? If the folks themselves on the “unequal” part of the spectrum don’t demand more equality through voting or resistance, they have to rely on politicians who are willing to close the gap. Unfortunately, closing the gap is not the incoming administration’s priority. Lowering taxes doesn’t reduce the gap.
What Linda Robb said.
The school of American capitalism lacks a class on civic responsibility. Hedge funds and “investment” banking exist to exploit weak laws and regulations on the profit mongers. When it’s all profit all the time, the citizens lose. I am not a formerly schooled historian, but we’ve seen this movie before – around the world, over many centuries.
As loopy as Karl Marx was he did leave us with one salient point about unregulated capitalism. Our Republican party has made 100+ years of deregulating our economy for the sake of the rich. How do we fix that?
When half the country votes for creatures who are against the voters’ own best interest, how does fixing inequality happen? It doesn’t. What happens is an implosion. When the money mongers realize that the consumers in a consumer economy lack the means to consume, their golden goose gets cooked, then things will change.
Until then? Have a look at the health care insurance “industry”. When enough people die to due the inability to pay and/or are denied what they paid for, that golden goose simply chokes to death. Brilliant. Bottom line? Greedy capitalists aren’t universally intelligent. They are one-trick ponies and the trick is harmful to everyone.
For the uber wealthy, money is just a numbers game, and the ones with the highest numbers wins. They can’t imagine that people need money to exist, for food, housing, and healthcare; those aren’t problems for them, so they can’t fathom that they’re problems for anyone. Pure greed, yes, and complete disconnect and apathy. And our politicians, who are also wealthy—with only a few exceptions, like AOC—and are propped up by their wealthy donors, will never work for our interests because it would go against their personal interests. And as much as I would like the killing of the United Health CEO to serve as a wake-up call for the money-grubbing bastards, I haven’t reached that level of optimism yet.
Linda mentioned “voting” our way out of our problems. I hope everyone on this blog, at least, understands by now that our two oligarchy-controlled parties have ensured that never happens. If not, you better shake that loose within the next four years.
Elon Musk gave Trump $234 million and spent day and night misinforming his followers on X so they’d vote for Trump. Now, Elon is in charge. Based on his post yesterday on X, the DoD is off-limits for cuts because it’s an “essential expenditure.” Or is it because he and Peter Thiel and the rest of his Tech Bros have significant contracts with the DoD?
The Pentagon’s audits by IGs show trillions of dollars are unaccountable. If you’re the self-appointed “government efficiency” expert, how in the HELL can you argue that the DoD is an efficiently run operation? Elon is a fraud and has his eyes set on programs benefiting the working poor and poor. Many of those federal programs benefit Indiana directly, so we shall see how Braun/Beckwith handles the lack of income.
Who’s going to lead the opposition against Trump? I would be shocked if it came from within the DP, so who will rise against Trump as a leftist populist?
p.s. Let’s also keep an eye on how the media spins the capture of Luigi. While the police claim victory, the apparent assassin wanted to get caught.
When it comes to the inequality of tax system it extends outside of just income tax. I have paid an extra 1% tax my entire adult life, first for the Hoosier dome and now Lucas oil stadium to which I have never been able to afford to buy a ticket(s) to a single event held there.
When the ACA was established we fell into that working poor gap, not enough to afford a policy and pay co-payments and still owe the penalty fines with the accumulated interest and penalties will be paying for rest of my life.
I fully understand the benefits of having these venues but personally I’m tired of providing places for the wealthy to have a good time.
In Indiana we still pay tampon taxes!
“I know what Rocco wants, he wants MORE!”
I just finished reading a wonderful little book, “The Serviceberry- Abundance and ReciprocityIn the Natural world,” by Robin Wall Kimmerer, the author of another wonderful book, “Braiding Sweetgrass.” The essence of the book is that “All Flourishing is Mutual,” a concept that is completely foreign to the monied class.
Sadly, as a result of the voting of the fools who believe virtually anything tfg says, we will not advance towards mutuality for a looooong time, now.
After saying that he had a “wonderful conversation” with the new Mexican president, Trump said “Mexico will stop people from going to our Southern border, effective immediately….” Our congresspeople, who torpedoed the bi-partisan immigration bill, as ordered by him, did us a major disservice, and he will continue to parlay his gains forever.
Two quick things:
1. Countries that have tried “wealth tax” have not been very successful
2. When the IRS is able to go after wealthy dodgers, the returns to taxpayers are many multiples of what is spent
As Lester said, the Inflation Reduction Act added additional IRS agents, which paid off handsomely:
“After successfully collecting $38 million from more than 175 high-income, high-wealth individuals last year, the IRS expanded this effort last fall to around 1,600 additional high-income, high-wealth individuals. Nearly 80% of these 1,600 millionaires with delinquent tax debt have now made a payment, leading to over $1.1 billion recovered. This is an additional $100 million just since July, when Treasury and IRS announced reaching the $1 billion milestone.”
https://www.irs.gov/newsroom/us-department-of-the-treasury-irs-announce-1-point-3-billion-recovered-from-high-income-high-wealth-individuals-under-inflation-reduction-act-initiatives
The coming administration will make the inequality even worse. Historically, it has happened before in this country. The robber barons of the late 19th century thought they were immune to any culpability for the terrible conditions that the working class and poor inhabited. They eventually found themselves held accountable. Unions formed to fight back. Poor people had nothing left to lose and decided to fight back. Lots of people died at the hand of hired goons, disease, work place hazards, hunger and poor living conditions. Is that what it is going to take again?
Remember that there were and are those among us who will gladly supply the muscle needed to force conformity. tfg never gets his hand dirty. There are already places where bounties are offered with more to follow. Greed and revenge will be satisfied by betrayal, all in the name of religious fervor.
I continue to fight back in the limited ways I am able to do. It may not matter very much in this stingy and hateful state, but I cannot stand idle and watch it happen.
most made their riches here in America, they used the stock markets and domestic investments as their own entitlements. when the international issues come up,they use the state dept for representation for their own gain. they dont want to pay taxes to the very system that has guilded their sorry ass. they require we pay all the taxes. these people who demand,have stagnated wages to a point that main street doesnt exist to support its local economy. then jacks up prices to further take more from the working class. small buisness runs a shell game like competitors for the same product,as the sole corp who produces said product is laughing its ass off watching them die.now they insist they won America fair and square while they used that ill begotten wealth to manipulate by extortion the social/commercial media investments they own. shareholders have become the demand and conquerer to any one who asks for a break. they have bought and sold a entire politcal party,and drug down the other. the billionaire class is now filing for their fare share of America,and we watch and can do nothing. we allowed it.its called hate.. now the rest of the world will evolve into this exploitation of the working class. were now just cash cows to the rich..