Every year, the gap between the wealthiest Americans and the rest of the country grows wider and wider. While 40% of Americans would be unable to come up with $400 in an emergency, a select few wonder where they’ll park their next yacht. But we didn’t arrive to a reality where the richest 10% of Americans hold 70% of the countries’ wealth by accident.
In their groundbreaking new book, The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay, professors Emmanuel Saez and Gabriel Zucman expose precisely how we got to the paradoxical place in our country’s history where the rich have never been richer, and yet steadily pay less and less in taxes.
Saez and Zucman find that America’s wealthiest went from paying a 70% marginal tax rate in the 1950s to a paltry 23% rate in 2018. Over the same period, the bottom 10th percentile of Americans workers saw their tax rates increase from 16% to 26%. Even more shocking, they found that while working Americans typically pay between 25 to 30% of their income in taxes, billionaires pay just 23% on average.
When you account for years of workers bearing the brunt of a regressive sales tax, slashes to the corporate tax rate, a low capital gains tax rate that unfairly allows wealthy investors to pay less than those who work for a living, it’s no surprise that the wealthy aren’t paying their fair share. As the authors explain, working families don’t benefit from a lower capital gains or a lower corporate rate. The kinds of cuts that the US has been pursuing for decades shamefully are intended only to benefit the wealthy elite.
The Patriotic Millionaires have long said that if you want to rig an economy, you start with the tax code. When you control the tax code, you can completely restructure how society is organized. Our country, for example, was once a beacon of progressive taxation with steady revenue streams for robust social programs and checks on inequality. But over time, as the rich and powerful lobbied for lower and lower tax rates, our social safety net has disintegrated and inequality has skyrocketed. It’s easy to excuse cutting budgets for schools or housing programs when there’s no money left in the coffers.
Our country’s tax debate often falls into the dangerous – and false – trap of accepting the current state of taxation as written in stone. Calls to raise taxes on corporations are met with the lazy rebuttal of the likelihood of them moving offshore. If you try to suggest raising the capital gains tax rate, you’re told that rich people will flee the country and take their riches with them. Saez and Zucman thoroughly dismantle this fearmongering and offer a simple solution: just tax them.
So it follows from this that to change the abysmal state of affairs in our economy, we must follow Saez and Zucman’s advice and un-rig our tax code. No American should have to work two jobs and still be worried about putting food on the table when the upper echelon of our country lives in excess.
We have the power, and increasingly the will, to change our tax code back to a progressive system. Returning to a fair tax rate on the wealthiest Americans, in addition to tracking and taxing money hidden overseas, would give us the funds we need to enact the kind of policies that uplift the most vulnerable Americans.