It is the most American of scams.
The wealthiest among us have convinced millions of Americans that they got rich solely because they’re smarter and harder-working than the rest of us. We don’t just accept extreme wealth in this country: We worship it. And so, we ask less of the rich than we should.
Our up-by-the-bootstraps mythology makes it easier for the rich, along with the politicians who do their bidding, to sell the bogus notion that what is good for them is also good for the rest of us — that less regulation and lower taxes for them will bring prosperity to all.
In fact, as studies have repeatedly shown, such measures bring prosperity largely to those who already have it. And those tax cuts certainly don’t pay for themselves, despite the Reaganite theology. Those to whom Republicans give the biggest tax breaks tend to take the money and run, and they leave the rest of us footing far more than our fair share of the bill for government and all that goes with it.
How much more? This week’s investigation by ProPublica lays it out in shocking detail. Because of the way our tax system is structured, billionaires like Jeff Bezos, Elon Musk, and others pay a minuscule share of their enormous wealth in taxes. They do so essentially by sidestepping the income tax system, leveraging their losses, and using their massive collateral to take out loans. All of it appears to be legal. None of it is fair.
According to the ProPublica analysis, the 25 richest Americans were worth $1.1 trillion by the end of 2018, their wealth equivalent to that of 14.3 million American wage-earners. The personal federal tax bill for the top 25 was $1.9 billion that year. That seems like a lot, until you learn that the wage-earners paid Uncle Sam $143 billion.
At last, Democrats are talking about addressing this obscenity. President Biden wants to beef up the IRS, gutted by Republicans over the years, in the hopes of catching more wealthy scofflaws. He also wants to claw back some of the GOP tax cuts of 2017, returning top income tax rates to appropriately higher levels. Others, like US Senator Elizabeth Warren, rightly argue that reforming existing taxes won’t really get at the problem, and they’ve proposed a tax of 2 percent annually on wealth over $50 million, and 3 percent of all riches over $1 billion.
Neither measure is likely to go anywhere given the current makeup of Congress, despite the fact that the proposals are hugely popular with the rest of us.
But the picture looks a little different in Massachusetts, where legislators on Wednesday voted to put the Fair Share Amendment on the 2022 ballot. If voters approve it, the amendment would impose a 4 percent state surtax on personal income above $1 million, raising about $2 billion annually in new revenue for education and transportation.
The tax increase will do nothing to get at the inequities made plain by ProPublica’s reporting: The wealth of our richest residents will still remain largely untouched by the tax code. Even so, the revenue raised by the hike could make a real difference in our classrooms and on our roads.
Like the federal proposals, the state measure is very popular, with 65 percent of support from respondents in a March UMass Amherst poll. But that doesn’t mean it will pass. Opponents of the measure will be well funded, and well organized.
They will argue, for example, that rich people in this state already pay a huge amount in taxes in dollar terms, which is true, because they also earn a huge amount in dollar terms. But they pay a much lower share of their income in taxes than poorer residents do. Opponents will argue, too, that higher state taxes will make rich people flee the state, though there is plenty of evidence that taxes are not determinative in such decisions.
Over the next 17 months, we will see an expensive pitched battle in which those who oppose the Fair Share Amendment will try to convince ordinary workers that their interests are perfectly congruent with those of people who make more than wage earners could ever dream of.
That trick has worked before. This is America after all, where the obvious is, way too often, the impossible.