by Brett Wilkins
As the deadline for Americans to file federal income tax returns approached, on April 14th Oxfam America renewed calls for taxing the ultrarich while publishing an analysis showing America’s growing number of billionaires saw their wealth increase by nearly one-third since the start of the Covid-19 pandemic and by nearly 90 percent over the past decade.
“Wealth inequality in the U.S. is more extreme and dangerous than income inequality; and we need to change our approach, so we effectively tax wealth as well as income,” the charity said in an introduction to the report, Tax Wealth, Tackle Inequality.
Based on Forbes data, the report found that “U.S. billionaires are almost a third richer (over a trillion dollars, in real terms) than they were at the onset of the pandemic in 2020,” while overall U.S. billionaire wealth has soared 86 percent since 2013.
The number of U.S. billionaires—of which there are now more than 700—is also nearly 60 percent higher than it was a decade ago, according to the analysis.
As the report notes:
“At the same time, our country has a ‘permanent underclass’ of working families who are denied their economic rights, trapped in poverty, and unable to accumulate wealth no matter how hard they work. Oxfam data shows that almost a third of the U.S. labor force earns less than $15 an hour; half of all working women of color earn less than $15.14.
“The racial wealth gap is actually growing wider since the 1980s, and today is close to what it was in 1950. The average Black American household currently has only about 12 cents in wealth for every dollar of the average white American household.
“And while the gender pay gap has barely budged in two decades, the gender wealth gap is much wider. One study found a raw gender wealth gap of women owning 32 cents for every dollar of male wealth. For women of color, the gap is even more profound.
“At a time when the ultrawealthy are amassing historic and dangerous levels of wealth, a federal wealth tax offers a vital and necessary tool for directly redressing extreme wealth inequality, as well as advancing racial justice, tackling the climate crisis, and protecting democracy,” Oxfam argued. “It also offers a reminder that today’s debt ceiling gridlock is a consequence of giving tax breaks to the ultrawealthy.”
Oxfam urges Congress and the Biden administration to enact legislation like Sen. Elizabeth Warren’s (D-Mass.) Ultra-Millionaire Tax Act, which would impose a 2 percent annual tax on the net worth of households and trusts exceeding $50 million, plus a 1 percent annual surtax on billionaires.
According to an analysis by University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman, the tax would bring in at least $3 trillion in revenue over 10 years without raising taxes on 99.95 percent of American households worth less than $50 million.
Citing figures from the Institute for Policy Studies and Patriotic Millionaires, Oxfam’s analysis showed that:
• The wealth tax proposed by Sen. Warren, based on taxing U.S. billionaires alone, would raise $114 billion annually—more than enough to pay for reinstating the Child Tax Credit;
• An annual net wealth tax could raise over half a trillion dollars ($582.6 billion) each year, by taxing more than only billionaires and using marginally higher rates: 2 percent for wealth above $5 million, 3 percent above $50 million, and 5 percent above $1 billion; and
• If there had been a net wealth tax of 6.9 percent since 2013, it would have kept billionaire wealth simply constant.
“Tax Day is a reminder that the tax system isn’t working for ordinary Americans. It’s built to favor the richest in our society,” said Nabil Ahmed, Oxfam America’s director of economic justice. “The ultrawealthy are sitting on mountains of wealth that remain largely untouched by taxes, and their wild riches are in no small part a result of intentional public policy.”
“We need to implement strategic wealth taxes if we want to stand any chance at reining in this kind of Gilded-Era wealth inequality that allows the super-rich to have a stranglehold over our economy,” Ahmed continued.
“Taxing the ultrawealthy is essential to tackle extreme wealth inequality and protect our democracy from the threat of oligarchy—but it is also central to advancing racial and climate justice, connections that we must pay more attention to,” he added. “It’s also clear that political gridlock around the debt ceiling is a consequence of tax cuts on the richest.”
Brett Wilkins is a staff writer for Common Dreams. This work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
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The Highest U.S. Marginal Tax Rate Is Too Damn Low
by Sylvia Allegretto
With Tax Day just behind us, it is a good time to put post-WWII top marginal tax rate into context. Many find it hard to believe that the top rate was 91 percent during the Eisenhower years. No, that didn’t mean that high earners paid a 91 percent tax on all of their income.
Take the 2022 tax brackets for single filers. The lowest rate is 10 percent and applies to taxable income (after deductions) up to $10,275. The first $10,275 is taxed at the same rate for everyone regardless of whether total taxable income is $10,000 or $750,000. The same logic applies to each successive tax bracket.
The highest marginal rate this year is 37 percent, which only applies to each dollar above $539,900 for single filers. So, for taxable income of $539,901, the top tax rate would be assessed on $1.00 for a tax of 37 cents. Income that is millions above the $539,900 threshold is all taxed at the same 37 percent. Given rate increases for much lower levels of income, this seems unfair.
For the last three decades, the mainstream policy debate around the top rates has centered around the difference of, at most, a few percentage points. As the figure shows, the Bush tax cuts (2001-03) lowered the highest rate from 39.6 percent to 35 percent. Obama set them back to 39.6 percent (2013) before Trump moved them to 37 percent (2018). 1 President Biden’s income tax plan continues the trend over the last three decades, as it would return the top rate to the Obama-era 39.6 percent for single filers earning over $450,000. The best research from economists Gabrial Zucman and Emmanuel Saez pegs the optimal federal marginal income tax rate around 60 percent—though this depends on enforcement and avoidance factors, this optimal rate is leaps and bounds away from the modern-day seesaw of a couple percentage points.
While no single tax change can solve the issue of fairness and revenue for things both needed and nice, progressive tax changes across corporate, capital gains (20 percent top tax rate!), personal income (federal and state),2 estates, and wealth together can change the landscape of the country. Current tax structures starve investments in our aging infrastructure and other public goods like healthcare, education, childcare, and veteran care. Inequality continues to soar and the richest Americans and corporations are not paying their fair share. Bold progressive policies across all taxes are necessary to invest in people, their communities, and to reflect our values at a level commensurate with our vast national resources and wealth.
1 – Clinton did not change the top rate but removed the cap on Medicare taxes. Obama also added a 0.9 percent surcharge to high income earners. Together, they add 3.8 percentage-points to the top marginal rate.
2 –State taxes vary widely with many implementing cuts, nine states have no personal income tax. Other states have more progressive policies. For instance, California has a top state rate of 13.3 percent with an additional 1 percent on income above a million dollars.
Sylvia Allegretto is a senior economist at the Center for Economic and Policy Research.
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Wealthy Americans Warn U.S. Democracy ‘Will Not Survive’ Unless Rich Are Taxed Heavily
by Jake Johnson
A group of rich Americans marked Tax Day on Tuesday by calling on the U.S. Congress to aggressively tax wealthy people like themselves, warning that the U.S. will remain in a state of “perpetual chaos” until lawmakers boldly confront the worsening inequality crisis.
“Tax Day isn’t just a filing deadline—it’s also an annual reminder that the ultra-rich exist in an entirely separate world when it comes to taxes,” said Morris Pearl, chair of the Patriotic Millionaires, an advocacy group that supports progressive taxation.
“For us, the loopholes are bigger, the rates are lower, and many rules are entirely optional,” Pearl, a former managing director at BlackRock, continued. “The tax code has been contributing to growing inequality for decades, and we’re reaching a point where the concentration of wealth is simply unsustainable. We need a change, or our economy and our democracy will not survive. For my future, my grandchildren’s future, and our country’s future, we need to tax the rich.”
Ahead of a Tuesday morning event on Capitol Hill, which featured Rep. Pramila Jayapal (D-Wash.) and other progressive lawmakers, Patriotic Millionaires released a tax reform agenda that called for, among other changes, a 90 percent top marginal tax rate for people with annual incomes above $100 million and a federal tax exemption for people who earn less than a “cost-of-living wage.”
The group also proposed legislation titled the Oppose Limitless Inequality Growth And Restore Civil Harmony (OLIGARCH) Act, which would create a progressive wealth tax structure aimed at countering the vast concentration of fortunes at the very top.
Patriotic Millionaires explained that the bill would establish “wealth tax bracket thresholds based on multiples of median American household wealth.”
“The bracket thresholds are set at 1,000, 10,000, 100,000, and 1,000,000 times median household wealth, with marginal rates at 2, 4, 6, and 8 percent respectively,” the group said. “It will wax and wane with wealth concentration, intensifying during periods of extreme inequality when wealth at the top is increasing faster than wealth in the middle, and tapering off to near non-existence when median household wealth increases and inequality moderates.”
Erica Payne, founder and president of Patriotic Millionaires, said in a statement Tuesday that the heavily skewed U.S. tax code contains “the seeds of our destruction.”
A massive trove of Internal Revenue Service documents obtained by ProPublica last year showed that the 25 richest Americans—including Amazon founder Jeff Bezos and Tesla CEO Elon Musk—paid an average true tax rate of just 3.4 percent between 2014 and 2018 in large part because unrealized capital gains from stock appreciation are not taxed.
Patriotic Millionaires on Tuesday called for a Billionaire Minimum Income Tax that would “impose a minimum tax on a wealthy household’s true economic income, including unrealized capital gains, thereby eliminating the incentive for billionaires to hoard assets and avoid selling, and instead live on low-interest personal loans.”
“Elites over decades have broken the social contract,” said Payne. “The only way to restore stability to this nation, the only way to fix this country, is to tax this country appropriately. That includes 90 percent tax rates on centi-millionaires and an aggressive wealth tax designed to make billionaires less rich.”
According to an Oxfam America analysis published last week, U.S. billionaires have gotten 86 percent richer over the past decade, with $37 of every $100 of wealth created between 2012 and 2021 going to the top 1 percent. The bottom 50 percent only received $2 for every $100 of wealth generated during that period, according to Oxfam.
“Tax Day is a reminder that the tax system isn’t working for ordinary Americans. It’s built to favor the richest in our society,” said Nabil Ahmed, Oxfam America’s Director of Economic Justice. “The ultrawealthy are sitting on mountains of wealth that remain largely untouched by taxes, and their wild riches are in no small part a result of intentional public policy.”
“We need to implement strategic wealth taxes if we want to stand any chance at reining in this kind of Gilded-Era wealth inequality that allows the super-rich to have a stranglehold over our economy,” Ahmed added.
Jake Johnson is a staff writer for Common Dreams. This work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
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Average U.S. Taxpayer Spent $1,087 on Pentagon Contractors in 2022
by Brett Wilkins
The average U.S. taxpayer in 2022 spent over four times as much on Pentagon contractors than on primary and secondary education, according to the annual Tax Day analysis published in recent days by the Institute for Policy Studies’ National Priorities Project.
NPP found that, on average, American taxpayers contributed $1,087 to Pentagon contractors, compared with $270 for K-12 education. The top military contractor—Lockheed Martin—received $106 from the average taxpayer, while just $6 went to funding renewable energy.
According to the analysis, the average 2022 U.S. taxpayer:
• Paid $74 for nuclear weapons, and just $43 for the Centers for Disease Control and Prevention;
• Spent $70 on deportations and border control, versus just $19 for refugee assistance;
• Contributed $20 for federal prisons, and just $11 for anti-homelessness programs; and
• Gave $298 to the top five military contractors, and just $19 for mental health and substance abuse.
“The main message? Our government is continuing to invest too much in the military, and in militarized law enforcement, and not nearly enough on prevention, people, and our communities,” NPP said.
The annual analysis shows how individual income taxes—the portion withheld from workers’ paychecks—were spent in 2022. It does not include corporate or individual payroll taxes that fund Social Security and Medicare. To determine what constitutes the average tax bill, NPP divided the total amount of federal income tax collected by the number of applicable returns filed.
NPP’s analysis comes just over a month after the White House released President Joe Biden’s $1.6 trillion budget request for fiscal year 2024. More than half of that amount—$886 billion—would go to the military.
Responding to the $886 billion request, NPP program director Lindsay Koshgarian said last month that “this military budget represents a shameful status quo that the country can no longer afford.”
“Families are struggling to afford basics like housing, food, and medicine, and our last pandemic-era protections are ending, all while Pentagon contractors pay their CEOs millions straight from the public treasury,” Koshgarian noted.
“A responsible budget would restore the Pentagon’s spending to previous reduced levels from just a few short years ago, and reinvest that additional money at home where we need it the most,” she added.
Brett Wilkins is a staff writer for Common Dreams. This work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
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“Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. … This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron.”
President Dwight D. Eisenhower, to the American Society of Newspaper Editors, April 16, 1953.