Welcome, dear reader, to a new year in which we will all be subjected to mass quantities of the same old… same old. That is to say, we may expect dire warnings from sober and serious conservatives, expressing deep concern about the nation’s impending bankruptcy, due entirely to profligate spending by liberals eager to fritter away the hard earned money of widows and orphans. Never mind that said widows and orphans are about to be asked, by the aforementioned pillars of fiscal probity, to expect less from a Social Security system which exempts taxation on earnings above $168,600.
And for God’s sake, no one breathe a word about wave after wave of Republican tax cuts for the wealthy. Corporate sponsors hate that kind of talk.
— The Alleged Editor
“MAGA Math Doesn’t Add Up”: Democrats Rebuked for Backing GOP Cuts to IRS
by Julia Conley
Democratic leaders assured the U.S. public that a budget deal keeping non-military spending at its 2023 level would “protect key domestic priorities,” but economists and economic justice advocates on Monday criticized the party for appeasing the GOP and permitting the inclusion of its top objective: accelerating cuts to the Internal Revenue Service in order to benefit wealthy tax evaders.
The deal, which provides $772.7 billion for “non-defense discretionary funding,” also includes a provision allowing $10 billion in funding cuts to the IRS—which the GOP insisted upon last year in the so-called Fiscal Responsibility Act to raise the debt ceiling—to go into effect in 2024 instead of 2025.
Rebuking a statement from Senate Majority Leader Chuck Schumer (D-N.Y.) and House Minority Leader Hakeem Jeffries (D-N.Y.), who said the deal will “maintain important funding priorities for the American people and avoid a government shutdown,” the Center on Budget and Policy Priorities (CBPP) warned the agreement is “at best a funding freeze at a time when costs have risen, meaning that public services that people and communities count on will be cut.”
Sharon Parrott, president of the progressive think tank, said that while Democrats rejected “further, deeper cuts that some House Republicans demanded”—a “critical” move—the acceleration of IRS funding cuts in the deal was “deeply unfortunate.”
With the provision, said Parrott, the deal puts “tax cheaters’ interests ahead of honest taxpayers.”
“Any further cuts to the IRS should be rejected,” she added. “House Republicans continue to create showdowns they claim are about spending and deficits, only to demand IRS funding cuts that would weaken tax enforcement, allow for more unlawful tax cheating, and increase the deficit.”
Critics have warned that slashing IRS funding will not only make it more difficult for the government to stop tax evasion by the rich—costing an estimated $38.1 billion in lost tax revenue, according to a Center for American Progress (CAP) analysis—but will also make it more difficult for working people to access IRS services.
“Says a lot that this is a top conservative priority,” said Bharat Ramamurti, former deputy director of the National Economic Council.
The 2022 Inflation Reduction Act increased IRS funding, noted David Kass, executive director of Americans for Tax Fairness last week, cutting wait times and adding services for taxpayers “while simultaneously allowing the IRS to recoup funds from super-rich tax cheats.”
Yet “Republicans continue to be laser-focused on a single issue—protecting the wealthiest from paying their fair share in taxes,” Kass said. “Republicans continually shout about the size of the deficit, using it as an excuse to try to cut services that Americans rely on. Yet according to the Congressional Budget Office, cutting the IRS budget costs our country billions. Why then, would Republicans work so hard to slash this funding and add to the deficit? We know the answer: to protect mega-rich tax cheats rather than helping hard working Americans.”
Bobby Kogan, senior director of federal budget policy for CAP, pointed out that the deal finally reached by Republicans and Democrats includes about $32.5 billion in “real spending offsets”—less than the amount of government revenues that are lost when the IRS loses funding to hold tax cheats to account.
“For every $1 the IRS spends auditing wealthy tax cheats, America sees $22 in return,” said campaign group Groundwork Action. “MAGA math doesn’t add up.”
“Appeasing Republican extremists with cuts to the IRS,” the group added, “is both fiscally and morally irresponsible.”
Julia Conley is a staff writer for Common Dreams. This work is licensed under Creative Commons (CC BY-NC-ND 3.0).
The Yoken’s sign, as it appeared on Friday evening, January 5th. The whale no longer spouts, and its tail wags no more. Its outline, always static, is mostly missing now. With its missing letters, the name is now legible only to those who knew it when… . On October 22, 1987, for example, when a certain con man from Queens spoke here to a credulous Portsmouth Rotary Club, and, by his own account, due to their enthusiasm, began to think of running for president. In 2015, the sign was restored. It was a glorious thing to behold. The next year the con man was elected, and it’s all been downhill since then. We’re torn: should the sign get a tune-up? Or should it be allowed to decay, as a fitting memorial to the state of our democracy?
$8.5 Trillion in Untaxed Assets: Data Shows Why We Need a Billionaire Income Tax
by Jake Johnson
An analysis released January 3rd shows that in 2022, the wealthiest people in the United States collectively held a “staggering” $8.5 trillion in wealth that is not—and might never be—subject to taxation.
Examining recently released Federal Reserve data for 2022, Americans for Tax Fairness (ATF) found that the roughly 64,000 U.S. households with at least $100 million in wealth—less than 0.05 percent of the population—controlled more than one in every six dollars of the country’s “unrealized gains,” profits that aren’t taxable until the underlying asset, such as a stock position, is sold.
“But the ultra-wealthy don’t need to sell to benefit: They can live off low-cost loans secured against their growing fortunes. And once inherited, such gains disappear completely for tax purposes,” ATF’s Zachary Tashman and William Rice explained in the new analysis. “While most Americans predominantly live off the income they earn from a job—income that is taxed all year, every year—the very richest households live lavishly off capital gains that may never be taxed.”
That small, ultra-rich fraction of U.S. society is sitting on more unrealized capital gains than the bottom 84 percent of the country—roughly 110 million households—combined, Tashman and Rice noted.
Most of the typical U.S. household’s unrealized capital gains are in the form of their homes, which face state and local property taxes. But 93 percent of the unrealized gains of America’s wealthiest are tied up in businesses, stock portfolios, and mutual funds, ATF found. As a result, mega-rich individuals such as Tesla CEO Elon Musk—the wealthiest man on the planet—wind up paying little to nothing in federal income taxes.
Between 2013 and 2018, leading U.S. billionaires paid an average federal tax rate of just 4.8 percent, according to a previous ATF analysis.
“This is why we need a billionaire income tax,” the group wrote on social media Wednesday, pointing to legislative proposals reintroduced late last year in both chambers of Congress.
Sen. Ron Wyden’s (D-Ore.) Billionaires Income Tax would tax the tradable assets of individuals with more than $100 million in annual income or more than $1 billion in assets for three consecutive years, according to a summary released by the Oregon Democrat’s office.
In the House, Reps. Steve Cohen (D-Tenn.) and Don Beyer (D-Va.) unveiled a bill that mirrors President Joe Biden’s call for a minimum income tax for billionaires. The legislation would require ultra-wealthy households to pay a 25 percent annual tax rate on their income, including unrealized gains.
Last month, the U.S. Supreme Court heard oral arguments in a case backed by right-wing groups aiming to preemptively outlaw any tax on unrealized gains. The justices—with the notable exception of Samuel Alito, who was urged to recuse from the case due to his connection to a lawyer representing the plaintiffs—appeared unlikely to issue the kind of sweeping ruling demanded by right-wing organizations such as the U.S. Chamber of Commerce.
ATF’s analysis found that the wealth of America’s billionaires and centimillionaires has exploded in recent years as Republicans have enacted massive tax cuts for the rich while wealth tax proposals have languished in Congress.
“The cumulative $8.5 trillion of unrealized capital gains held by America’s billionaires and centi-millionaires in 2022 has jumped by more than half–or $3.2 trillion–just since the last Fed survey year of 2019,” Tashman and Rice wrote. “That increase continues a decades-long upward trend among the richest households in the United States.”
To begin reversing the trend and addressing the extreme and dangerous stratification of U.S. society by wealth, Tashman and Rice argued that Congress must “curb the economic and political power of the richest households by annually taxing their investment gains–whether realized or not–just as workers’ wages are taxed now, every year, all year round.”
“Without this necessary reform to our system of taxation,” they warned, “the growth of untaxed income at the very top of our economy will continue to accelerate, to the benefit of a tiny few and the detriment of everyone else.”
Jake Johnson is a senior editor and staff writer for Common Dreams. This work is licensed under Creative Commons (CC BY-NC-ND 3.0).
Attempting to commit journalism these days can be a challenge. If you’re not careful, the subject matter can lead to some rather dark thoughts [see previous photo]. Fortunately our readers send us things from time to time which cheer us up immeasurably. Take this photo, for example, showing a pair of charming young gentlemen fortifying themselves during a game at the Wildcat Stadium in Durham. It’s always heartening to see such civic engagement amongst the youth. Now, if you’ll excuse us, we’ll go down cellar and take turns banging our heads against the wall.
In 41 U.S. States, Richest One Percent Pay Lower Tax Rates Than Everyone Else
by Jake Johnson
Nearly every state and local tax system in the U.S. is fueling the nation’s inequality crisis by forcing lower- and middle-class families to contribute a larger share of their incomes than their rich counterparts, according to a new study published Tuesday.
Titled “Who Pays?,” the analysis by the Institute on Taxation and Economic Policy (ITEP) examines in detail the tax systems of all 50 U.S. states, including the rates paid by different income segments.
In 41 states, ITEP found, the richest one percent are taxed at a lower rate than any other income group. Forty-six states tax the top one percent at a lower rate than middle-income families.
“When you ask people what they think a fair tax code looks like, almost nobody says we should have the richest pay the least,” said ITEP research director Carl Davis. “And yet when we look around the country, the vast majority of states have tax systems that do just that.”
“There’s an alarming gap here between what the public wants and what state lawmakers have delivered,” Davis added.
In recent years, dozens of states across the U.S. have launched what the Center on Budget and Policy Priorities recently called a “tax-cutting spree,” permanently slashing tax rates for corporations and the wealthy during a pandemic that saw billionaire wealth skyrocket and company profits soar.
A report released last week, as Common Dreams reported, showed ultra-rich Americans are currently sitting on $8.5 trillion in untaxed assets.
According to ITEP’s new study, tax systems in just six states—California, Maine, Minnesota, New Jersey, New York, and Vermont—and the District of Columbia are progressive, helping to reduce the chasm between rich taxpayers and other residents.
Massachusetts, which has one of the more equitable tax systems in the nation, collected $1.5 billion in revenue last year thanks to its recently enacted millionaires tax, a measure that improved the state’s ranking by 10 spots in ITEP’s Tax Inequality Index. Minnesota has also ramped up its taxes on the rich over the past several years while expanding benefits for lower-income families, ITEP’s study observes.
But the full picture of U.S. state and local systems is grim. In 44 states, tax laws “worsen income inequality by making incomes more unequal after collecting state and local taxes,” ITEP found.
Florida has the most regressive tax code in the U.S., with the richest one percent paying a mere 2.7 percent tax rate while the poorest 20 percent pay 13.2 percent.
Florida is among the U.S. states that don’t have personal income taxes, which forces them to rely on consumption and property taxes that are “nearly always regressive,” ITEP notes in the new analysis.
“Eight of the 10 most regressive tax systems—Florida, Washington, Tennessee, Nevada, South Dakota, Texas, Arkansas, and Louisiana—rely heavily on regressive sales and excise taxes,” the study says. “As a group, these eight states derive 52 percent of their tax revenue from these taxes, compared to the national average of 34 percent.”
Aidan Davis, ITEP’s state policy director, said that “we’ve seen a lot of states shift their tax systems to become even more regressive in recent years by enacting deep tax cuts for the wealthiest.”
The report points to Kentucky’s adoption of a flat tax and repeated corporate tax cuts, which “delivered the largest windfall to families in the upper part of the income scale and have been paid for in part through new or higher sales and excise taxes on a long list of items such as car repairs, parking, moving services, bowling, gym memberships, tobacco, vaping, pet care, and ride-share rides.”
Davis said that “we know it doesn’t have to be like this,” arguing there is a “clear path forward for flipping upside-down tax systems and we’ve seen a handful of states come pretty close to pulling it off.”
“The regressive state tax laws we see today are a policy choice,” said Davis, “and it’s clear there are better choices available to lawmakers.”
Jake Johnson is a senior editor and staff writer for Common Dreams. This work is licensed under Creative Commons (CC BY-NC-ND 3.0).
’Twas Ever Thus
“…after the pestilence…servants, having no regard to the ordinance, but to their ease and singular covetousness, do withdraw themselves from serving great men and others, unless they have…wages double or treble of what they were…to the great damage of the great men and impoverishment of all the commonality.”
— Britain, 1350