Tax the Rich

           Tax Day was a couple of weeks ago, and I trust you good citizens got your returns filed in timely fashion. If only everyone was so honest. Among the many outrages of the Mump administration, it appears to be their policy to let the cheaters get away with it.

            I saw a poll recently that ranked the Internal Revenue Service dead last as the most unpopular federal agency, so it probably looked like a political winner to inflict massive layoffs on the agency. No one should be celebrating. When rich people evade paying what they owe, the rest of us pay the price. Either we pay more, or the federal deficit grows by that much more.

            Make no mistake about who the culprits are. A recent study by the Yale Budget Lab estimated that the richest 1% of Americans account for around 30% of unpaid taxes. The Biden administration addressed the problem as part of the Inflation Reduction Act. Thanks to improved funding and other changes, the IRS announced in July of last year that they had collected more than $1 billion from high-wealth taxpayers with past-due taxes. If the point of DOGE was actually to fight fraud and abuse, the IRS should be the last place to start cutting.

            If the firings at the IRS are allowed to stand, the New York Times estimates that the agency stands to lose about a third of its staff this year. If it were to get as high as half, the Yale study calculates that the lost federal revenue from the top 1% would amount to $30 million a day for the next ten years. It will be open season for bilking the country out of needed resources.

            I have to wonder about these fabulously wealthy tax cheats. I mean, why bother? Are they really going to have to go without if they file an honest return? And aren’t they already getting plenty of tax breaks? When they are so many legal ways to lower your tax bill, it seems like you’d have to be pretty stupid to resort to illegal means.

            Even Trump once promised to get rid of the carried interest loophole, one of the biggest ways in which rich people’s earnings are made to look like something other than income. Don’t hold your breath. Trump’s one big accomplishment during his first term was a tax bill that delivered massive cuts for the wealthy and large corporations, and now the Republicans are pushing another tax bill with lots of goodies for those who need it least. They claim to pay for it with cuts to spending – including $800 billion from Medicaid – but in fact the numbers don’t add up. The huge increases to the national debt in recent decades are attributable more than anything to Republican tax cuts.

            Rigging the tax system to favor the wealthy has also contributed more than a little to the massive growth in economic inequality in our country. Income taxes and estate taxes are two bastions of progressive taxation that have the potential to shift resources from the haves to the have-nots. Republicans are doing their damnedest to undermine that.

            More than simply resisting the Republican tax bill, we should be fighting for a wealth tax. While most of us get our money from working for it, the rich get much of theirs from capital gains on their investments. Not only are capital gains taxed at a lower rate than salaries, they aren’t taxed at all as long as they just sit there and keep growing. Elizabeth Warren has proposed an Ultra-Millionaire Tax on the top 0.1% of households that could generate $3.75 trillion in revenue over a ten-year period. What a great idea.

Paul Harris