Trump's Destruction Of The Tax System Can Only Be Remedied By Progressives, Not By Less Toxic Conservatives

David Leonhardt's NY Times column yesterday about the wealthiest 400 Americans paying lower taxes than the rest of us, is just another indication-- as if we need one-- that Trump lied about everything he said when he ran for president... and continues to do so. Did you ever think this claim was anything other than pure bullshit?

He was laughing at you

Do you know what a progressive tax rate is? The idea goes all the way back to the Roman Republic since he was meant to mitigate some of the societal ills associated with out of control income and wealth inequality. Bernie's political career has always been about this mitigation. Republicans and conservative Democrats have always sought to defend the wealthy against progressive tax rates, which began when Lincoln replaced a flat tax in 1862. The idea of progressive taxation is that the RATE increases as your taxable income increases. One of the key ways conservatives have gotten around progressive taxation is by exempting certain income. Trump and his Republican cheerleaders have brought taxes on the rich down so precipitously that the country is in fiscal danger. "For the first time on record," wrote Leonhardt the 400 wealthiest Americans last year paid a lower total tax rate-- spanning federal, state and local taxes-- than any other income group. This depressing milestone has two main causes: President Donald Trump’s 2017 tax cut and the long-term rise of tax avoidance by both companies and individuals."

The average tax rate on the richest 400 households last year was only 23%, down from 70% in 1950 and 47% in 1980. Why? In recent decades, the top income-tax rate and the estate tax have both fallen, and corporate taxes-- which are effectively paid by shareholders-- have plummeted. Middle-class and poor families, on the other hand, haven’t benefited much if at all from the falling corporate tax or estate tax, and they now pay more in payroll taxes than in the past. Overall, their taxes have remained fairly flat.

The combined result is that over the last 75 years the U.S. tax system has become radically less progressive.

The data here come from the most important book on government policy that I’ve read in a long time-- called The Triumph of Injustice, to be released next week. The authors are Emmanuel Saez and Gabriel Zucman, both of the University of California, Berkeley. Saez has won the award that goes to the top academic economist under age 40, and Zucman was recently profiled by Bloomberg BusinessWeek magazine as “the wealth detective.”

They have constructed a historical database that tracks the tax payments up and down the income spectrum since 1913, when the federal income tax began. The story they tell is maddening-- and yet ultimately energizing.

“Many people have the view that nothing can be done,” Zucman told me. “Our case is, ‘No, that’s wrong. Look at history.’” When the United States has raised tax rates on the wealthy and made rigorous efforts to collect taxes, it has succeeded in doing so.

And it can succeed again.

Saez and Zucman portray tax history as a struggle between people who want to tax the rich and those who want to coddle the rich. The story starts in the 17th century, when Northern colonies created more progressive tax systems-- including wealth taxes-- than Europe had. The Southern colonies, by contrast, were hostile to taxation, out of a fear that taxes could undermine slavery, as historian Robin Einhorn has explained.

By the middle of the 20th century, the high-tax advocates had prevailed. The United States had arguably the world’s most progressive tax code, with a top income-tax rate of 91%. But the second half of the 20th century was mostly a victory for the low-tax side. Companies found ways to dodge taxes. Politicians cut every tax that fell mostly on the wealthy, with the justification that the economy would benefit.

The justification turned out to be wrong. The wealthy, and only the wealthy, have done fantastically well over the last several decades. The American economy just doesn’t function very well when tax rates on the rich are low and inequality is sky high. It was true in the lead-up to the Great Depression, and it’s been true recently. Which means that raising high-end taxes isn’t about punishing the rich (who, by the way, will still be rich). It’s about creating an economy that works better for the vast majority of Americans.

In their book, Saez and Zucman sketch out a modern progressive tax code. The overall tax rate on the richest 1% would roughly double, to about 60%. The tax increases would bring in about $750 billion a year, enough to pay for universal pre-K, an infrastructure program and much more. Those are the kinds of policies that do lift economic growth.

One crucial proposal is a minimum global corporate tax of at least 25%. A company would have to pay the tax on its American profits even if it set up headquarters in Ireland or Bermuda. Saez and Zucman also favor a wealth tax; Elizabeth Warren’s version is based on their work. And they call for the creation of a Public Protection Bureau, to crack down on tax dodging.

I already know what some critics will say in response-- that the rich will always figure out a way to avoid taxes. That’s simply not the case. True, they will always be able to avoid some taxes. But history shows that serious attempts to collect more taxes usually succeed.

Ask yourself this: If efforts to tax the super-rich were really doomed to fail, why would so many of the super-rich be fighting so hard to defeat those efforts?

For the same reasons, no doubt, they are fighting to defeat Elizabeth Warren and, even more so, Bernie, the serious two candidates who actually want to deliver on fundamental change. It's also the reason why progressive candidates for Congress are always up against the forces of conservatism, whether in Democratic primaries-- where progressives have to battle the DCCC and their corrupt candidates for nominations-- or in general elections (when Republicans are always the greater evil).

Eva Putzova is the Blue America-endorsed candidate running against Republican-pretending-to-be-a-Democrat (Blue Dog) Tom O'Halleran, a consistent voter against everything even vaguely progressive. Eva-- who is adamantly opposed by both the Republicans and the conservative DCCC-- told us that "If we doubled the tax rate on the rich, closed corporate tax loopholes, and imposed a wealth tax, we could raise the money we need to invest in healthcare, education, and green infrastructure. It would produce millions of good paying jobs which would benefit people who have been neglected for decades. We built the greatest middle class in history after World War II by enacting a strong progressive tax system and we can do it again if we elect politicians with the guts to take on corporate interests."

Jason Butler, our progressive pastor in Wake County, North Carolina is running against a reactionary Republican, George Holding, whose record shows he doesn't think rich people should pay taxes, just working people. Jason could disagree more: "Let’s get this straight-- taxes pay for our national defense, our infrastructure, healthcare for the vulnerable, our public schools, they preserve our national parks and our national treasures, they provide a safety net for the suffering, assist those in need, help rebuild communities after disasters, fund pivotal programs for economic development, and so much more… and the rich are constantly trying to pay less. Why? Like it or not, paying taxes is one of the most patriotic ways we participate in a shared nation. And as the old saying goes, 'to those who have been given much, much is required'-- yes, the rich have benefited tremendously from America and much is required. I’d like to see more stop trying to hide from their responsibility and more embrace their potential role as leaders in our patriotic duty."

Kim Williams, a Central Valley progressive running for the 16th district seat held by Blue Dog-- quasi-Republican-- Jim Costa noted that "Nowhere in California are the failures of our current system more apparent than in the Central Valley. We are home to one of the most unequal regions in California with high-income households making 14 times as much as poor households. And since 2007, incomes at the bottom 10 percent have dropped by 26 percent, which means that the poor continue to get even poorer. The conversation around fair taxation tends to center itself on whether the rich will pay and how hard they will fight to hold onto their wealth. But for many people in this Valley, the conversation should be around life or death. Because while billionaires are complaining about taxes on their yachts and vacation homes, people here are choosing between medicine and food. I will absolutely support a millionaire wealth tax, and I will vigorously support efforts to enforce it."

Another broken promise-- this one just a few minutes ago

Rachel Ventura is running for a Chicagoland seat held by multimillionaire New Dem who is a conservative on all fiscal matters. She disagrees with him and the GOP on taxation. She told us that she likes "the idea of a universal corporate tax rate on companies that try to dodge taxes by setting up shop in foreign countries. One could argue that businesses use as much or more of our taxpayer infrastructure than citizens do. Businesses depend on roadways to get their goods to market. In Will County, where I serve as an elected official, the roads that are pounded by truck traffic are in constant need of repair, costing taxpayers. The oil and gas industry is the dominant benefactor of our taxpayer-funded military presence in the Middle East and pharmaceutical companies benefit from the millions of dollars that taxpayers invest into research and development."

Rachel also told us she agrees "that we need to restore the 1950’s era progressive tax rates on the wealthy and I am a supporter of closing tax loopholes that are written by the wealthy, for the wealthy. Not only is Trump’s tax cut destructive to our economy, looking at the Republicans and their 2020 tax messaging is also important. The anti-tax wing of the Republican Party is already trying to boil things like the Green New Deal down to a 'meat tax' coupled with fear-based messages about 'taking away your hamburger.' In addition to having to call out Trump’s lies about his tax cuts helping working people, we also have to counter their entire 2020 campaign about the Democrats wanting to 'tax everything.' If we allow weak Democrats to handle the messaging in 2020, they will no doubt get clobbered by the anti-tax message. It will be important to go into the 2020 election cycle with strong progressives who can inspire the working poor to go to the polls in large numbers. We need to be talking about wealth inequality, taxing the rich, strengthening the middle class, protecting and expanding social security, creating good paying jobs and investing in real fixes to the climate crisis."