Jul 14, 2021
A new analysis out Wednesday shows that the 713 billionaires in the United States have seen their collective wealth skyrocket by nearly $1.8 trillion since the beginning of the coronavirus pandemic--and, thanks to the nation's deeply skewed tax system, much of that windfall will likely go untaxed.
"Lawmakers should pay for jobs, infrastructure, and investments benefiting working families with targeted taxes on the wealthiest 0.1%."
--Chuck Collins, Institute for Policy Studies
Conducted by Americans for Tax Fairness (ATF) and the Institute for Policy Studies (IPS), the breakdown of billionaire wealth data finds that Tesla CEO Elon Musk's $138 billion gain between March 18, 2020 and July 9, 2021 "could cover the costs over ten years of tuition for 5.5 million community college students and feed 29 million low-income public school kids over the summer--and still leave Musk $4 billion richer than he was before Covid."
The new analysis comes hours after Senate Democratic leaders announced plans to pursue a $3.5 trillion legislative package that includes investments in green energy, an expansion of Medicare benefits, paid family and medical leave, and other priorities.
According to the Washington Post, Senate Democrats plan to finance the measure with a "slew of tax hikes" targeting the wealthy and large U.S. corporations, many of which pay little to nothing in federal taxes each year.
"Major new sources of revenue include raising the top marginal tax rate, increasing the corporate tax rate, and changes to the international tax system," the Post reported.
Frank Clemente, ATF's executive director, said in a statement Wednesday that "there's not a better symbol of the need" for such progressive tax increases than "tax-free billionaires."
"We can raise some $4 trillion for vital public services simply by ensuring the rich and corporations begin paying their fair share of taxes," Clemente argued. "In the budget soon to be voted on, Congress needs to reward work, not wealth, ignore the pleadings of special interests and do what voters are demanding."
\u201cBREAKING: Billionaires have gotten $1.8 trillion richer, nearly all tax-free, since the pandemic began.\n\nDon't tell us we can't afford a bold reconciliation package that invests at least $4 trillion in jobs and families, paid for by fairer taxes on the rich and corporations.\u201d— Americans For Tax Fairness (@Americans For Tax Fairness) 1626268714
As ATF and IPS explain in their analysis, "very little if any" of the $1.8 trillion wealth gain that U.S. billionaires have seen during the deadly pandemic "will ever be put to such public use," thanks to fundamental inequities embedded in the tax code.
"Even though such asset growth is the primary source of income for the rich, under current rules almost none of that income will ever be taxed," the groups note. "Due to gaping loopholes in the tax code, increased wealth enjoyed by America's billionaires and other members of the richest 1% can go untaxed forever. Even when it is taxed, the rate is about half that of wage income."
The analysis goes on to spotlight several tax proposals endorsed by President Joe Biden that, if approved, would bring in revenue sufficient to fund significant expansions of the tattered U.S. safety net:
- Raising the corporate tax rate to 28% (revenue raised over 10 years: $858 billion): Corporate taxes are largely paid by the owners of corporations, which means the stockholders in the companies. Billionaires are among the wealthiest 1% that own over half of all corporate stock.
- Curbing offshore corporate tax dodging ($1 trillion-plus): Biden would raise by half the U.S. corporate tax on the foreign profits of American firms and make it harder for corporations to outsource jobs and use loopholes that make it look like corporate income is generated in offshore tax havens rather than here at home.
- Reforming the taxation of capital gains ($324 billion): Growth in wealth such as billionaires have experienced is a kind of income known as "capital gains." That kind of income currently enjoys special tax treatment, including a tax rate that is nearly half the rate on wages (20% vs. 37%), and the possible avoidance of all tax on a lifetime's worth of gains. For those making over $1 million a year (which very likely includes all billionaires), Biden would close the loopholes that provide the much lower capital gains tax rate and allow for lifetime capital gains on underlying assets to be passed to the next generation tax free.
Chuck Collins, director of the Program on Inequality and the Common Good at IPS, said in a statement that "surging billionaire wealth gains during the pandemic dramatizes the deep economic imbalances in our society."
"Lawmakers should pay for jobs, infrastructure, and investments benefiting working families with targeted taxes on the wealthiest 0.1%," Collins added.
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