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'Bond Villain' Jeff Bezos Claims 'You Could Double the Taxes I Pay' and It Won't Help Anyone
"Too much money contorts any human being," said one critic of the Amazon founder.
May 20, 2026
Amazon founder Jeff Bezos drew ridicule on Wednesday after he claimed that doubling the amount of taxes he pays wouldn't be beneficial to society.
During an interview on CNBC, journalist Andrew Ross Sorkin asked Bezos about arguments made by Sen. Elizabeth Warren (D-Mass.) that the super-rich have lower effective tax rates than average Americans given how much of their wealth comes from unrealized capital gains and not traditional income earned through actual labor.
"I pay billions of dollars in taxes," replied Bezos, whom Forbes estimates is worth $267 billion. "If people want me to pay billions more, then let's have that debate. But don't pretend, you know, that that's going to solve the problem. You could double the taxes I pay, and it's not gonna help that teacher in Queens, I promise you."
Bezos on CNBC: "You could double the taxes I pay, and it's not gonna help that teacher in Queens. I promise you." pic.twitter.com/ocbf34XZhA
— Aaron Rupar (@atrupar) May 20, 2026
A 2021 investigation by Pro Publica found that Bezos' effective tax rate of less than 1% between 2014 and 2018, as he paid a total of $973 million in taxes over a period in which his net worth grew by $99 billion.
As explained by the Institute of Taxation and Policy (ITEP), this effective tax rate was "significantly lower" than the tax rate paid by middle-class Americans over that period.
"There were multiple years where Bezos paid nothing at all in income taxes," ITEP noted. "While having billions of dollars of wealth, Bezos consistently avoided income tax by offsetting earned income with other investment losses and various deductions, all while Amazon stock was rapidly rising."
Democratic congressional candidate Melat Kiros in Colorado suggested Bezos had a point about taxation—"because we tax income, not wealth.
"Bezos takes out a tiny salary, pays the income tax, and lives off loans borrowed against his stocks, basically tax-free," said Kiros. "They all do this and now 935 billionaires hold more wealth than 170 million Americans. It’s time to tax wealth."
Melanie D'Arrigo, executive director of the Campaign for New York Health, took issue with Bezos' claim that doubling his taxes would produce no benefits.
"Jeff Bezos paid $500 million for his super-yacht and $75 million for his super-yacht’s mini-yacht—both of which he’s allowed to write off on his taxes," she wrote in a social media post. "That alone would cover $180 in classroom supplies for every public school teacher in the US."
Craig Harrington, research director at Media Matters for America, marveled at how out of touch Bezos seemed to be.
"There’s a funny thing about being uber wealthy," he observed. "They get so rich that they lose all sense of place, they essentially manifest as stateless people with no connection to or understanding of the world outside their private airports and resplendent villas."
Journalist and screenwriter David Simon expressed a similar view of the impact of immense wealth on Bezos' psyche.
"Too much money contorts any human being," Simon wrote. "And what was once a man is now, for the rest of the world, a fully metastasized cancer."
Author Hemant Mehta, meanwhile, simply wondered if Bezos "auditioning to be the next Bond villain."
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How Luxury Real-Estate Can Have Redeeming Social Value for the Rest of Us
Some 17 local governments, the Washington, D.C.-based Institute on Taxation and Economic Policy (ITEP) details in a just-released report, are now levying a “mansion tax” on the sale of high-end residential properties.
Mar 25, 2024
Back in 1928, the bold and brassy mobster Al Capone spent $40,000—about $851,000 in today’s dollars—on “a stately Spanish Colonial-style villa” that sat on an isle right off Miami’s coast.
Local historic preservationists would end up cherishing that villa for years after Capone’s 1947 passing. They apparently didn’t cherish it enough. The property’s current corporate owner demolished Capone’s villa last summer and now has the empty lot on sale for $23.9 million.
Meanwhile, in nearby Miami Beach, deep pockets are buzzing about a $125-million “two duplex penthouse” that’s going to be topping a brand-new 15-story luxury tower. The co-developer on the project expects no problems selling off his tower’s 30 opulent abodes. And why should he? Luxury dwellings are selling quite nicely in America’s most fashionable rich people-friendly neighborhoods.
Proposals to either enact or expand mansion taxes have so far passed into law a remarkable 86% of the times they’ve appeared on local ballots.
Greater Miami—in 2023’s last quarter alone—saw its typical luxury-home sale price jump nearly 9% over the year before. In the heart of California’s Silicon Valley, last-quarter prices for luxury dwellings in 2023 rose 9.5% over 2022. The sellers of those dwellings pocketed a median $4,559,500 after having their homes on the market for just 15 days.
In New York City, luxury realtors are flashing even broader smiles. One Manhattan property sold for $75 million in 2023’s last quarter, with another topping $65 million and still another grabbing close to $50 million. Out west, Colorado’s Aspen registered two last-quarter sales in the nation’s top 10, one at $60 million and another at a mere $40 mil.
What do deep pockets spend their time doing once they’ve closed on one of these super deals? They start concentrating, The Wall Street Journal reports, on their closets. Today’s rich are hiring “closet designers” and then throwing “closet reveal” parties to share their favorite new storage spots with friends and family. One elite closet designer, Design Galleria CEO Matthew Quinn, has collected over $1 million “for a two-story closet” that features “both an elevator and a spray-tan booth.”
An outrageous display of out-of-control conspicuous consumption? Sure. But the proud owner of that manse with the two-story closet also figures to get that million-plus back—and then some—when that luxury abode goes back on the market. The demand for housing fit for billionaires is simply exploding. Four decades ago, the United States hosted just 13 billionaires. Now we have some 735.
Fabulous mansions, in other words, figure to be fetching top dollar deep into the foreseeable future. Could these sales possibly have any redeeming social value for the rest of us? A growing corps of progressive local lawmakers believe they most certainly could.
Some 17 local governments, the Washington, D.C.-based Institute on Taxation and Economic Policy (ITEP) details in a just-released report, are now levying a “mansion tax” on the sale of high-end residential properties. Most all of these levies have gone into effect since 2018.
The mansion sale levies enacted so far, ITEP researchers calculate, are currently raising “nearly $3 billion” in annual revenue. Big cities are collecting the bulk of that revenue. In New York, home to the original modern mansion tax, luxury home sales over $25 million face a special 4.58% tax. San Francisco’s top tax rate on over $25-million transactions sits at 6%.
Other cities are taxing mansion sales at more modest levels. The city in the heart of Silicon Valley, San Jose, subjects mansion sales over $10 million to a 1.5% tax.
Still other cities are looking overseas to nations like Denmark for their mansion tax inspiration. Local lawmakers in the District of Columbia, for instance, are considering a higher “new marginal tax bracket on homes worth more than $2 million.” Across most of the United States today, by contrast, “flat-rate” property taxes currently rule. The predictable result: Low- and middle-income homeowners pay a higher share of their income in property taxes than America’s most affluent.
Moves to change that reality, the new Institute on Taxation and Economic Policy Local Mansion Taxes report suggests, would be enormously popular. Proposals to either enact or expand mansion taxes have so far passed into law a remarkable 86% of the times they’ve appeared on local ballots.
But those appearances remain relatively rare. That could change. You could help change it. How best to begin that change effort? How about emailing your favorite local lawmakers a copy of ITEP’s fascinating new deep dive into what could become our mansion tax future.
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Tax the Rich Men North and South of Richmond—and Join a Union Too
We could better tax the rich men near and far from Richmond by getting rid of the special low tax rate on capital gains income and making it the same as taxes on work.
Sep 10, 2023
Oliver Anthony’s smash country hit “Rich Men North of Richmond” has gone through an entire story arc in just a few weeks. When conservatives heard the song’s anger, apparent ire toward northerners, and lyrics punching down at people on welfare, some lauded it as an anthem for our times — helping send it to the top of the Billboard charts, and inspiring Fox News to reference it in the first question at last week’s Republican presidential debate.
But Anthony changed the narrative late last week by saying: “It was funny seeing my song at the presidential debate ’cause it’s like, I wrote that song about those people.” He also tweeted “I. Don’t. Support. Either. Side. Politically. Not the left, not the right. I’m about supporting people and restoring local communities.”
Fair enough. Let’s leave the song, particularly the parts about welfare and obesity, behind. But lines like “I’ve been sellin’ my soul, workin’ all day, overtime hours for bullshit pay” and “your dollar ain’t shit and it’s taxed to no end ’cause of rich men north of Richmond” strike a truthful chord. For those of us at the Institute on Taxation and Economic Policy who examine tax policy through the lens of how much working (and poor) people are taxed compared to rich men north (and south) of Richmond, it’s hard not to take this as a jumping off point to amplify some important facts.
Oliver Anthony - Rich Men North Of Richmondwww.youtube.com
In Virginia, where Anthony is from, middle-class, working-class and poor families all pay a larger share of their income in state and local taxes than households in Virginia’s top 1 percent. That’s because the state relies more on sales taxes, which poor and working families disproportionately shoulder, and less on income taxes that better target the rich. Virginia lawmakers also let multinational corporations stash their earnings in tax havens to avoid state taxes, something local businesses can’t get away with. The tax laws in most other states create the same problems.
There is a better way. While Gov. Glenn Youngkin recently pushed for more high-income and business tax cuts, some Virginians are trying to increase what the wealthiest pay and redirect resources toward families with children. And some states, like Minnesota, already have a system that does more for kids and communities by taxing rich people and corporations.
I’ll admit I’ve been humming lines from Oliver’s song, but what sticks in my head more is the response from labor balladeer Billy Bragg, who’s been refining his political and economic views for decades.
Nationwide, income from wealth gets a special lower tax rate, so someone whose money comes from their big investment portfolio pays less than someone who earns the same amount by working. And don’t get me started on the breaks available to the uber-rich, whose stock portfolios balloon until they pass them on to their children without anyone ever paying anything on the increase. Finally, wealthy corporations often dodge federal taxes — in 2020, we found that 55 of the nation’s most profitable corporations paid zero in federal income taxes.
We could better tax the rich men near and far from Richmond by getting rid of the special low tax rate on capital gains income and making it the same as taxes on work; by cracking down on tax avoidance by multinational corporations; and by turning state tax codes right side up, replacing sales taxes with new income tax brackets for earnings over $150,000, over $250,000, and over $1 million. This would generate the money needed to deliver more for working families — from child care, to health care, to affordable college. And it would raise that money from those who derive the most benefit from capitalism.
I’ll admit I’ve been humming lines from Oliver’s song, but what sticks in my head more is the response from labor balladeer Billy Bragg, who’s been refining his political and economic views for decades. Bragg’s new song, “Rich Men Earning North of a Million,” taps proud musical traditions that give voice to economic hardship, from spirituals to the blues, bluegrass, country, rock and hip-hop.
Billy Bragg - Rich Men Earning North of a Millionwww.youtube.com
I’ve added Bragg’s newest to my playlist. And my hunch is that Anthony wouldn’t like me citing his song any more than he liked the Republicans doing so. But I can’t ignore the anger of someone working for “bullshit” pay who is pissed off at the power that rich men have in our political system and in our tax code. I’ll take the sentiments from both musical voices to honor working class narratives, channel feelings of disempowerment, and push for a more economically just country. Starting with better taxing rich men, wherever they live.
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Progressives Say IRS Cuts Should Be 'Off the Table' as GOP Reneges on Debt Ceiling Deal
With House Republicans pledging to limit new spending on a range of programs, Democrats are "no longer obliged to move forward with the IRS cuts" in the handshake deal, said more than a dozen groups.
Jul 14, 2023
More than a dozen economic justice groups on Friday called on the U.S. Senate Appropriations Committee to move forward with fully funding the Internal Revenue Service, arguing that Republican actions have nullified a debt ceiling deal struck by the Biden White House and GOP leaders.
Under the terms of the handshake agreement, the nation's borrowing limit was suspended for two years in exchange for a two-year limit on non-military spending—rescinding Covid-19 relief funds; clawing back more than $20 billion in IRS funding that was a signature element of the Democrats' climate and healthcare law, the Inflation Reduction Act (IRA); and enforcing new work requirements for recipients of nutritional and economic aid.
Soon after the deal was reached, said groups including Groundwork Action, Americans for Tax Fairness, and the Institute on Taxation and Economic Policy (ITEP), House Speaker Kevin McCarthy (R-Calif.) and other powerful Republicans made clear they have no intention of sticking to the funding cuts that were agreed upon.
As Common Dreams reported in June, less than two weeks after the debt ceiling deal had been reached, House Appropriations Committee Chair Kay Granger (R-Texas) said the spending levels in the agreement were "a ceiling, not a floor" for 2024 spending and that Republicans are free to limit new spending in appropriations bills for the coming year.
"To be clear, Republican demands for IRS cuts were never sensible. The cuts will cost the government more than they will save and will make tax filing more complicated for middle-class Americans."
"In doing so, House Republicans are underfunding the very programs the agreed-upon IRS cuts are designed to protect," said the groups in their letter Friday. "Thus, your committee is no longer obliged to move forward with the IRS cuts in its appropriations and should instead fully fund the IRS at the levels President Biden requested in his FY2024 budget."
As the Senate committee prepares to mark up appropriations legislation, said the organizations, it should "include all of the funding for the IRS requested by President Biden in his FY2024 budget, amounting to $14.1 billion in annual discretionary appropriations for the IRS, and to preserve the $79.4 billion in long-term funding included in the Inflation Reduction Act."
"If Republicans have decided that the deal is off, then further IRS cuts should be completely off the table," ITEP federal policy analyst Joe Hughes told Common Dreams on Friday.
IRS funding aimed at cracking down on wealthy Americans who cost the federal government—and working families—tens of billions of dollars annually by evading taxes was a key provision of the IRA last year. After becoming House Speaker in January, McCarthy made clear his intention of cutting the funding.
Funding for the tax agency is "necessary to support a fair tax system, crack down on wealthy tax cheats, guarantee the highest quality of taxpayer services for all Americans, and ensure that the IRS can build an effective system that would empower taxpayers to file their taxes for free," said the groups.
As Common Dreams reported in June, the GOP's proposed cuts to the IRS would cost the federal government in $40 billion in lost revenue.
"To be clear, Republican demands for IRS cuts were never sensible," Hughes said. "The cuts will cost the government more than they will save and will make tax filing more complicated for middle-class Americans. Meanwhile, the top 1% and big multinational corporations will use their armies of accountants to cheat the system out of taxes that they legally owe."
While working to protect the wealthiest Americans from tax enforcement, the Republicans are also intent on scrapping an IRA provision which required the IRS to develop a tax filing system that would be free for all Americans—saving them hundreds of dollars per year in fees they currently pay to private companies like H&R Block and TaxSlayer to file their taxes.
A seven-month congressional investigation found this week that those companies send the private data of clients to tech giants like Meta and Google, constituting a "shocking breach" of privacy, according to Democratic lawmakers.
But the Republican-controlled House Appropriations Committee included a rider in its Financial Services and General Government (FSGG) legislation that would block the IRS from creating a simplified, free system for taxpayers.
"We strongly urge you to fully fund the IRS so that it can enforce tax laws against wealthy tax cheats and deliver 21st century customer services and oppose any efforts to incorporate harmful riders into the appropriations process," the groups told the Senate committee. "We have an opportunity to provide a free and fair option to millions of tax filers in America, making the tax system simpler and more equitable. Let's not miss this opportunity."
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Sen. Ron Johnson Argues Against Rich Paying Fair Share to Ensure Social Security's Survival
The Wisconsin Republican millionaire accused working-class Americans of "getting a lot more in return" from the key social program than rich people who pay disproportionately less into its coffers.
Jul 12, 2023
U.S. Sen. Ron Johnson came under fire Wednesday after the multimillionaire Wisconsin Republican asserted during a Senate hearing that Social Security—an economic lifeline for tens of millions of Americans who paid into the system throughout their working lives—unfairly takes from wealthier people to support lower-income retirees.
Speaking during the Senate Budget Committee hearing—entitled Protecting Social Security for All: Making the Wealthy Pay Their Fair Share—Johnson said that his Wisconsin constituents "have a basic misconception about Social Security."
Johnson—one of the wealthiest U.S. senators, according to the watchdog OpenSecrets—derided Social Security, a key New Deal program, as a "nanny state" scheme enacted because the government doesn't trust Americans to save for retirement on their own.
"Most people think, 'Well, that's my money,' and, in fact, part of it is," the senator continued. "If you're in a low-income group, you're getting a lot more in return than you invested in... If you're in the high-income, you're not getting what you paid in."
Patient advocate and cancer survivor Peter Morley tweeted Wednesday that "Sen. Ron Johnson is a LIAR and it was clear from today's hearing that he is a defender of the rich and not for the people!"
Johnson previously called Social Security a "Ponzi scheme" in one of many attacks on the program upon which around 66 million Americans rely.
Further arguing during Wednesday's hearing that Social Security was not meant to be a "general welfare system," Johnson turned to Institute on Taxation and Economic Policy (ITEP) executive director Amy Hanauer—who testified that "our tax system raises far too little from those with the most"—to ask what he called "a very simple question."
"Out of every $1 of income that any American makes," he queried, "how much should be the maximum amount the government takes out in total?"
"I think we should think about the kind of country we want to have," Hanauer began to reply before Johnson interrupted her to demand an answer as "a percent."
"You know, we had 400 billionaires who paid less than an 8% tax rate, so more than that," she asserted. "It strikes me that in a society where the wealthiest are getting more and more of our income, they can afford to chip in more to maintain the systems that enabled them to build that wealth in the first place."
Senate Budget Committee Chair Sheldon Whitehouse (D-R.I.) followed Hanauer's response by opining that "it would make a very big difference to me in how much should be taxed on a dollar of income whether it was the first dollar of income of an individual or their billionth dollar of income."
On Tuesday, the Social Security Administration's Office of the Chief Actuary published an analysis showing how Democrats' Medicare and Social Security Fair Share Act could extend the social programs' solvency for generations by increasing taxes on incomes over $400,000.
Another bill introduced earlier this year by Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) and Reps. Jan Schakowsky (D-Ill.) and Val Hoyle (D-Ore.) would boost monthly Social Security benefits by at least $200, prolonging the program's solvency for decades by lifting the cap on the maximum income subject to Social Security payroll tax.
Meanwhile, House Speaker Kevin McCarthy (R-Calif.) has announced the creation of a fiscal commission tasked with finding ways to reduce the national debt, warning last month that he was "going to make some people uncomfortable" by looking at cuts to Social Security and Medicare.
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Minnesota Democrats Show It's Possible to Curb Tax Avoidance by Corporations
The state-level approach sends a clear signal that the days may be coming to an end when big multinationals can scare state lawmakers into allowing them to game the tax system.
Jul 09, 2023
Earlier this year, Minnesota lawmakers came within a whisker of enacting a sorely needed corporate tax reform that would have insulated the state from the corrosive effect of offshore corporate tax dodging. This reform, known as worldwide combined reporting, is the gold standard for corporate tax sustainability at the state level. The state’s near miss, and the second-best solution Minnesota ultimately enacted this year, known as GILTI (the Global Intangible Low Taxed Income provision), each provide a blueprint for the loophole-closing strategies that other states should prioritize.
The goal and strategy of worldwide combined reporting are simple: the goal is to prevent large multinational corporations from artificially shifting their income out of the U.S. and into foreign tax havens, and the strategy is to require big multinationals to include all their income—from the biggest nation to the smallest foreign tax haven – in one big pot before determining Minnesota’s proper share of worldwide income.
Absent this reform, big multinationals can reap huge tax cuts by shifting their U.S. profits out of Minnesota—where state tax laws can, sensibly, reach those profits—to low-rate foreign tax havens that are utterly beyond the reach of states. This income shifting remains a gigantic drain on corporate taxes, as an ITEP analysis of IRS data reveals. Because worldwide combined reporting starts by putting the income of foreign subsidiaries in the same pot as domestic profits, it takes away the incentive for companies to shift their income out of the U.S. and into tax havens.
If this strategy sounds familiar, it should: it’s the same concept as water’s edge combined reporting, a vital reform half the states have now put in place to prevent corporations from artificially shifting U.S. income into low-tax states. The “water’s edge” version prevents companies from using Delaware as a tax dodge but is helpless to prevent profits from sailing across the ocean to more exotic tax havens like the Cayman Islands or Luxembourg. Extending an existing combined report beyond the water’s edge, or enacting a combined report that immediately reaches worldwide, is a reform that would put an end to aggressive profit-shifting in one fell swoop.
When Minnesota’s House and Senate passed worldwide combined reporting earlier this year (before lawmakers lost their nerve in conference committee), it took many observers by surprise. But from a worldwide perspective, this move was anything but shocking: around the world, the walls are closing in on offshore corporate tax avoidance.
More than 140 countries have now signaled their support for a multinational effort to tax corporate income where it is earned. A new corporate tax backstop enacted by Congress and the Biden administration last year promises to help mitigate corporate efforts to hide profits in tax havens. Even the otherwise-awful Tax Cuts and Jobs Act (TCJA) included provisions—most notably GILTI—designed to discourage artificial offshoring of profits. Seen through this lens, Minnesota’s move seems both predictable and welcome.
GILTI conformity is a clear second best compared to worldwide combined reporting but is nonetheless a valuable step forward. Enacted at the federal level as part of the 2017 Tax Cuts and Jobs Act, the GILTI provision is designed to discourage offshore income shifting. Rather than identifying specific foreign tax havens, GILTI applies a U.S. tax to foreign profits that are disproportionately large relative to the offshore tangible assets that supposedly are generating these profits. In particular, GILTI applies to foreign income exceeding a 10 percent rate of return on foreign tangible assets.
While the GILTI approach is less explicitly targeted to specific foreign tax havens, it’s designed to ensure that large multinationals best known for shifting profits into foreign tax havens will no longer be rewarded for doing so. And early indications are that it’s achieving this goal.
For example, Minnesota-based 3M has paid an average of $65 million a year in GILTI tax over the five years since GILTI took effect at the federal level, a clear indication that the company is reaping suspiciously large profits in foreign countries where its physical footprint is small. So the state’s move to couple with this federal provision will help ensure that GILTI tax payments made by 3M and other large multinationals will benefit Minnesota taxpayers as well, to the tune of over $400 million during the next biennium.
Minnesota’s last-minute retreat from worldwide combined reporting, and subsequent embrace of GILTI, appears increasingly a Pyrrhic victory for the business lobbyists who used misleading scare tactics to jangle lawmakers’ nerves.
These lobbyists, acting at the behest of large multinational corporations, have protested vigorously against every sustainable corporate tax reform proposal in the last quarter century. They complained when more than half the states enacted water’s edge combined reporting as the 21st century began; they have pushed for a bigger sales factor, more generous manufacturing incentives and research tax credits; and have fought against better disclosure of how this raft of tax breaks affect their own tax rates. They do it not because their arguments have merit, but because pushing for ever-lower corporate taxes is their job. And, until recently, they have done their job well.
But the qualified success of Minnesota’s GILTI conformity—to say nothing of the state’s serious dalliance with the game-changing worldwide combined reporting–sends a clear signal that the days may be coming to an end when big multinationals can scare state lawmakers into allowing them to game the tax system. For lawmakers seeking to level the playing field for small businesses against the predations of big multinationals, following in Minnesota’s footsteps should be on the short list of reform goals.
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Let's Have Work Requirements for the Super Rich and Their Massive Tax Breaks
Current tax rules effectively subsidize investment income of the wealthy that far exceeds the income these individuals earn from work. Time to to put an end to that.
May 28, 2023
As Congress and the President negotiate on the debt ceiling, one sticking point is the work requirements that GOP leaders want to apply to income assistance programs like Medicaid and SNAP. Instead of focusing on low-income people who are already mostly employed or facing significant barriers to employment, lawmakers who want to encourage labor force participation should revisit existing tax breaks subsidizing wealthy individuals who live off their assets rather than work.
Along these lines, Congress could attach a new work requirement to the tax code’s lower rate for capital gains and stock dividends, which is a tax break that mostly benefits the richest 1 percent of taxpayers, including those who do not work at all and live off their investments. Even if this new work requirement is limited to millionaires, it would likely bring in more than the $120 billion that the House GOP proposes to raise over the next decade by imposing new work requirements on programs for low-income people.
The work requirement for this tax break could limit the capital gains and stock dividends eligible for special, lower tax rates to an amount equal to the taxpayer’s earnings each year. In other words, wealthy individuals’ access to the biggest tax break for investments would be directly tied to their workforce participation.
Work Requirements in the Limit, Save, Grow Act
In April, House Republicans approved the Limit, Save, Grow Act, which would delay a government default for less than a year (through March of next year) in exchange for more than $4 trillion in spending cuts. Republican lawmakers have remained firmly opposed to raising more tax revenue, despite evidence that tax cuts enacted under previous administrations are primarily responsible for the budget gap this century. The bill includes provisions that would cut assistance by $120 billion over a decade by imposing new work requirements on Medicaid, food assistance (SNAP) and Temporary Assistance for Needy Families (TANF).
As the Center on Budget and Policy Priorities explains, SNAP and TANF already have work requirements that do not seem to increase employment while states that briefly attempted to impose work requirements on Medicaid were headed towards cutting off thousands of people from health care without increasing workforce participation. These requirements cut off many people who were in the labor force but who had difficulty providing the proper paperwork and navigating the bureaucracy enforcing these requirements.
These work requirements seem designed to address an imaginary problem. As the Center on Budget and Policy Priorities explains:
“Most adults with low incomes who are able to work for pay do so; those who aren’t are often between jobs, in school or training, are ill or have disabilities that impede their ability to work, or are caring for loved ones, some of whom are ill or disabled. For example, among SNAP participants who are working-age, non-disabled adults, more than half work while receiving SNAP — and 74 percent work in the year prior to or the year after receiving SNAP.”
Astonishingly, the Limit, Save, Grow Act would actually lose the same amount of revenue, $120 billion, by cutting funding for the IRS to enforce tax laws on households making more than $400,000. (A recent report from former Treasury officials Natasha Sarin and Mark Mazur estimates that the revenue loss would be much higher from repealing this enforcement funding, at least $480 billion.)
How Congress Could Attach Work Requirements to a Huge Tax Break for the Rich
If lawmakers really are concerned about work incentives, they should worry about tax provisions that are more generous to those who live off their wealth than those who earn income from work.
People who receive long-term capital gains (profits from selling assets that they have owned for a year or longer) or certain stock dividends can pay a lower personal income tax rate on that income than they pay on income from work. The top personal income tax rate for earnings and most other income is 37 percent, but for long-term capital gains and qualified dividends it is just 20 percent.
This means that if two people have the same income, but one works while the other lives off investments they inherited or acquired years ago, the working person will pay more in federal personal income taxes than the person who does not work.
This type of unfairness – two people at the same income level paying different effective tax rates – is bad enough. What is worse is that the lower tax rate for capital gains and dividends disproportionately benefits the rich, who receive most of these types of income. The most recent analysis from the Congressional Budget Office on this topic concluded that 75 percent of the benefits of the lower rate for capital gains and dividends went to the richest 1 percent of Americans in 2019. The preferential rate also contributes to racial inequity in the tax code. A recent Treasury study found that 92 percent of the benefits of the preferential rate flow to white families even though they make up just 67 percent of families in the United States.
A benefit provided through the tax code is equivalent to a benefit provided through direct spending like Medicaid, SNAP, or TANF. Like direct spending, it costs the Treasury revenue and provides a concrete benefit to individuals. There is, then, no obvious reason why work requirements should apply to direct spending benefits but not to benefits provided through the tax code.
A work requirement for the capital gains and dividends tax break could apply at any income level, but to roughly calculate the potential revenue impact one can start with a proposal from President Biden that would eliminate this tax break for the very rich.
Under a proposal in the President’s budget, all taxable income exceeding $1 million would be taxed at the ordinary rate. In other words, capital gains and stock dividends would be taxed like any other income to the extent that they push a household’s taxable income beyond $1 million.
A related proposal in the President’s budget would partly shut down a different tax break for capital gains that wealthy people could otherwise use to avoid paying the higher tax rate. This break is the rule that exempts “unrealized” capital gains on assets left to heirs. An unrealized gain is the increase in an asset’s value that has not yet been realized as a profit because the asset has not been sold. Under current law, huge amounts of unrealized capital gains escape taxation forever when the owner of an appreciated asset dies and passes it on to their heirs. If this break is not limited, increasing the rate on capital gains could fail to raise much revenue because the wealthy could respond by holding onto more assets and leaving them to their heirs to escape the tax.
The President would exempt the first $5 million in unrealized capital gains and effectively exempt the first $10 million in unrealized gains for married couples. Unrealized gains on assets left in a taxpayer’s estate beyond these amounts would be subject to the personal income tax like other income on the final tax return filed for the taxpayer.
Congress’ official revenue estimators, the Joint Committee on Taxation (JCT), concluded that these two reforms (taxing capital gains and dividends of millionaires at the ordinary rate and taxing some unrealized gains on assets left to heirs) together would raise $195 billion over 10 years if the top rate imposed on ordinary income was the pre-Trump rate of 39.6 percent. Based on calculations explained below, these proposals would raise slightly less, $169 billion over a decade, if the top ordinary tax rate of 37 percent (enacted as part of the Trump tax cuts) remained in place.
Biden’s proposals would raise still less revenue if they were modified so that the affected taxpayers could still enjoy the preferential rates if they also have income from work. But they would nonetheless raise significant revenue because most of the millionaires affected have capital gains and stock dividends that far exceed their earned income.
For simplicity, one can begin by assuming the new work requirement would apply, like Biden’s proposed change in the rates, to those with taxable income of more than $1 million. It could bar taxpayers in this group from paying at the preferential rate on capital gains or stock dividends exceeding their earned income.
For example, under current law, an individual with $1 million in earned income and $3 million in long-term capital gains and stock dividends would pay the ordinary income tax rate on $1 million and the preferential rate on $3 million. Under this proposal, the individual would pay the preferential rate on just $1 million of the $3 million in long-term capital gains and stock dividends, because they have $1 million of earned income. The other $2 million in long-term capital gains and dividends would be taxed at the ordinary tax rate.
This modification to Biden’s proposals would further reduce the revenue impact to about $137 billion over a decade, based on rough calculations explained below. While this is less than the projected impact of Biden’s original proposals, it is still significant and indeed larger than the $120 billion projected savings from work requirements in the Limit, Save, Grow Act.
There are at least two reasons to believe that this type of work requirement could raise more than is calculated here. First, if Republican lawmakers are correct that attaching work requirements to benefit programs increases workforce participation, this would increase earnings, as well as the taxes collected on those earnings, which is not accounted for in these calculations.
Second, lawmakers crafting this work requirement could make it stricter than what is described here. For example, Congress could impose this work requirement on individuals with taxable income of more than $400,000 rather than $1 million.
More Details: Approximate Revenue Raised from Attaching a Work Requirement to the Capital Gains and Dividends Tax Break
JCT estimated that two of the President’s reforms related to capital gains – eliminating the lower tax rate for capital gains and dividends for millionaires and limiting the break for unrealized gains on assets left to heirs – would together raise $195 billion over a decade.
However, JCT’s estimate assumed that the top “ordinary” tax rate would have returned to 39.6 percent (under a separate proposal from the President). The Biden proposal therefore assumes an increase in top rate for capital gains and dividends of about 98 percent (from the current 20 percent to 39.6 percent). If ordinary income was still taxed at the top rate of 37 percent enacted under the Trump tax law, the top rate for capital gains and dividends would increase by about 85 percent (from 20 percent to 37 percent). Based on this, we estimate that these two capital gains tax reforms proposed by Biden would raise about $169 billion over ten years if the top rate continues to be 37 percent, rather than the $195 billion estimated by JCT.
The next step is to determine the smaller amount of revenue that would be collected from a proposal that only eliminates the preferential tax rates (for those with taxable income exceeding $1 million) to the extent that these types of income exceed earned income. As explained below, limiting the amount of capital gains and dividends eligible for the preferential rate to taxpayers’ earned income (rather than barring it altogether) would raise 81 percent of that amount, $137 billion. (81% x $169 billion = $137 billion).
For a general estimate, we used the IRS Public Use File for 2014, one of the most recent databases representing the population of U.S. taxpayers released by the IRS. While capital gains fluctuate dramatically from year to year, the 2014 database likely represents a fairly typical year for capital gains realizations. (According to CBO, in 2014 capital gains realizations equaled 4.1 percent of GDP and capital gains taxes equaled 8.4 percent of individual tax revenues, both of which are very close to the average over the period of years CBO covers, from 1995 through 2000.)
We examined those with taxable income exceeding $1 million who report some long-term capital gains or stock dividends (the taxpayers who would be affected by Biden’s proposed change in the preferential rate). We found that 81 percent of the preferential rate income (81 percent of the long-term capital gains and qualified stock dividends) of this group that year was preferential rate income exceeding taxpayers’ earned income.
In other words, if taxpayers in this group were allowed the lower rates in 2014 only for preferential rate income up to the amount of their earned income, 81 percent of their preferential rate income would be taxed at the ordinary rate rather than the preferential rate.
This means that current tax rules effectively subsidize investment income of the wealthy that far exceeds the income these individuals earn from work. If lawmakers truly are concerned about work incentives, this is exactly the sort of policy they would seek to reform.
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Why the States Have a Major Role to Play If We Want Tax Justice
If we want more tax fairness from coast to coast, let's push back on the destructive proposals to cut already-too-low taxes on wealthy people and corporations.
Feb 07, 2023
Americans scored a tax victory with last summer's Inflation Reduction Act, raising hundreds of billions of dollars for climate, health and debt reduction, and breaking a long streak of little progress or even backward movement on tax fairness. Now, with fears of gridlock in a divided Washington, tax justice champions are building momentum in other places where there's dire need for better tax policy: the states. We can upgrade communities across the country by making 2023 a year to win tax improvements in statehouses.
Let's start with the good news: lawmakers all over the country are launching campaigns to improve their state tax codes. The people of Massachusetts gave us a head start. They passed a ballot initiative in November to add a 4 percent surcharge on income above a million dollars, having that tiny group pay slightly more than the otherwise flat 5 percent income tax rate. This will generate billions annually to fund schools, restore bridges and make college more affordable. It will make Massachusetts more economically and racially equitable while improving services and infrastructure for residents of all races.
Now advocates in eight more states want to tax wealth in various creative ways. Because extreme wealth is highly concentrated among a small group of the uber-rich, this approach makes a lot of sense. My colleagues at the Institute on Taxation and Economic Policy (ITEP) recently found that more than one in four dollars of wealth in the U.S. is held by a tiny fraction (0.25 percent!) of households with net worth exceeding $30 million.
When it comes to basing taxation on ability to pay, there is good precedent to build on. Four in five states already have income taxes and two-thirds of those states levy lower rates on low earnings and higher rates on income above a certain threshold. That approach—called a graduated income tax—works well because it raises more from those more able to pay, unlike sales taxes which disproportionately hit poor and middle-income families who have to spend most of what they earn.
But not all the news is rosy. In over half the states with income taxes, moneyed interests are pushing to cut or eliminate those taxes, even though history tells us that cutting income taxes—especially by eliminating graduated rates for higher earnings—means higher taxes on property or on purchases (to make up for the lost revenue), lower revenue despite that (because you'd have to raise these other taxes a lot to fully close the gap), and less equity across income and racial categories.
Unwillingness to have the rich pay their fair share at the federal or state level means we all suffer.
This insightful map tracks what lawmakers in every state are trying to do. Some made their tax codes worse last year and many still want to go in the wrong direction. This is especially bad because, despite the existence of income taxes, most state tax structures as a whole are already upside down, requiring a higher average share of the income of poor and middle-income families than of the rich and uber-rich who already get the most out of our economy.
This unwillingness to have the rich pay their fair share at the federal or state level means we all suffer. That's why American parents struggle to afford childcare that other countries ensure. It's why we don't have universal healthcare or parental leave, in contrast to most of the rest of the world. And it's why college is now so hard to afford.
Lawmakers pushing ill-considered tax cuts are doing so on top of previous underfunding that meant Iowa slashed unemployment benefits, Utah neglected disability assistance, and Mississippi left its sewage systems in a desperate state of disrepair, to cite just a few examples.
Enough. Kids in Louisiana deserve great schools and teachers in Indiana deserve fair pay. Truckers from Oregon to Florida should have health insurance and be able to see a doctor. And a childcare worker—in any state—should be paid enough to retire with dignity.
If we want more tax fairness from coast to coast, let’s push back on the destructive proposals to cut already-too-low taxes on wealthy people and corporations. And let’s jump on the innovative ideas to tax wealth and income from wealth. The result will be a country with stronger schools, healthier communities, and more equity for residents from coast to coast.Keep ReadingShow Less
New GAO Report Confirms Trump Tax Cuts Were Massive Corporate Giveaway
The share of these companies who paid zero in federal income tax rose from 22 percent in 2014 to 34 percent in 2018, the first year that the Trump tax law was in effect.
Jan 13, 2023
The tax cuts signed into law by former President Trump at the end of 2017 were a boon for profitable corporations, according to a new report released by the Government Accountability Office. It finds the average effective federal income tax rate paid by large, profitable corporations fell to 9 percent in the first year that the Trump tax law was in effect, and the share of such companies paying nothing at all rose to 34 percent that year.
This is consistent with our findings that profitable corporations often pay little or nothing. While the corporate minimum tax passed this summer will help, Congress now needs to pass the international corporate minimum tax to further address this problem.
The GAO analysis presents many different types of figures, but all show the Tax Cuts and Jobs Act was an unprecedented gift to corporations. For example, it finds that the share of all corporations paying no federal income taxes was 67 percent in 2018 and had not changed much over the years. But that is not so surprising because that figure includes tiny companies and companies reporting losses, which are not expected to pay income taxes. (The federal corporate income tax is, after all, a tax on profits, not losses).
Much more alarming are the GAO’s conclusions about corporations that are both large (which GAO defines as having at least $10 million in assets) and profitable. The share of these companies paying nothing rose from 22 percent in 2014 to 34 percent in 2018, the first year that the Trump tax law was in effect.
What the GAO report really demonstrates is that no matter how you measure the federal corporate income tax, not much of it has been paid in recent years, and the 2017 tax law has brought it to a new low.
The average effective federal income tax rate paid by these companies (the share of profits they paid in federal income taxes) fell from an already-low 16 percent in 2014 to a nearly rock-bottom-low 9 percent in 2018.
These estimates use corporations’ actual tax liability based on IRS data that is not available to researchers outside the government. Still, the GAO report shows that the “current” tax reported by publicly traded corporations in the filings they submit to the Securities and Exchange Commission (which is what ITEP uses to identify how much specific corporations pay) comes to roughly the same answers.
For example, while GAO found that average effective tax rates based on actual tax liability (using IRS data) fell from 16 percent in 2014 to 9 percent in 2018, an alternative version of those figures calculated using current taxes reported in the public filings are just a bit different, at 17 percent in 2014 and 8 percent in 2018.
Even profitable corporations might pay nothing in one year because they are allowed to carry forward losses from previous years. If the system works as intended, corporations that are profitable in the long run will pay taxes at a reasonable effective rate over time. But the GAO analysis demonstrates that even if the data is adjusted to ignore the deductions that companies can claim for losses, the conclusions do not change very much (in which case the average effective income tax rates increase slightly to 18 percent in 2014 and 10 percent in 2018). This is unsurprising because ITEP has followed corporations that were profitable each year for several years in a row and found that even these fortunate companies often manage to pay nothing over time.
What the GAO report really demonstrates is that no matter how you measure the federal corporate income tax, not much of it has been paid in recent years, and the 2017 tax law has brought it to a new low.
The corporate minimum tax enacted as part of the Inflation Reduction Act will help address this problem. But as ITEP has explained, another key step for Congress is to implement the international corporate minimum tax that the Biden administration negotiated with other governments, and which is designed to address the offshore tax dodging that will otherwise be very difficult to resolve.
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73 Major Corporations Paid Just 5.3% Federal Tax Rate Between 2018 and 2020: Report
Thirty-nine other companies paid no federal corporate tax during the three-year period, in which they collectively reaped over $120 billion in profits.
Jul 29, 2021
Thirty-nine U.S. corporations reaping over $120 billion in profits between 2018 and 2020--the first three years of the so-called "GOP tax scam"--paid no net federal income tax, or claimed refunds during that period, a report published Thursday by the Institution on Taxation and Economic Policy revealed.
"The 39 corporations that paid nothing over three years received $29.7 billion in corporate income tax breaks during that period."
--ITEP report
The report (pdf), entitled Corporate Tax Avoidance Under the Tax Cuts and Jobs Act, notes that while some of the 39 companies--all of them in the S&P 500 or Fortune 500--paid federal income tax in one or more of the years analyzed in the study, "their total federal income taxes for the three-year period were either $0 or a negative amount, meaning they received a refund from the IRS for taxes paid in previous years."
This, despite the firms' realization of $122 billion in collective profits during the 2018-20 study period. Those three years were the first years of the Tax Cuts and Jobs Act (TCJA), which was signed by former President Donald Trump in December 2017.
Additionally, the analysis found that 73 other profitable companies paid less than half of the 21% statutory federal corporate income tax rate under the TCJA from 2018 to 2020. These firms paid an effective rate of just 5.3% during the three-year period.
"The 39 corporations that paid nothing over three years received $29.7 billion in corporate income tax breaks during that period," ITEP notes, while "the 73 corporations that paid less than half the statutory corporate tax rate over three years received a combined $67.5 billion in corporate income tax breaks during that time."
The new analysis follows an April ITEP report revealing that 55 companies paid $0 in federal income taxes on a combined $40.5 billion in profits.
According to the new report:
Among the 39 corporations that avoided paying federal income taxes over three years, T-Mobile reported the largest profits. It reported $11.5 billion in profits over this time but had a federal income tax liability of negative $80 million, meaning the company received $80 million in tax refunds...
Among the 73 corporations that paid less than half of the statutory rate are household names such as Amazon, Bank of America, Deere, Domino's Pizza, Etsy, General Motors, Honeywell, Molson Coors, Motorola, Netflix, Nike, Verizon, Walt Disney, Whirlpool, and Xerox--which all paid effective federal income tax rates in the single digits.
ITEP explains numerous ways in which corporations avoid paying taxes:
- Accelerated depreciation allows companies to write off equipment costs more quickly than the equipment loses value, with the TCJA empowering businesses to immediately write off all the costs of such investments;
- Some companies lower their tax burden by exploiting a tax break for executives' stock options;
- Accelerated depreciation and stock option tax breaks enable companies to report lower earnings to the IRS than they report to shareholders, further lowering their tax liability; and
- Companies often subsidize their research and development costs via R&D tax credits.
"It's clear that many companies are paying abysmally low effective tax rates even in the years when they pay something," senior ITEP fellow and report co-author Matthew Gardner said in a statement. "Looking at a single year tells us a lot, but when we look at corporate tax-paying habits over several years, we get a better sense of the scale of the problem. This makes a clear case for Congress to enact significant tax reforms."
Denounced by critics as the "GOP tax scam" and opposed by a majority of Americans at the time of its passage, the TCJA reduced the federal corporate income tax rate from 35% to 21%, allowed companies to write off certain capital investments for five years, increased the exemption amount for estate tax from $5 million to $10 million, and made it easier for U.S. corporations to avoid paying taxes on income earned abroad.
"President Biden's proposals would not solve all the problems with our tax system but they could significantly reduce the worst corporate tax avoidance we have identified."
--Steve Wamhoff, ITEP
As he signed the measure, Trump said that "corporations are literally going wild" over it, just moments after touting the legislation as "a bill for the middle class."
Hours after signing the bill, however, the former president reportedly told wealthy friends at his Mar-a-Lago resort in Palm Beach, Florida that "you all just got a lot richer."
Indeed, a 2019 report from the Economic Policy Institute and the Center for Popular Democracy showed that the TCJA "delivered big benefits to the rich and corporations but nearly none for working families."
The ITEP report notes that President Joe Biden "has proposed to raise the statutory federal corporate income tax rate from 21% to 28% and end or limit many of the breaks that allow corporations to avoid taxes."
According to a Morning Consult poll published in April, nearly two-thirds of U.S. voters favor higher taxes on businesses to pay for the Biden administration's $2.25 trillion infrastructure and employment legislative proposal.
An analysis published earlier this year by the Penn Wharton Budget Model showed that Biden's proposed 7% corporate tax hike would increase government revenue by $891.6 billion between 2022 and 2031, and by nearly $1.49 trillion between 2022 and 2036.
However, the president has angered progressives by reportedly signaling his openness to a smaller corporate tax increase--to 25% instead of 28%.
"President Biden's proposals would not solve all the problems with our tax system but they could significantly reduce the worst corporate tax avoidance we have identified," said Steve Wamhoff, director of federal policy at ITEP and report co-author.
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