Real Solutions For Tax Day, Not Bogus Tax Reforms
We are in a time of fantasy proposals from our country’s “leaders.” What We the People need is real policy proposals to address our real problems.
Next up on the Trump/billionaire/corporate agenda in Congress is “tax reform.” Whenever you hear Republicans talking about “reform” of anything, it usually means a few really rich people are going to get really richer and the rest of us are going to pay for it.
Now, in the time of Trump, “reform” means Trump will be the first to get rich, then the rest of the billionaires can line up at the trough. And it means the rest of us aren’t just going to pay for it, it means we’re really, really going to pay.
This year’s “tax reform” is a corporate and billionaire wish list. This time Republicans are not just planning to cut taxes for the rich and hand corporations every possible tax break. Oh no, this time they have something special on the menu. This time they’re planning to let giant, multinational corporations off the hook for hundreds of billion in taxes they already owe but managed to “defer” paying by using all kinds of schemes like tax havens, offshoring, “transfer pricing” and you-name-it.
In 2015, it was estimated that these corporations owed as much as $620 billion in “deferred” taxes, with another $90 to 135 billion a year adding up. So the math suggests they owe $800 to $900 billion now.
That princely sum is owed by giant, multinational corporations that dodged their taxes. What about smaller, domestic corporations that paid their taxes like good citizens do? The Main Street Alliance says this means small businesses are paying a higher rate than giant multinational corporations,
“The playing field is already skewed heavily in favor of large corporations, making it hard for small businesses to compete.” said Amanda Ballantyne, National Director of Main Street Alliance. “Unlike their larger corporate counterparts, small business owners don’t shift their profits overseas to lower their tax liability. The Buffett Rule is a good guiding principle. Multinationals shouldn’t be paying tax at a lower rate than the small businesses that line Main Street.”
Cutting taxes has not just been about making a few rich people richer, it was also about defunding our democracy. It is time to turn this around and restore our understanding of what democracy and self-government means and what it can do for us.
It is time for real policy proposals to address our real problems. Politicians, listen up: real solutions are not just good policy, they are good politics.
Good politics: tax cuts are not actually popular. Even 44 percent of Republicans think corporate taxes are too low, and only 35 percent are bothered “a lot” by how much they themselves pay. So certainly the Republican proposals for tax cuts for the rich and corporations are not good politics.
Good Politics 101 would require politicians to actually deliver for their constituents. You can put off solving problems, kick the can down the road, and blame others for only so long. After a while people get fed up. It’s time to get back to reality, which is where we were before we started the tax-cutting frenzy that led to rising inequality, budget cuts, rising dissatisfaction with what government was delivering, and ultimately to Trump.
Good policies: each year, the Congressional Progressive Caucus (CPC) does the work to bring us a real budget proposal, called the People’s Budget, that really addresses our country’s real problems. Unfortunately the People’s Budget rarely gets much coverage from the corporate press, but maybe this year, after Bernie Sanders’ presidential campaign and the Democrats were swept from power, the press will start paying attention.
The tax proposals in the CPC budget serve as an excellent guideline for beginning the Tax Day discussion of real policies to address our real problems.
First and foremost, the budget includes a “Millionaires tax” that raises the tax rates on the highest incomes. The CPC budget adds new tax brackets that don’t come anywhere near the pre-Reagan top tax rates:
● $1-10 million: 45 percent
● $10-20 million: 46 percent
● $20-100 million: 47 percent
● 100 million-1 billion: 48 percent
● $1 billion and over: 49 percent
These are “brackets.” This means that you don’t start paying the higher percent until after you make more than that amount. So if you make $1,000,001 you only pay the 45% rate on one dollar, not on that first million.
Declaring that “income earned on investments should not get preferential tax treatment over income earned through daily labor,” the CPC budget would also tax capital gains and qualified dividends as ordinary income.
The CPC budget proposes a Wall Street financial transaction tax. “The CPC proposal would tax trading as follows: stocks at 0.25 percent, bonds at 0.004 percent, option premiums at 0.25 percent per year to maturity, foreign exchange transactions at 0.004 percent, and futures and swaps at 0.01 percent.”
Their estate tax closes loopholes and kicks in after $2.5 million for individuals ($5 million for couples). Above that the tax rate is 55 percent to 65 percent.
The CPC budget would end the deferral of taxes on “offshore” corporate income that has let corporations dodge $800-900 billion in taxes by keeping their profits in tax havens. The corporations would have to bring their profits “home” and pay those taxes — which would cover badly-needed infrastructure investment.
The Economic Policy Institute’s (EPI) Analysis of the Congressional Progressive Caucus budget for fiscal year 2017 shows how this budget would:
Increase tax progressivity and adequacy. The budget restores adequate revenue and pushes back against income inequality by adding higher marginal tax rates for millionaires and billionaires, equalizing the tax treatment of capital income and labor income, restoring a more progressive estate tax, eliminating inefficient corporate tax loopholes, levying a tax on systemically important financial institutions, and enacting a financial transactions tax, among other tax policies.
The CPC budget proposal does much more, on taxes as well as spending on things that address real problems and make our lives better. But let’s not get mired in details; it brings us toward the right policy proposals, and it is also the right thing to do politically.
Want more real solutions? See the 2010 post, 14 Ways A 90 Percent Top Tax Rate Fixes Our Economy And Our Country. It has charts!