Rising inflation and the escalating cost of everything from gas to homes has made Tax Day 2022 even more important for many Americans this year. Growing economic anxiety collided with middle-class tax bills as families worried about the future and planned to tighten their belts.
However, the country’s 700 billionaires face no such worries. Unlike the rest of us who have battled the pandemic and are now trying to catch up, billionaires have enjoyed a huge increase in their wealth over the past two years.
Yet, thanks to our biased and unfair tax code, they won’t have to pay more taxes than all of us. As a small black business owner who works hard every day to make it a success and who, like everyone who isn’t wealthy, has to pay taxes on the income it produces for my family, I don’t see why the rich deserve this preferential treatment.
According to Forbes According to data analyzed by Americans for Tax Fairness, America’s billionaires got richer by $1.7 trillion in the first two years of the pandemic, while our state’s four billionaires got richer by more than 45%, with $6 billion more to their names since 2020. It’s a stark contrast. the number of people who lost their jobs and businesses and suffered from illness during the same period, or even the number of people who did well during the pandemic but did not significantly increase their personal wealth.
The concentration of wealth among the top 0.01% has become truly staggering. The country’s 700 billionaires now collectively control more wealth than the bottom half of the US population, or about 165 million people. This massive wealth not only allows them to buy rocket ships and professional sports teams, it also gives them near absolute political power to keep the rules rigged in their favor.
When it comes to taxes, for example, the ultra-rich don’t follow the rules that the rest of us follow because they have their own. And these built-in tax loopholes and breaks allow many wealthy individuals to consistently pay lower tax rates than nurses, firefighters, and accountants.
While the rest of us pay taxes on the income we earn from work, the wealthy pay nothing on the earnings they derive from stocks and other financial assets, their primary source of income. When we get a raise in our jobs, we earn more income and pay more taxes. But when the wealthy hit a stock market windfall that increases their wealth exponentially, those gains aren’t taxed unless they sell the assets. Economists have determined that when wealthy people’s stock gains are counted as income, the country’s richest 400 billionaires paid a tax rate of just 8.2% over a recent nine-year period. Meanwhile, the average federal income tax rate for all taxpayers was 13.3% in 2019.
And, of course, most don’t need to sell assets to live a lavish life. This means they can keep most of their wealth indefinitely. To avoid paying taxes, they may pass their assets on to their heirs rather than selling them, thus never paying what they should if the tax system treated them the way it treats the rest of us.
Americans love a good success story. Many of us appreciate the innovations and inventions that wealthy entrepreneurs have brought to the mainstream. But no matter how much money the rich make, they still have to adhere to the same rules as everyone else. The twisted exceptionalism in the tax code allows the wealthy to profit from the American economy without contributing much to it.
It doesn’t have to be that way. Rich people could continue to be rich while paying what they owe in taxes like the rest of us. But Congress needs to take action on good tax reform proposals that would finally demand that America’s wealthiest people pay their fair share.
President Biden and Oregon Senator Ron Wyden have proposed different versions of a billionaire income tax that would ultimately force the wealthy with hundreds of millions or billions in assets to pay taxes on annual increases in their wealth generated by stocks and other assets – the same way the rest of us pay taxes on our earnings from work. Polls show that this policy is widely supported by 64% of voters, including 61% of Independents.
The revenue generated by taxing these wealthiest Americans could be used for a number of critical investments, including reducing the cost of health care and education; cover dental, vision, and hearing services for seniors in Medicare for the first time; and increase public safety.
If Congress took action to force the rich to follow the same tax rules that apply to everyone else, the rich would stay rich, but the rest of us – who helped make people like Jeff Bezos and Elon Musk in the first place – would benefit from this wealth too.
Michael De Los Santos is the owner of Mike D’s BBQ in Durham.