A longstanding critique of the United States tax code is that it favors absurdly wealthy corporations and individuals over working class Americans.
A ProPublica report from this summer found:
"[The 25 richest Americans] saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. That's a staggering sum, but it amounts to a true tax rate of only 3.4%."
Some of the world's richest people, such as Amazon founder Jeff Bezos and Tesla head Elon Musk paid nothing in federal income taxes for a combined three years since 2007. The report goes on to note that the super wealthy have means of evading taxation that are simply out of reach for everyday Americans. As the pandemic made all too clear, immense wealth is largely garnered from assets, the values of which can skyrocket. However, that increase in value isn't considered taxable income until the assets are sold.
If these rules weren't widening the wealth gap enough, the lack of enforcement isn't helping either, according to another new report from the Treasury Department.
Deputy Assistant Secretary for Economic Policy Natasha Sarin writes:
"Today's tax code contains two sets of rules: one for regular wage and salary workers who report virtually all the income they earn; and another for wealthy taxpayers, who are often able to avoid a large share of the taxes they owe. ... [E}stimates from academic researchers suggest that more than $160 billion lost annually is from taxes that top 1 percent choose not to pay.1"
Sarin concludes the report by calling for more resources for the Internal Revenue Service (IRS) to end the two-tiered tax system.
People were enraged at what the lost income represented.
That money could be put to good use.
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