Taxing the Rich
2. Taxing the Rich
In stereotypical history, America has stood as a beacon of success, emitting praises of the American Dream with every ray it shone through its economic superiority. However, this American Dream is a facade. Underneath the promises of wealth and happiness once promised to expand the country, is the truth of the economic inequalities that grow day by day. According to a former U.S. Secretary of Labor, “Despite an economy that’s twice as large as it was 30 years ago, the bottom 90 percent of Americans remain stuck in the mud.” If America is so full of prosperity, why are so many of its people barely getting by? The answer is taxes — or lack thereof. Affluent corporate America has been dodging taxes for years, jumping through loophole after loophole and using their power in corrupt ways. With their financial authority, they have politicians in the palm of their hand, resulting in more and more tax cuts for the rich. As the rich gain more and more money and power, they are paying less and less in taxes, forcing the tax burden onto those who are not equipped to handle it. The American government must impose a heavier tax on the top income earners who have been avoiding tax responsibility for years, in order to lessen the burden of taxes on those lower on the financial spectrum and provide better tax-funded services to the people.
With an imbalance of income and tax rates in America, low-income families who have less of an ability to pay taxes, end up with an onerous burden. According to an article from the New Haven Register, low-income families are paying more in payroll, property, and sales tax than they did thirty years ago; whereas, the tax burden on the most affluent sitting at the top 1%, has decreased by more than 50%. The reason for this steep decline is tax cuts. With the political sway and authority many large and successful corporations hold, many politicians have been throwing tax cuts in the direction of the rich like candy for decades. Most of these tax cuts go toward top taxes, estate taxes, tax on capital gains — essentially, many tax cuts in the past few decades have been for taxes that only impact the rich, not the rest of the country (Ingrahm). The justification for these tax cuts that keep most people at the bottom, is that corporations will use that money to reinvest in the community and provide more jobs with liveable wages. However, this politically moral justification is no more than a facade. For example, after the billion dollar company General Motors received massive tax cuts, they cut 14,000 lower rank jobs and reinvested in their stocks and raised corporate positions, instead of using the tax cuts for the benefit of the community as a whole, as was supposedly intended. This concept of trickle-down economics that politicians have been using as an excuse to keep the rich above the rest of us is a ruse. It goes to show how little the government can care about the American people, sitting idly by while the rich get more rich and the poor get more poor. Now more than ever, the government needs to take action and address this, by increasing taxes for the rich.
Another argument against raising taxes on the wealthy is that the rich create economic growth for the country as a whole. Once again, this is a poor attempt at an excuse. During the 1950s and 1960s when corporate and individual taxes for the rich were much higher and taxes were not as burdensome for the bottom 90% of Americans, the economy grew much faster and the middle-class and below was much more successful and stable than they are today. Nowadays, the economic scale is completely out of sorts. Individuals who have more than enough funds to pay their fair share of taxes should be doing so; the weight of this nation’s taxes should not be drowning those who cannot afford to deal with them. In Utah as early as the late 1990s, residents earning $5,000-$7,500, living below the poverty line, paid a shocking 224% of the state’s income taxes. In comparison, families making $250,000 or more annually paid only 4.4% of the state’s income taxes that same year; which was actually a significant decrease from the past six years (Harrie). This gap is only getting wider, and like with taxes, there is also a growing gap when it comes to income. In California, for example, over the past few decades, economists have recognized a trend: the rich are getting richer and the poor are getting poorer (Takenouchi). This trend is not home to just the golden state; it’s all across the country.
If the American government makes the right choice of taxing the rich, benefits would fly to all parts of this country. For example, Seattle City Councilmember Kshama Sawant proposed a progressive tax that would do just this. It would tax Seattle’s top three-percent of big businesses and families who make at least $250,000 annually. The proposed tax would bring in tax revenue to help benefit the local community — the whole community. Seattle is home to several big-name big-dollar corporations, Amazon coming in at first place, with Jeff Bezos, the richest man alive, at the very top as CEO. The revenue from Sawant’s proposed progressive tax would go toward providing thousands of affordable housing units to address Seattle’s housing affordability crisis. As the income and tax divide continues to expand, the issue of homelessness grows. Taxing the rich is a political, social, and economic issue. As the pandemic rages on, displacing people, making people lose their jobs, and increasing the lack of funding for public services, taxing the rich must be advocated for at once. Along with helping provide affordable housing units, a quarter of the money from the proposed tax would go toward converting gas or electrical homes in Seattle to renewable energy sources, in an attempt to battle the growing issue of climate change (Office of the Seattle Mayor). Additionally, not only would this tax proposal help house those in need of shelter and not contribute to pollution, this proposal would provide hundreds of jobs. There would be an abundance of jobs available for construction workers, for people to install renewable energy to homes, and more. Tax revenue going toward community services like these two social and environmental ones, will almost always result in the creation of thousands of jobs nationally, making the economy healthier and helping more businesses thrive, which is something corporations shouldn’t be against.
However, corporations were still against these proposals. Amazon even went as far as to threaten to leave Seattle and move their headquarters to the neighboring city of Bellevue, so their higher-ups could avoid being taxed — the richest man alive included. Defenders of the rich often argue that taxing them at a steeper rate than others is unfair and robs them of their hard-earned salary. However, one version of Councilmemeber Sawant’s proposal wouldn’t even kick in until the ten millionth dollar (Golden). Is ten million dollars alone not already enough profit for these corporations and individuals to live off of and thensome? Plus, the rate of taxation at that level would be miniscule and should have no largely detrimental impact on these already extremely wealthy and successful national corporations residing in Seattle. Taxing the rich wouldn’t put a burden on them; a burden is something negative that falters something, leaving them on a dirt road in the dark with nothing. Those who would be taxed by the City of Seattle in this proposal would remain at the top 1%. — that would not change. What taxing the rich would do, is lessen the burden on those who cannot afford to falter every tax season.
Some critics of taxing the rich argue that if the loopholes are already there to escape taxation, why shouldn’t they use them? Why doesn’t the rest of America use them? The rich and wealthy have access to high-priced accounts and tax lawyers who would be gold medal winners if there were an Olympics for corrupting the economy. These are the people who find the hidden deductions and write-offs that keep an evil grin on the faces of CEOs. 60% of corporations don’t pay income taxes due to excessive tax write-offs. Some corporations in this 60% even receive ‘negative tax’ rebates. Some end up increasing their profits, like Amazon, who doubled their profits in 2018 after not paying one cent in federal taxes. The majority of working class Americans do not have access to these sources and benefits. Additionally, despite popular belief that they are not, most Americans are in favor of raising taxes on the rich. According to polls cast on both sides of the political spectrum, a proposal from Massachusetts Senator Elizabeth Warren (D) to impose a progressive tax on high income earners was more favorable than the opposite. Most critics of this proposition are those who would be taxed. Former Starbucks CEO Howard Schultz, for example, argued against raising taxes on the rich, claiming it is not what America wants (Bump). Which America is he talking about? The America that sits at the top of a skyscraper with the whole world in their palm, yet still engrossed by greed? Or the America that works three jobs and is still barely getting by? With majority support from those who are paying taxes in America, perhaps the government should listen closer to the proposals to tax the rich.