By Karen Rubin, News-Photos-Features.com
Regardless of whether you see Trump’s tax returns as evidence of tax cheating and fraud or as financial wizardry (that is, sleight of hand) in capitalizing on (or fabricating) loopholes so he can pay zero or $750 tax on millions of dollars in income (hello! AMT???) - Trump is the poster child for the need for tax reform - that is, a fairer (not flatter) tax code and a just, efficient tax collection system.
And yet, Kevin McCarthy, said his first act as Speaker of the House would be to repeal the $80 billion funding for the 80,000 IRS agents. Second is to go after Medicare and Social Security under the aegis of reducing the national debt and mandating spending “within means”.
But those IRS agents are necessary to recover the estimated $1 TRILLION in unpaid taxes each year by the top 1%, who, it is calculated, routinely hide 20 percent of their income. It’s so much easier to go after the tips earned by waiters, and let billionaires skate away paying an average of 8%, half the rate that firemen and teachers pay. Let’s see, $80 billion over 10 years in spending to recover $1 trillion a year seems like a pretty good ROI.
As for Social Security, the better solution is to raise the cap from $147,000, in order to adequately fund it, and preserve this lifeline for millions of retirees. If the cap were raised or even eliminated, then not only would Social Security be adequately funded, but the rate could actually be lowered for everyone.
Republicans, who had no complaint with the national debt when Trump exploded it by $7.4 TRILLION ($2 trillion due to the Trump Tax Scam of 2017 and billions because of Mnuchin’s profligate dispensing of Covid relief) are back to using it to handcuff the administration from spending on everything from infrastructure to climate action to public health and education; they even want to cut defense spending by $75 billion. They claim that government must live within its means, just like families do. But families take a mortgage to buy a house, a loan to buy a car; businesses take loans to start or expand - an investment in the future. It should be the same with government spending.
This is borne out in the fact that Biden’s economic policies – designed for stable growth and sustainability – have resulted in record jobs creation, the lowest unemployment rate in 50 years, the first real gains in income since Reagan, and a record $1.4 TRILLION reduction in the budget deficit in a single year. Very simply, when you put people to work, they pay taxes instead of taxing the social safety net, such as it is.
The idea behind raising interest rates to stem rising inflation is to reduce demand. But raising interest rates on mortgages and auto loans in order to control inflation is like a tax that becomes a barrier to families clawing their way into the middle class.
Still, the Republicans seem intent on continuing to beat the drum for the failed and repeatedly discredited “trickle down” theory of lowering taxes on the wealthiest and corporations which is supposed to unleash “investment”. Instead, their spending is what fuels inflation. Indeed, tax policy that so favors the rich and well connected is the ‘trickle down” of inflation – the wealthiest have no problem paying a $1 more per gallon of gas or milk, but push up prices for everything and everyone else.
Raising (and collecting) taxes on the uber-rich would not only temper demand that is driving inflation but give the government resources to continue to grow the economy sustainably.
Republicans also push for “flat tax” which is the “skin in the game” theory of economics. (The fact that the lowest earners, the true “creators” are also the ones with the most sweat equity doesn’t seem to factor.). This is a crock. Let’s say you set a “flat tax” of 10%: for a family making $20,000, struggling to pay rent, that $2,000 is serious money, but 10% on $1 billion would leave $900 million and hardly missed. Moreover, flat tax on what? Billionaires already pay hardly any “income” tax because they don’t “earn” income –they take out loans on anticipated appreciated value of their stock options and get to deduct the interest from taxes, or, like Trump, they manage to contrive enough losses to erase revenue.
Here’s what I mean: In 2017, his first year occupying the White House, Trump had $8.6 million in revenue, which was cut down to zero, and paid $750 in tax. In 2018, he reported taxable income of $22,951,389 and paid $999,466, or 4.4%; in 2019, he had $11.8 million in funds, but paid $133,445 in tax or 1.1%; in 2020, he had $11 million in funds, but paid zero tax. And that’s just his time in the White House.
The more rational approach to the “skin in the game” is reforming the AMT (Alternative Minimum Tax), which seems not to be working very well, if Trump could evade paying taxes altogether even as he “earned” millions.
Biden has achieved something comparable to the AMT for corporations: as part of the Inflation Reduction Act, Biden was able to make good on the global agreement to have a 15 percent minimum tax on corporations.
There also should be a transaction tax on stock trading which would have the added benefit of inserting some stability and longterm productivity to the market.
Raising tax rates on the uber-rich would not only lower the budget deficit and pay down the national debt, but give the country vital resources to invest in the future.
Instead, the first bill the Republican majority passed (without a single Democratic vote) was to rescind the IRS funding, which the Committee for a Responsible Federal Budget stated would help wealthy people and big corporations cheat on their taxes. “We estimate the bill would increase deficits by more than $100 billion over the next decade while encouraging tax cheating, expanding the tax gap, and undermining a policy supported by every President since Ronald Reagan, including Donald Trump.” (And what happened to the Rules adopted which required 72-hours before any bill was voted upon? So much for that. The second action the Republicans took was to gut the Ethics Committee, effectively allowing fraudsters like the newly elected George Santos sail along. The third action was to create new committees to seek investigations of January 6 and the campaign to overturn the 2020 election, while moving to defund the FBI and intelligence agencies, along with the defense apparatus to guard against cyberattacks – effectively giving criminals free rein of the levers of power. The new Rules also require all new spending to be accompanied by equal cuts – so much for investment in the future.)
The Office of Management & Budget (OMB) in issuing a statement strongly opposing H.R. 23, said, “This reckless bill would increase the deficit by nearly $115 billion over 10 years per an estimate by the Congressional Budget Office by enabling wealthy tax cheats to engage in additional tax fraud and avoidance. To be clear, the Treasury Secretary has already directed that none of the additional IRS resources be used to increase audit rates relative to historical levels for small businesses or households with incomes below $400,000.
“Far from protecting middle-class families or small businesses, H.R. 23 protects wealthy tax cheats at the expense of honest, middle-class taxpayers. Each year the top one percent hides about 20 percent of their income from the government so they can get away with not paying any tax on it. That means that working people – who report 99 percent of their income to the IRS – pay a larger share of collected taxes than they should. Not only does it shift the tax burden from the wealthy to the middle-class, it would also make it harder for middle-class families and small businesses to get timely tax refunds and other important services from the IRS, by rescinding billions in funding for IRS information technology and operations.
“With their first economic legislation of the new Congress, House Republicans are making clear that their top economic priority is to allow the rich and multi-billion dollar corporations to skip out on their taxes, while making life harder for ordinary, middle-class families that pay the taxes they owe. That’s their agenda; not lowering costs or cutting taxes for hard working Americans – as President Biden has consistently advocated.
‘If the President were presented with H.R. 23 – or any other bill that enables the wealthiest Americans and largest corporations to cheat on their taxes, while honest and hard-working Americans are left to pay the tab – he would veto it.”
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