But the distribution of income and wealth in the U.S. has been worsening for decades, making America the most unequal country in the developed world. The trend, which has persisted through recessions and recoveries, and under administrations of both parties, has put inequality at the center of U.S. politics.
The number of U.S. companies paying zero federal taxes DOUBLED when Trump's tax plan took effect in 2018
· 60 large companies managed to escape 2018 taxes under Trump's new plan
· Many of those corporations actually received tax rebates totaling $4.3 billion
· The businesses include: Amazon, Netflix, Chevron, Delta Airlines, JetBlue Airways, IBM, General Motors, Goodyear, Eli Lilly and United States Steel
· The result is a $20.7 billion budget hole that is adding to America's federal debt
The Triumph of Injustice, by Emmanuel Saez and Gabriel Zucman: How tax cuts for the rich fuel inequality
The Triumph of Injustice, by economists Emmanuel Saez and Gabriel Zucman (2019, W. W. Norton), documents how governments have systematically allowed the wealthy to dodge taxes, and then cut corporate tax rates in the name of “closing tax loopholes,” helping to fuel runaway inequality.
Saez and Zucman are world-renowned experts in the economics of social inequality. In recent years, they have turned their attention to documenting the prevalence of tax evasion by the super-rich. The results of this research are condensed into a 232-page volume.
The two economists demonstrate that for the first time in modern US history, the very rich in 2018 paid a lower percentage of their income in taxes than the average worker, and that the US tax system, far from being progressive, as commonly claimed, is regressive.
The second half of the book consists of policy proposals. Saez and Zucman advocate a form of capitalist reformism similar to that of Bernie Sanders and Elizabeth Warren, who consulted the two economists in formulating portions of her program.
We do not share the view of Saez and Zucman that social inequality can be fought outside of a struggle against the capitalist social order. But their presentation of the growth of social inequality in the United States and the role that tax policy has played is vital and should be widely read.
The book begins with a description of the scale of social inequality in the United States:
In 1980, the top 1 percent earned a bit more than 10 percent of the nation’s income, before government taxes and transfers, while the bottom 50 percent share was around 20 percent. Today, it’s almost the opposite: the top 1 percent captures more than 20 percent of national income and the working class barely 12 percent. In other words, the 1 percent earns almost twice as much income as the entire working class population, a group fifty times larger demographically. And the increase in the share of the pie going to 2.4 million adults has been similar in magnitude to the loss suffered by more than 100 million Americans.
The book proceeds to describe the incomes of the various sections of American society:
Let’s start with the working class, the 122 million adults in the lower half of the income pyramid. For them, the average income is $18,500 before taxes and transfers in 2019. Yes, you are reading this correctly: half of the US adult population lives on an annual income of $18,500.
This contrasts sharply with the lives of the affluent upper-middle class—those in the 90th to 91st percentile:
With an average income of $220,000 and everything that goes with it—spacious suburban houses, expensive private schools for their children, well-funded pensions, and good health insurance—they are not struggling.
At the top are the 2.4 million wealthiest people in the United States, part of the top 1 percent, “whose members make $1.5 million in income a year on average.”
Saez and Zucman argue that this level of social inequality is the outcome of deliberate policy choices on the part of lawmakers. They describe how for decades, successive administrations have slashed taxes on the wealthy and corporations, leading to a massive increase in social inequality.
They note that “confiscatory” taxes levied on the very wealthy under the New Deal helped rein in the social inequality of the 1920s, leading to a more equitable distribution of wealth in the middle of the 20th century:
From 1930 to 1980, the top marginal income tax rate in the United States averaged 78 percent. This top rate reached as much as 91 percent from 1951 to 1963. Large bequests were taxed at quasi-confiscatory rates during the middle of the twentieth century, with rates nearing 80 percent from 1941 to 1976 for the wealthiest Americans.
They continue:
In 1970, the richest Americans paid, all taxes included, more than 50 percent of their income in taxes, twice as much as working-class individuals. In 2018, following the Trump tax reform, and for the first time in the last hundred years, billionaires have paid less than steel workers, schoolteachers, and retirees.
In fact,
The wealthy have seen their taxes rolled back to levels last seen in the 1910s, when the government was only a quarter of the size it is today.
They argue that, more and more, the capitalist class is being exempted from taxation:
The explosive cocktail that is undermining America’s system of taxation is simple: capital income, in varying degrees, is becoming tax-free.
Such a social order has much in common with the tax collection practices of the French monarchy, which are described in detail:
French kings pampered the affluent and bludgeoned the populace. France had an income tax (taille), whose main claim to fame was that it exempted almost all privileged groups: the aristocracy, the clergy, judges, professors, doctors, the residents of big cities, including Paris, and, of course, the tax collectors themselves—known as the fermiers généraux (tax farmers). The most destitute members of society, at the same time, were heavily hit by salt duties—the dreaded gabelle—and sprawling levies (entrées and octrois) on the commodities entering the cities, including food, beverages, and building materials.
The perpetual lowering of taxes on the wealthy has had a symbiotic relationship with the systematic toleration of tax evasion by the rich on the part of the US government, which is particularly evident in the effective elimination of the estate tax.
While estate and gift tax revenues amounted to 0.20 percent of household net wealth in the early 1970s, since 2010 they have barely reached 0.03 percent–0.04 percent annually—a reduction by a factor of more than five.
The authors provide further documentation of this “collapse in enforcement:”
In 1975, the IRS audited 65 percent of the 29,000 largest estate tax returns filed in 1974. By 2018, only 8.6 percent of the 34,000 estate tax returns filed in 2017 were examined.The capitulation has been so severe that if we take seriously the wealth reported on estate tax returns nowadays, it looks like rich people are either almost nonexistent in America or that they never die.
Saez and Zucman document the extent to which US corporations dodge taxes by booking profits in offshore tax havens.
Today, close to 60 percent of the—large and rising—amount of profits made by US multinationals abroad are booked in low-tax countries. Where exactly? Primarily in Ireland and Bermuda.
They explain how a massive industry exists to help companies evade taxes, making clear that most of these tax dodges are illegal because US law prohibits any investment decision whose sole aim is to evade taxes.
For decades, systematic tax evasion by major corporations was used as a pretext for lowering corporate tax rates, in the name of supposedly “closing loopholes.” The claim that “closing loopholes” would compensate for lost tax revenues resulting from lower corporate tax rates, while supposedly accelerating economic growth, has constituted the bipartisan consensus on tax policy, and remains so to this day. The authors write:
For the majority of the nation’s political, economic, and intellectual elites, slashing the corporate tax rate was the right thing to do. During his presidency, Barack Obama had advocated in favor of reducing it to 28 percent, with a lower rate of 25 percent for manufacturers.
The capstone of this was Trump’s 2018 tax bill, which slashed the corporate income tax rate from 35 percent to 21 percent. This was part of an international process:
As Trump’s bill passed, French president Emmanuel Macron vowed to cut the corporate tax from 33 percent to 25 percent between 2018 and 2022. The United Kingdom was ahead of the curve: it had started slashing its rate under Labour Prime Minister Gordon Brown in 2008 and was aiming for 17 percent in 2020. On that issue, the Browns, Macrons, and Trumps of the world agree.
Having presented this analysis, Saez and Zucman explain what they propose to do about it. They argue for increasing taxes on the wealthy, including a tax on wealth, increasing the top income tax bracket, and raising the corporate tax rate.
While taxation would be used broadly to redistribute income to the level of inequality that existed in the 1930s, the vast bulk of the cost of constructing a social welfare state would be borne by an effective tax increase on working people.
The majority of tax revenue would be raised with a flat “national income tax,” affecting workers and capitalists alike. This “national income tax,” falling disproportionately on workers, would then be used to finance a government-run health insurance program, public child care and free education.
The authors write:
The good news is that we can fix tax injustice, right now. There is nothing inherent in globalization that destroys our ability to tax big companies and the wealthy. The choice is ours…When it comes to the future of taxation, everything is possible. From the disappearance of the income tax—a plausible outcome if the trend of the last four decades is sustained—to levels of progressivity never seen before, there is an infinity of possible futures ahead of us.
But this “infinity of possible futures” does not include the overthrow of capitalism. Saez and Zucman argue on the basis of a premise which they never state, much less seek to defend: that private ownership of the means of production should be continued and maintained.
They want to treat the symptom (inequality) of the disease (capitalism) without attempting to argue against those who say that the symptom cannot be treated outside of eradicating the disease.
The word “capitalism” appears only twice throughout the book. This is not surprising, because the volume treats the capitalist socioeconomic order as effectively the fixed basis of analysis.
Saez and Zucman never attempt to answer the most important question: What happens when the wealthy resist paying more in taxes? What political means are required to end inequality?
The unstated premise is that this change can be carried out through the Democratic Party, including candidates such as Elizabeth Warren and Bernie Sanders who advocate policies similar to those of the authors.
But since Saez and Zucman don’t argue for this course of action, they don’t have to deal with the myriad problems that arise from it. How will the Democrats, the party that first cut taxes on the rich (under Johnson) and presided over the deregulation of Wall Street (under Clinton), then bailed out the banks (Obama), be made into the instrument of, as the authors call it, “confiscatory” taxation?
Within the book’s analytical framework, if governments reduced taxes on the rich, it was because opinions changed. If opinions can be changed back, then governments can undo the policies that led to the growth of inequality.
Except, there must have been some reason that opinions changed. Saez and Zucman do not attempt to root the phenomenal processes they discuss in broader historical changes.
What, after all, is the relationship between the fact that the 20th century was viewed as the so-called “American century,” based on American global economic hegemony, and the socially redistributive character of the New Deal, as well as the “confiscatory” tax policy of Roosevelt and Eisenhower? Leon Trotsky did not beat around the bush when he declared, “America’s wealth permits Roosevelt his experiments.”
The fact is that a return to the New Deal is simply not possible. The financial oligarchy would fight such a plan tooth and nail. There is no wing of the ruling elite, as there was in Roosevelt’s day, which argues that US capitalism should reduce social inequality to head off revolution.
There is, of course, is an enormous constituency for social redistribution: the working class. But its struggles will be animated in the coming period not by a desire to put patches on capitalism, but to do away with it altogether.
White House,
congressional Republicans accelerate drive for corporate tax cut worth
trillions
The push is accelerating for an overhaul of the US tax system that
will divert trillions of additional dollars to the corporate aristocracy, widen
the gap between the rich and the working class and set the stage for the
destruction of basic social programs.
On Thursday, the Republican-controlled House Ways and Means
Committee passed a White House-backed tax bill on a party-line vote, after
which House leaders said the measure would come to the House floor for a vote
next week. On the same day, the Republican-controlled Senate released its
version of the measure, with plans for a floor vote in the upper chamber before
the Thanksgiving holiday later this month.
If passed, the two versions will be reconciled and a final bill
will be moved through the two chambers and signed into law by President Trump.
The Trump administration and congressional Republicans are pushing
for passage of the handout to the richest 5 percent by Christmas. The Democrats
are putting on a show of opposition that is cynical to the core. They are
denouncing the Republican bills for skewing the tax benefits to the wealthy,
while fully supporting the centerpiece of the legislation, a huge tax cut for
US corporations.
While there are differences between the House and Senate bills,
both versions adhere to the same basic framework. The corporate tax rate is to
be permanently reduced from the current level of 35 percent to 20 percent,
saving US corporations $2 trillion in taxes and generating an additional $6.7
trillion in revenues over the next decade. The House bill enacts the corporate
tax cut in 2018, while the Senate bill, in order to reduce the projected deficit
from lost federal revenues, delays the corporate tax cut one year, until 2019.
The House bill keeps the top federal tax bracket at 39.6 percent
(down from 70 percent in 1980), but applies it to households making more than
$1 million a year, as compared to the current threshold of $500,000. The Senate
version provides a bigger windfall for the very rich by reducing the top
bracket to 38.5 percent.
Both bills eliminate the alternative minimum tax, which almost
exclusively impacts the wealthy, and they both slash the tax rate on so-called
“pass-through” income reported by business owners.
Each bill allows corporations that have stashed hundreds of
billions of dollars overseas to avoid US taxes, such as Apple and Amazon, to
repatriate their profits at a sharply discounted tax rate even lower than the
new 20 percent corporate rate.
The bills either sharply restrict or eliminate outright the estate
tax, which is currently paid by the wealthiest 0.2 percent of households. The
House bill doubles the exemption for an individual to $11 million and
eliminates the estate tax entirely in 2025. The Senate version doubles the
exemption but does not repeal the tax.
Either way, the change underwrites the right of the richest
households to pass on their wealth to succeeding generations,
institutionalizing the transformation of the United States into an oligarchy,
presided over by a semi-hereditary dynastic caste.
Other boons to business are included in both bills, including an
immediate 100 percent tax write-off for capital investments. Neither bill
eliminates or reduces the so-called “carried interest” loophole that allows
hedge fund, private equity and real estate speculators (such as Donald Trump)
to pay only 20 percent on their income instead of the normal tax rate, currently
almost twice as high.
This is in line with the legislation as whole. While shifting the
tax code to further redistribute the social wealth from the bottom to the top,
it particularly favors the most parasitic sections of the ruling class, those
engaged in financial manipulation.
In order to promote the fiction that the overhaul is geared to the
“middle class,” the bills include certain tax breaks, such as a doubling of the
standard deduction for taxpayers who do not itemize and an increase in the child
tax credit. However, they also rein in or eliminate existing tax deductions
that benefit working class and middle class households.
This is driven above all by the need to keep the total ten-year
deficit resulting from the legislation to $1.5 trillion. That limit must be met
in order to move the tax overhaul on an expedited basis through the Senate,
where the Republicans have only a 52 to 48 majority, ruling out a filibuster
and enabling passage by a simple majority.
The House bill eliminates the federal tax credit for state and
local income and sales taxes, but continues the write-off for state and local
property taxes, capping it at $10,000. It reduces the existing tax reduction on
mortgage interest payments as well as a tax break on medical expenses. It also
eliminates tax credits for student loan payments and imposes a tax on graduate
student stipends. These measures amount to a tax surcharge on workers, young
people and the elderly to help pay for the tax boondoggle for the rich.
The Senate version calls for a somewhat different package of added
tax burdens for the working class and middle class. It eliminates all state and
local tax deductions but retains the tax credits for mortgage interest, student
loan payments and medical expenses.
The Republicans are resorting to brazen
lying to present the legislation as a boon to “hard-working middle class
Americans.” Typical is an op-ed column published Friday in the Washington Post by Orrin Hatch of Utah, the
chairman of the Senate Finance Committee. “For too long, middle-class Americans
have struggled with stagnant wages, sluggish labor markets and economic growth
well below the historic average,” he writes. “It is time to pay attention to
those Americans who have felt left behind in economic stagnation, by providing
tax relief and economic opportunity.”
The line is that corporate America will use the trillions in tax
savings to buy new equipment, build new factories, hire more workers and raise
wages. This ignores the fact that US corporations already have access to cheap
credit, are making bumper profits, and are sitting on trillions of dollars in
cash. It also ignores the past record of tax cuts for big business, whether
under Reagan or George W. Bush, which pushed up stocks and the wealth of the
ruling elite while accelerating the destruction of jobs and working class
living standards. The same lying pretext was used to justify Obama’s bailout of
the banks.
In fact, the extra trillions will be used to buy more and bigger
yachts, private planes, mansions, penthouses, private islands and gated
communities and bribe more politicians to do the bidding of the oligarchs.
One indication of the two-faced character of the Democrats’
opposition is the fact that interest groups backed by Republican billionaires
such as the Koch brothers and Sheldon Adelson have thus far spent almost $25
million on TV ads to promote the Republican tax plan, while Democratic groups
have spent less than $5 million to oppose the plan.
An updated analysis of the House bill published Wednesday by the
non-partisan tax center spells out in detail how the tax overhaul is designed
to sharply increase the wealth of the richest 5 percent, and especially the
richest 1 percent and 0.1 percent, and vastly increase over the next decade the
concentration of wealth at the very top.
Under the so-called “Tax Cuts and Jobs Act,” in 2018, taxpayers in
the top 1 percent (with income above $730,000) will receive nearly 21 percent
of the total tax cut, an average of about $37,000, or 2.5 percent of after-tax
income.
Those in the top 5 percent income bracket, and especially the top
1 percent and top 0.1 percent, will get by far the biggest percentage gains in
after-tax income. In other words, if you are among the very rich, the rate of
increase you receive will be far higher than for the lower 95 percent. That
means the plan is designed to widen the gap between the very rich and everybody
else.
In 2018, the top 20 percent of income earners will get 56.6
percent of the total federal tax cut. Within the top 10 percent, the 90-95
percent group will get 7.4 percent of the total, the 95-99 percent group will
receive 14.8 percent, the top 1 percent will get 20.6 percent and the top 0.1
percent will receive 10 percent. In other words, within the richest 10 percent,
the benefits are skewed dramatically to the richest of the rich.
One decade out, by 2027, the transfer of social wealth to the very
rich will be even more pronounced. In 2027, taxpayers in the bottom two
quintiles (those with income less than about $55,000) will see little change in
their taxes, with a tax decrease of $10-$40. Taxpayers in the middle of the
income distribution will see their after-tax incomes increase by only 0.4
percent. Taxpayers in the top 1 percent will receive nearly 50 percent of the
total benefit.
Someone in the top 1 percent will get a break of $52,780. Someone
in the top 0.1 percent will get a tax cut of $278,370.
In total, 12.8 million households will
have a bigger tax bill in 2018 under the law,
including more than three million earning between $48,600 and $86,100. By 2027,
more than 11 million households in this income group will see their tax bills
increase. Overall, by 2027, 47.5 million households, a quarter of the total,
will have a tax increase.
"At the same
time, the tax cuts for big business are fueling the federal deficit, which will
be used by both Democratic and Republican politicians to call for further cuts
in social spending. The February monthly federal deficit hit an all-time high
of $234 billion this year, as a result of a 20 percent drop in corporate tax
revenue. The deficit for the first half of 2019 is projected at $961 billion,
and the deficit for the fiscal year ending September 30 is expected to reach
$1.1 trillion, as bad as the deficits posted in the immediate aftermath of the
2008 financial crash."
US Tax Day 2019: Sixty giant corporations pay
zero income tax
Dozens of giant US
corporations, including 60 of the Fortune 500, used deductions, credits and
other tax loopholes to avoid paying any federal income tax for 2018, according
to an analysis issued by the Institute on Taxation and Economic Policy (ITEP).
The report was published April 11, just in time for the April 15 deadline for
most American working people to file their tax returns.
The 60 companies in the
Fortune 500 who paid no federal income tax had net incomes just from US
operations of nearly $80 billion ($79,025,000,000, to be exact). They include
such household names as Amazon, Chevron, Deere, Delta Air Lines, General
Motors, Goodyear, Halliburton, Honeywell, IBM, Eli Lilly, Netflix, Occidental
Petroleum, Prudential Financial and US Steel.
Meanwhile, millions of
moderate-income families are finding that their income taxes have either
increased or their expected tax refunds have evaporated because of restrictions
on the itemization of tax deductions, the imposition of a $10,000 cap on state
and local tax deductions and a cut in the mortgage interest deduction.
Nearly all of the 60
companies that paid no taxes qualified to receive a refund from the US
Treasury, although most will not collect a check, instead using the credit to
offset future taxes. But whatever the bookkeeping process, American taxpayers
are effectively paying money to them, despite their vast profits.
The biggest refunds include those going to Prudential, $346 million (added to
its $1.44 billion in profits); Duke Energy, a whopping $647 million (added to
$3.02 billion in profits); and Deere, $268 million (added to $2.15 billion in
profits).
Among the report’s most
outrageous findings:
Amazon more than
zeroed-out its tax bill on $10.8 billion in profits, making use of accelerated
depreciation deductions on equipment as well as favorable tax treatment of
stock-based compensation for executives like CEO Jeff Bezos, the wealthiest man
in the world. The stock compensation deduction alone was worth $1 billion.
Amazon will actually show a credit of $129 million from the US Treasury, not
paying one cent in federal income taxes.
IBM is another corporate
giant that has gamed the tax system by shifting earnings to its foreign
operations to escape US taxation. The company reported worldwide profits of
$8.7 billion, but only $500 million in the United States. It will reap a $342
million credit from the Treasury.
Delta Airlines accumulated $17.1
billion in federal pre-tax net losses as of 2010, partly as a consequence of a
protracted crisis of the airline industry, partly as a result of the 2008 Wall
Street crash. It has used these losses as well as the accelerated depreciation
credit for purchase of new planes to “dramatically reduce their tax rates,”
according to the ITEP report, receiving a credit of $187 million in 2018
despite net profits of more than $5 billion. According to Delta’s chief
financial officer, the actual tax rate the company expects to pay going forward
is between 10 and 13 percent, far below what a typical Delta worker pays on his
or her income.
EOG Resources, a renamed remnant of
Enron, perpetrator of the biggest corporate fraud in American history, can
collect $304 million from US taxpayers on top of $4.07 billion in profits.
For one company, the
federal tax refund would actually exceed net profits. Gannett made
a $7 million profit, while showing an additional $11 million credit from the
Treasury, giving the newspaper publishing giant an effective tax rate of
negative 164 percent.
IBM’s tax rate was a
negative 68 percent, while software maker Activision Blizzard and construction
company AECOM Technology both posted effective tax rates of negative 51
percent.
Sixteen of the 60
companies made more than a billion dollars in net income on their US
operations, to say nothing of foreign subsidiaries. Oil and gas producers and
utilities comprised more than one-third of the total, led by Chevron and
Occidental among the oil companies, and DTE Energy, American Electric Power,
Duke Energy and Dominion Resources among the utilities.
The 60 companies
profited enormously because the Trump tax cut bill cut the basic rate for
corporations from 35 percent to 21 percent, while not eliminating the loopholes
they had previously used to keep their taxes low. They had the best of both
worlds, paying lower rates while still enjoying loopholes.
Overall, according to
the Joint Committee on Taxation, an arm of Congress, the cut in the corporate
tax rate alone will pump $1.35 trillion into the pockets of the corporations
over the next 10 years. For this year alone, corporate taxes have been cut by
31 percent.
For the 60 companies in
the ITEP report, “Instead of paying $16.4 billion in taxes, as the new 21
percent corporate tax rate requires, these companies enjoyed a net corporate
tax rebate of $4.3 billion, blowing a $20.7 billion hole in the federal budget
last year.”
This figure by itself
is an irrefutable answer to all the bogus claims—made to workers in every part
of the United States—that there is “no money” to pay for needed social
programs, for wage and benefit increases, or to hire additional workers to
reduce overwork and understaffing. The $20.7 billion would pay for a $7,000
bonus to every public school teacher in America.
The bonanza that these
60 corporations are enjoying is three times the amount that Trump proposes to
cut from the budget of the Department of Education. It is 10 times the total
amount budgeted for the Bureau of Indian Affairs, which provides services for
more than 2 million Native Americans. It is nearly 20 times the budget of the
Occupational Safety and Health Administration, which conducts workplace safety
inspections.
The ITEP report, issued
by a group with close ties to the Center on Budget and Policy Priorities, a
liberal Washington think tank, warns of the explosive political consequences of
the corporate plundering of the Treasury. “The specter of big corporations
avoiding all income taxes on billions in profits sends a strong and corrosive
signal to Americans: that the tax system is stacked against them, in favor of
corporations and the wealthiest Americans,” the report says.
At the same time, the
tax cuts for big business are fueling the federal deficit, which will be used
by both Democratic and Republican politicians to call for further cuts in
social spending. The February monthly federal deficit hit an all-time high of
$234 billion this year, as a result of a 20 percent drop in corporate tax
revenue. The deficit for the first half of 2019 is projected at $961 billion,
and the deficit for the fiscal year ending September 30 is expected to reach
$1.1 trillion, as bad as the deficits posted in the immediate aftermath of the
2008 financial crash.
The number of U.S. companies paying zero federal taxes DOUBLED when
Trump's tax plan took effect in 2018
·
60 large companies managed to escape 2018
taxes under Trump's new plan
·
Many of those corporations actually received
tax rebates totaling $4.3 billion
·
The businesses include: Amazon, Netflix,
Chevron, Delta Airlines, JetBlue Airways, IBM, General Motors, Goodyear, Eli
Lilly and United States Steel
·
The result is a $20.7 billion budget hole
that is adding to America's federal debt
President Donald
Trump's tax policy doubled the number of highly
profitable companies that were able to avoid paying any federal taxes in 2018,
according to a new report.
Amazon, Netflix,
Chevron, Delta Airlines, IBM, General Motors and Eli Lilly were among those who
managed to escape taxes for last year, according to the study by the
Institute on Taxation and Economic Policy.
'Instead
of paying $16.4 billion in taxes, as the new 21 percent corporate tax rate
requires, these companies enjoyed a net corporate tax rebate of $4.3 billion, blowing
a $20.7 billion hole in the federal budget last year,' the report says.
The
Washington, D.C. think tank analyzed America's 560 largest publicly held
companies, finding that 60 of them paid nothing in taxes for last year – double
the average of roughly 30 companies that got away scot-free each year from
2008-2015.
Republicans
in Congress pushed through the tax law signed by Trump in 2017, and its
policies favoring the richest Americans and most valuable U.S. companies took
effect in 2018.
Scroll down for the full list of companies and rebates
·
The
change cut the tax rate from 35 percent to 21 percent and allowed companies to
take advantage of deductions, tax credits and rebates. That change alone is
projected to save corporations $1.35 trillion over the next decade, according
to the Joint Committee on Taxation.
'We
know that there's this pretty glaring contrast between what the proponents of
this tax law promised back in 2017 and what it's delivering now,' lead
author Matthew Gardner told DailyMail.com.
'The
whole argument was that the reason companies were avoiding taxes is because tax
rates are so high,' he added. 'What we're seeing is that isn't coming to
pass.'
Collectively, the 60 companies that avoided
all taxes last year managed 'to zero out their federal income taxes on $79
billion in U.S. pretax income,' according to the study, which was first
reported on by the Center for Public Integrity and
NBC News.
For
example, the John Deer farm equipment company earned $2.15 billion before
taxes, yet owed no U.S. taxes and used deductions and credits to extract $268
million from the federal government.
Nationally,
corporate tax revenues decreased 31 percent in 2018 to $204 billion.
'This
was a more precipitous decline than in any year of normal economic growth in
U.S. history,' wrote Gardner, a senior fellow for the Institute on Taxation and
Economic Policy, in the report.
We know that there's this pretty
glaring contrast between what the proponents of this tax law promised back in
2017 and what it's delivering now.
-Matthew Gardner, Institute on Taxation and Economic Policy
Trump
had said that the corporate tax cut would pay for itself by sparking a business
boom that would create more jobs, thus generating growing income tax revenues
for the nation.
That
reality hasn't emerged. Instead the nation's budget deficit is higher than it's
ever been in this nation's history.
That's
despite Trump's campaign promise to eliminate the $19.9 trillion national debt
in eight years. So far it has ballooned 41.8 percent in the first four months
of the 2019 fiscal year (which runs October 1 – September 30.
The
Government Accountability Office announced in April that the 'federal
government's current fiscal path … (is) unsustainable.'
Presidential
economic adviser Larry Kudlow has said that 'economic growth' has 'paid for a
good chunk' of the tax cuts, and that the budget's outlook is 'not as bad' as
it's perceived.
+2
·
Richest 400 Americans paid lower taxes than
everyone else in 2018
According to an analysis by noted economists Emmanuel Saez and
Gabriel Zucman, previewed this week by New
York Times columnist David Leonhardt, the wealthiest American households
paid a lower tax rate last year than every other income group for the first
time in the country’s history.
Saez and Zucman, both professors at the University of California
Berkeley, detail the phenomenon of declining taxes for the richest Americans in
their soon-to-be released book, The
Triumph of Injustice .
The pair compiled a historical database composed of the tax
payments of households in various income percentiles spanning all the way back
to 1913, when the federal income tax was first implemented. Their research
uncovered that in the 2018 fiscal year the wealthiest 400 Americans paid a
lower tax rate—accounting for federal, state, and local taxes—than anyone else.
The overall tax rate paid by the richest .01 percent was only 23
percent last year, while the bottom half of the population paid 24.2 percent.
This contrasts starkly with the overall tax rates on the wealthy of 70 percent
in 1950 and 47 percent in 1980.
The taxes on the wealthy have been in precipitous decline since
the latter half of the 20th century as successive presidential administrations
enacted tax cuts for the rich, suggesting that they would result in economic
prosperity for all. Taxes that mostly affect the wealthy, such as the estate
tax and corporate tax, have been drastically cut and lawyers have been hard at
work on the beliefs of their wealthy patrons planning out the best schemes for
tax avoidance, seeking to drive tax rates as close to zero as possible. The
impetus for the historical tipping point was the Trump Administration’s 2017
tax reform, which was a windfall for the super-rich.
Supported by both the Republican and Democratic Parties, the two
parties of Wall Street, Trump’s tax cuts were specifically designed to transfer
massive amounts of wealth from the working class to the ruling elite.
The corporate tax rate was permanently slashed from 35 percent
to 21 percent, potentially increasing corporate revenues by more than $6
trillion in the next decade. The bill also reduced the individual federal
income tax rate for the wealthy and included a number of other provisions to
further ease their tax burden.
The story is different for many middle- and working-class
Americans. According to multiple analyses of the 2017 tax reform, 83 percent of
the tax benefits will go to the top 1 percent by 2027, while 53 percent of the
population, or those making less than $75,000 annually, will pay higher taxes.
At the same time, the reform will sharply increase budget deficits and the
national debt, granting the pretense for the further destruction of domestic
social programs.
Furthermore, a majority of Americans are paying higher payroll
taxes, which cover Medicare and Social Security. The tax increased from 2
percent just after World War II, to 6 percent in 1960, to 15.3 percent in 1990,
where it stands today. It has risen to become the largest tax that 62 percent
of American households pay.
The result of the multitude of changes to the US tax system over
the last three-quarters of a century is one that has become less progressive over
time. The 2017 tax reform effectively set up the foundation for a regressive
tax policy where the wealthy pay lower tax rates than the poor.
The implementation of a regressive tax structure has played a
major role in engineering the redistribution of wealth from the bottom to the
top that has brought social inequality in America to its highest level since
the 1920s.
According to Leonhardt’s preliminary Times review of The Triumph of Injustice,
Saez and Zucman offer a solution to the current unjust tax system in which the
overall tax rate on the top 1 percent of income earners would rise to 60
percent. The pair claim that the tax increase would bring in approximately $750
billion in taxes. Their tax code also includes a wealth tax and a minimum
global corporate tax of 25 percent, requiring corporations to pay taxes on
profits made in the United States, even if their headquarters are overseas.
In an interview with Leonhardt, Zucman states that history shows
that the US has raised tax rates on the wealthy before so therefore it should
be possible to do so now.
However, the last half century of counterrevolution waged
against the working class makes the parasitic nature of the ruling elite
absolutely clear, and underscores the well-known fact that the US is ruled by
an oligarchy that controls the political system. Neither the Democrats nor the Republicans, who both represent
this oligarchy and bear responsibility for the tax system, will make any effort
to implement Saez and Zucman’s modest proposal.
California
became a Democratic stronghold not because Californians became
socialists, but because millions of socialists
moved there. Immigration turned California blue,
and immigration
is ultimately to blame for California's high poverty level.
Economists: America’s Elite Pay Lower Tax Rate Than All Other Americans
Getty Images
The wealthiest
Americans are paying a lower tax rate than all other Americans, groundbreaking
analysis from a pair of economists reveals.
For the
first time on record, the wealthiest 400 Americans in 2018 paid a lower tax
rate than all of the income groups in the United States, research highlighted by the New York Times from
University of California, Berkeley, economists Emmanuel Saez and Gabriel
Zucman finds.
The
analysis concludes that the country’s top economic elite are paying lower
federal, state, and local tax rates than the nation’s working and middle class.
Overall, these top 400 wealthy Americans paid just a 23 percent tax rate, which
the Times‘ op-ed columnist David Leonhardt notes is a
combined tax payment of “less than one-quarter of their total income.”
This 23
percent tax rate for the rich means their rate has been slashed by 47
percentage points since 1950 when their tax rate was 70 percent.
(Screenshot
via the New York Times)
The
analysis finds that the 23 percent tax rate for the wealthiest Americans is
less than every other income group in the U.S. — including those earning
working and middle-class incomes, as a Times graphic shows.
Leonhardt
writes:
For
middle-class and poor families, the picture is different. Federal
income taxes have also declined modestly for these families, but they haven’t
benefited much if at all from the decline in the corporate tax or estate tax. And
they now pay more in payroll taxes (which finance Medicare and Social
Security) than in the past. Over all, their taxes have remained fairly flat.
[Emphasis added]
The
report comes as Americans increasingly see a growing divide between the rich
and working class, as the Pew Research Center has found.
Sen. Josh
Hawley (R-MO), the leading economic nationalist in the Senate, has warned
against the Left-Right coalition’s consensus on open trade, open markets, and
open borders, a plan that he has called an economy that works solely for the
elite.
“The same
consensus says that we need to pursue and embrace economic globalization and
economic integration at all costs — open markets, open borders, open trade,
open everything no matter whether it’s actually good for American national
security or for American workers or for American families or for American
principles … this is the elite consensus that has governed our politics
for too long and what it has produced is a politics of elite ambition,”
Hawley said in an August speech in the
Senate.
That
increasing worry of rapid income inequality is only further justified by economic
research showing a rise in servant-class jobs,
strong economic recovery for elite zip
codes but
not for working-class regions, and skyrocketing wage growth for the billionaire
class at 15 times the rate of other Americans.
Census Says U.S.
Income Inequality Grew ‘Significantly’ in 2018
(Bloomberg) -- Income
inequality in America widened “significantly” last year, according to a U.S.
Census Bureau report published Thursday.
A measure of inequality
known as the Gini index rose to 0.485 from 0.482 in 2017, according to the
bureau’s survey of household finances. The measure compares incomes at the top
and bottom of the distribution, and a score of 0 is perfect equality.
The 2018 reading is the
first to incorporate
the impact of President Donald Trump’s end-
2017 tax bill, which was reckoned by many
economists to be skewed in favor of the
wealthy.
the impact of President Donald Trump’s end-
2017 tax bill, which was reckoned by many
economists to be skewed in favor of the
wealthy.
But the distribution of
income and wealth in the U.S. has been worsening for decades, making America
the most unequal country in the developed world. The trend, which has persisted
through recessions and recoveries, and under administrations of both parties,
has put inequality at the center of U.S. politics.
Leading candidates for
the 2020 Democratic presidential nomination, including senators Elizabeth
Warren and Bernie Sanders, are promising to rectify the tilt toward the rich
with measures such as taxes on wealth or financial transactions.
Just five states --
California, Connecticut, Florida, Louisiana and New York, plus the District of
Columbia and Puerto Rico -- had Gini indexes higher than the national level,
while the reading was lower in 36 states.
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