Would taxing the rich help the United States?

Dr Anthony Stevens-Arroyo

Since the first time our first ancestors came out of caves to live in organized societies, governments have collected taxes. The pharaohs needed the stone to build pyramids, whereas today spreadsheets establish the tax tables.

Oliver Wendell Holmes reminded us that paying taxes “buys civilization”. If we want a modern society, we cannot avoid taxes; but we can change the current unfair tax system.

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A recent report showed that the 25 richest people in the United States paid an effective tax rate of just 3.4%. For example, Amazon owner Jeff Bezos paid a measly 1.1% effective tax rate on his growing $ 196 billion fortune. Meanwhile, ordinary Joes suffer from double and triple rates of the Bezos rate.

Tax inequality is the source of constant grumbling, but it also poses serious dangers. Over the centuries, revolutions occurred when high taxes on the common people fueled resentment against the wealthy who lived hard on pork. Bad tax policy has destroyed empires, including Britain under King George III which failed to grasp settler resentment over tax inequality.

The United States today faces the same consternation. Although we need to rebuild our infrastructure, our taxation revolves around a system where the richest have the lowest rates.

How long can our Republic remain competitive if the elites avoid paying their fair share?

Dr Anthony Stevens-Arroyo

Three solutions to this imbalanced taxation are making headlines today. “The solution of law and order” is based on the conservative principle that the law must be applied for all. The president’s proposal is to double the size of the IRS, gradually adding 87,000 new workers to find and sanction tax evaders.

This puts an end to the shortcuts that have reduced the IRS’s ability to enforce existing laws. In the last full year under the previous president, for example, uncollected taxes have ranged from $ 554 billion to as much as $ 1,000 billion. The law and order solution could pay most of the costs of rebuilding our infrastructure without raising taxes.

Unfortunately, taxing income alone would not affect the super-rich. Essentially, these tycoons write contracts that are paid for in shares, instead of getting a regular salary. Then they feed their extravagant lifestyles by drawing millions of their profits as a form of “loan”. Because most of their income becomes “non-income,” they escape tax.

We need “the innovative solution”, which is a wealth tax. He is torpedoing the ruse employed by the super-rich to avoid income tax.

Wealth tax is levied on assets, much like a property tax. The United States already uses a wealth tax, but only to settle an estate. The largest wealth tax in the world imposed on citizens is set by Switzerland without any adverse effect on its economy.

In addition, Washington’s proposal would only affect people with assets worth $ 50,000,000 or more. The super-rich would pay two cents on every dollar in assets, and three cents if they’re billionaires.

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Only 75,000 people or one percent of one percent (0.1%) of the population would be affected. Together, they wouldn’t fill the Pocono Raceway.

However, they currently hold nearly a third of all wealth in America. Two University of California economists say the proposed wealth tax would raise an estimated $ 2.75 trillion over 10 years without taxing America’s middle class. However, it ultimately forces 75,000 people to pay their fair share.

The “Think Big Solution” is the third possibility, and it has just been adopted as a minimum global tax of 15% at the G7 meeting in 2021. Like the pirates of yesteryear who buried their loot in small islands in the Caribbean, the rich today have hidden money in offshore banks. Since these havens do not tax foreign deposits, companies claim their headquarters in these enclaves to avoid paying taxes to their home countries. By making the tax universal, the United States and its allies are reducing the incentive to transfer money out of each country. Businesses and drug lords won’t be able to hide from the real taxes we need here.

Each of these solutions would help fund national improvements. The use of all three would represent a transformation of taxation.

Anthony M. Stevens-Arroyo holds a doctorate in Catholic Theology from Fordham University and wrote a column on religion for the Washington Post from 2008 to 2012. He is also professor emeritus of Puerto Rican studies and Latin Americans at Brooklyn College and Distinguished Scholar at the City University of New York. He sits on several community councils in the Poconos, including FLECHA, the Federation of Latinos / Aces for Education on Hispanic American Cultures.

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