Twice in an interview on CNBC after the announcement of the president’s framework to rebuild better, the Secretary of the Treasury Janet yellenJanet Louise Yellen The Hill’s Morning Report – Presented by Facebook – Republican Party Dealt a Coup in 2022, Looks at Trump-Era Issues Biden Faces High Stakes with Progressives Over Fed Election Biden Meets Potential Fed Elections Powell, Brainard: MORE report he claimed than the taxes outlined for high-income taxpayers and corporations by the framework (not to mention, the numerous tax breaks for news organizations, trial lawyers, unions, and wealthy citizens from high-tax states) played their “fair share.”
While I hope Congress has the good sense not to enact Build Back Better, thank God a liberal politician can finally discuss taxes responsibly, without demonizing an entire class of Americans.
For decades, we have heard liberal politicians, including presidents, cabinet members, and congressional leaders, demonize wealthy Americans by claiming that our deficit problems could be solved and that progressive social policies could be achieved if only the “rich paid their share. fair tax “. It is divisive and demagogic, the height of public irresponsibility, for anyone in power to demonize any class or group of Americans.
Even at first glance, the claim that the rich had insufficient taxes was always wrong. Top 10 percent of taxpayers pay 70 percent federal income tax. What would be “fair”? 75 percent? 90 percent? The top one percent pays 40 percent federal income taxes, despite earning only 21 percent of total reportable income. Is that less than “your fair share”? Since 2001, the share of the top 1 percent of federal income taxes paid increased from 33 to 40 percent.
Furthermore, what is not said in the liberal frameworks of our tax system is that 50 percent of Americans pay virtually no federal income tax (less than 3 percent). This fact is especially problematic, since half of Americans have no direct vested interest in reducing federal spending. This explains why rich new social programs often do so well – they cost half of Americans nothing. If you don’t have to pay for the waste of Congress, why oppose more spending? And would it be “fairer,” better for the United States, if 80 percent of Americans paid no taxes?
It is true that payroll and excise taxes tend (paid by most working Americans) to be more regressive, but, by almost any measure, the United States tax system is significantly more progressive than almost all countries. of the beloved Europe of the left, which relies mainly on highly regressive politics. value-added taxes to fund its vast social programs. Are those tax systems “fair”?
Unfortunately, in a tax system that relies heavily on the willingness of its citizens to declare and declare their own income, some people cheat. The IRS estimates that the tax gap (which is the difference between what taxpayers owe and what they pay) is approximately $ 400 billion. But cheats span all income levels. Three of the biggest cheat areas comes from Low-income taxpayers claiming excessive amounts of refundable tax credits (such as the earned income tax credit and child and dependent care tax credits), small middle-income businesses (such as restaurants and stores), and sole proprietors (such as hairdressers , doctors and maintenance personnel)) that transact with large amounts of cash and the underreporting of income of the so-called “passing entities”(As limited partnerships), a favorite investment vehicle of high-income individuals, for which the IRS cannot electronically track and verify income without an audit. Cheaters don’t pay their “fair share,” but cheats come in all sorts of shapes and sizes – and income tax brackets.
Liberal politicians should have the integrity to say what they really mean: “We want to spend more money on social programs (or we want to redistribute wealth in America) and we need to raise taxes to pay for it. For the same reason as gangster Willie Sutton Having answered why he robbed banks, we want to tax the rich more, not because they don’t pay their ‘fair’ share, but because “that’s where the money is.”
President Joe bidenJoe BidenBiden and Xi of China to hold virtual summit on Monday: Briahna Joy Gray reports: Biden ‘plays dumb’ with cancellation of student debt Defense and national security – Biden celebrates Veterans Day MORE he promised a more civilized and less divisive administration. With the Secretary’s declaration that we will achieve “justice” in the Build Back Better bill if it is enacted, and even if it does not become law, let’s hope that liberal politicians will stop, once and for all, trying to demonize the rich, or whatever. class, of Americans.
David F. Eisner was Under Secretary for Management in the US Department of the Treasury from 2018 to 2021.