Our Unjust Tax Code

Bill and Ted both make $100,000 a year, each have a wife who isn’t working so they can stay home with their one year old child. Bill works for a big company and handles their computers and network, sometimes he works 60 hours a week. Ted’s income comes from his stock portfolio. Since they make the same amount of money each year and have the same number of dependents you’d think they would pay the same amount of federal income tax, but you’d be wrong. Ted’s income is taxed at a lower percentage because the federal tax code privileges capital gains with a lower rate. While this has been a problem for decades the Trump tax “reform” of 2017 made it worse. 

Of course much of the rhetoric surrounding work and taxes claims that poor people don’t pay enough taxes and those who get jobless benefits are the problem when in reality it is the very wealthiest among us who not only don’t pay their fair share they use their wealth to actively push to increase the differential. The very wealthy make campaign donations for the maximum allowed by law, then they setup dark money groups to donate more and run their own ads pushing their chosen candidates. The only things the wealthy ask in return for their largesse is that their privileged tax rate continue and the Internal Revenue Service be underfunded so it doesn’t have the staff to audit them and take them to court.

People like you and me, who work hard all day to actually earn our money, pay more in taxes than people who just sit back and collect a check.

Republicans campaigning for midterm elections in 2022 are claiming that the Trump tax cut in 2017 was a great success. They claim wages went up and unemployment went down because the corporate tax cut created a demand for labor that helped disadvantaged groups. The truth is that the unemployment rate has been going down from 2010 to the beginning of the pandemic 10 years later. Nothing remarkable happened in 2017, 2018, or 2019 other than continuing the trend that had been going on for years. 

The 2017 tax law also includes incentives for investing in plants and facilities outside of the United States. Didn’t Republicans claim they were all about “America First”? Those incentives are in the tax code because Republican donors told them to include it. Republicans are not about “America First”, they are about campaign donors first. The only people the Trump tax plan was good for were the small number who fund the political campaigns of the people who voted for it. When pushing the tax bill Republicans claimed that companies that are actually overseas and happen to do incidental business in the United States shouldn’t have to pay taxes. The defined the tax code based such that the higher the percentage of physical stuff a company has outside of the United States the lower taxes they have to pay. That gave every company an incentive to move as much physical plant and equipment overseas as possible.

ProPublica, the non-profit public interest journalism organization, recently published a number of articles on how our tax code and the Internal Revenue Service have been undermined. While Trumps big tax bill was the latest injury Republicans aren’t the only ones who have favored their big campaign donors with tax breaks. On the positive side Joe Biden is pushing to raise taxes on capital gains and revitalize the IRS so that it can audit more of the wealthy people who are not paying their taxes.

Published in the Seguin Gazette - June 16, 2021