As the UK moves towards a People vs. Parliament election, the elitist defender of the big banks will need quite a transformation.
Government must stop doling out ever-larger tax breaks to the super-rich and vast corporations.
Have you heard? America is broke, according to many governors and lawmakers. They’re calling for deep cuts in teacher pay, firing cops, slashing medical services for working-class kids, and scrapping other essential services to narrow state and federal budget deficits.
There’s a better and fairer way to tackle this situation. Government must stop doling out ever-larger tax breaks to the superrich and vast corporations.
Around the country, states and towns are gutting their budgets, undermining the quality of our lives.
“Our country is not really broke,” said Cynthia Carranza who directs a food pantry in Niles, Illinois. Carranza witnesses the growing number of hungry people at her food pantry door even as government support for her program is slashed. “We’re an incredibly rich and prosperous nation. But our wealth is skewed to a very few fortunate at the top. We’re not broken, just twisted.”
Our communities are enduring mammoth state and federal budget cuts because we have, in large part, failed to sufficiently tax America’s millionaires and billionaires or prevent aggressive tax avoidance by multinational companies. The rest of us are paying to pick up the slack.
Congress has blown holes in our tax code, losing hundreds of billions in revenue. Worse, lawmakers have averted their eyes as corporate lobbyists drill new tax loopholes and extract new corporate welfare subsidies.
How else can we explain how a profitable company like General Electric pays no taxes? Since 2006, General Electric has reported over $26 billion in profits, yet paid not one penny in U.S. taxes. It gets worse. They’ve actually received more than $4 billion in subsidies and corporate welfare.
GE isn’t alone. Other huge global companies such as Verizon, Boeing, and Bank of America also pay no U.S. taxes. These artful dodgers aggressively solicit government subsidies and use accounting tricks to move money to overseas tax havens like the Cayman Islands. They pretend to earn their profits offshore and then report their paper losses here in the United States–so they don’t have to pay the IRS a dime.
Wealthy individuals have also benefited from a half-century of tax reductions. If U.S. millionaires and billionaires paid taxes based on 1961 tax rules, we would have raised an additional $231 billion in federal revenue this year.
By reversing years of tax giveaways to America’s rich and the corporations that enrich them, Congress could raise trillions in revenue. We could fund the public structures that safeguard our families and our future.
There are four revenue raisers that Congress could institute tomorrow that would generate $400 billion a year–or $4 trillion over the next decade. Such programs would restore greater fairness to our tax system and reduce the extreme levels of inequality polarizing our society.
Congress could levy a modest financial transaction tax on the transfers of stock, currency, and speculative investments that do little to strengthen the real economy. This would generate $150 billion a year while exempting smaller investors.
Lawmakers could reduce corporate tax dodging by closing overseas tax havens and requiring companies to pay U.S. taxes on the profits they actually earn in this country. This could generate as much as $100 billion a year.
Congress could establish new top tax rates on households with annual incomes over $1 million, which could generate another $100 billion a year. Under our current tax system, a person earning $380,000 a year pays the same top tax rate as someone earning $10 million a year.
Lawmakers could institute a progressive estate tax on fortunes over $5 million, with higher rates on billionaire estates. That would generate $45 billion a year.
Taking all four of these straightforward steps could raise a total of approximately $400 billion per year.
Sure, some politicians would rather cut services for children and the mentally ill before they dare to propose tax hikes on millionaires and tax-dodging corporations. But that doesn’t mean we’re broke. It just means we need to get our priorities straight.
Chuck Collins directs the Program on Inequality at the Institute for Policy Studies. He is co-editor of Inequality.org and the author of Born on Third Base: A One Percenter Makes the Case for Tackling Inequality, Bringing Wealth Home, and Committing to the Common Good.