In the two years since Congress passed the Republican tax law, the richest 1 percent have been the big winners.
A conservative U.S. senator has released a new study on federal giveaways to America’s rich. Our plutocrats won’t like it. But the indictment actually misses the biggest handout of them all.
Senator Tom Coburn, a right-wing Republican from Oklahoma, may be the quirkiest lawmaker in Washington. He swept into Congress with the “Contract with America” crowd in 1994 and has spent most of his lawmaking years working to get the government small enough to drown in a bathtub.
But the 63-year-old senator, who doesn’t plan to run for re-election, also doesn’t genuflect to the rich and powerful. He even keeps a DVD copy of the populist film classic, Mr. Smith Goes to Washington DVD, on his desk.
Last week, Coburn did something a bit more substantive to dramatize his political independence. He released a data-filled report that dissects the tens of billions in federal subsidies and tax breaks that flow every year to American taxpayers who make over $1 million a year.
“The income of the wealthiest one percent of Americans has risen dramatically over the last decade,” Coburn charges. “Yet the federal government lavishes these millionaires with billions of dollars in giveaways and tax breaks.”
In 2008, for instance, millionaires claimed over $7 billion in mortgage interest deduction tax breaks. Some of those deductions, amazingly, came for yachts. How’s that? Current law, Coburn explains, extends the mortgage interest deduction to second homes, and the wealthy can label a yacht a second home if they live on it at least two weeks a year.
Other items on Coburn’s subsidy list don’t evoke the same outrage factor. One example: Coburn includes on the list the Social Security checks that retired millionaires cash in — and he wouldn’t mind at all if these checks stopped flowing.
But many of Social Security’s most committed advocates would disagree. Social Security, they point out, has always been a universal program — everybody contributes, everybody benefits — and ending that universality, these advocates fear, would jeopardize the program’s broad public support.[pullquote]The wealthy can even take tax deductions on yachts.[/pullquote]
Coburn skates on much firmer ice when he goes after bloated farm subsidy programs and tax deductions for entertainment expenses. Billions from programs and tax giveaways like these serve to make the rich richer — at average taxpayer expense — each and every year. Millionaires, Coburn colorfully complains, are using the nation’s social safety net as “a hammock.”
Coburn, to be sure, has never been a particular safety net fan in the first place. He worries that “government policies intended to mainstream wealth redistribution are undermining” values like “personal responsibility.”
But the Oklahoma senator leaves unmentioned, in these pages, the tax code giveaway to the rich that undermines what may be the most core mainstream value of all, the importance of hard work. The giveaway that betrays this value: the tax code’s preferential treatment for speculative capital gains income.
Ending this preferential treatment — billionaire hedge fund managers pay taxes at just a 15 percent rate — would generate more income than the $30 billion annual cost of all the other subsidies on Coburn’s list.
Still, let’s give Coburn his due. Our plutocracy can’t be happy when even right-wing defenders of the faith start talking about subsidies for millionaires.
Sam Pizzigati, the co-editor of Inequality.Org, also edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up here to receive Too Much in your email inbox.