A weekly newsletter from the Institute for Policy Studies
In absolutely-should-not-be breaking news: The IRS is set to release a free electronic tax filing tool for 2024’s settling-up season. The new software, Direct File, will pilot in thirteen states — for a few hundred thousand taxpayers with relatively simple returns, it'll provide a solid measure of relief.
This new program amounts to a resounding defeat for the predatory tax prep industry. Since 2003, companies have shelled out over $90 million to lobby against free-filing options and protect their practice of routinely charging stressed customers a few hundred dollars a pop.
Having the government provide free, simple tools so that taxpayers can give money back to the government? Seems like a no-brainer to us.
But we’ll cheer the hardest when our wealthiest finally start ponying up their fair tax share in taxes. For now, they can afford to pay experts to exploit every loophole in the book and then evade scrutiny. In 2020, the IRS audited low-income families at a higher rate than households taking in more than $1 million. Sam Pizzigati takes a closer look at this egregious system in his weekly "Too Much" column.
More inside this issue: Another good effort to reduce needless expenses, the tumultuous Sam Bankman-Fried trial in New York, and a heartening speech by a young Boston activist.
Chuck Collins and Bella DeVaan
for the Institute for Policy Studies' Inequality.org team
INEQUALITY BY THE NUMBERS
Fifth-Grader Takes on the Powerful Private Jet Set
Kalea Foo is the youngest person we’ve ever highlighted in our weekly newsletter. We were blown away by the fifth-grader’s powerful speech at an October 2 protest against the proposed expansion of Hanscom Field, an airport outside Boston that primarily serves ultra-wealthy private jet travelers.
“The people who want more private jets at Hanscom would be stealing from the climate we need to buy something they just want,” Foo told a crowd outside the Massachusetts State House. A recent Institute for Policy Studies report reveals that the rich too frequently take short-hop flights to luxury destinations from the airfield, emitting tons of carbon and worsening the climate crisis.
After the rally, Foo presented a petition with over 10,000 signatures to staff of the Massachusetts Governor, calling for “no new private jet expansion at Hanscom or anywhere.” Read her full speech and view a video of her rally remarks at the link below.
Trashing Deceptive Junk Fees
Inequality.org co-editor Sarah Anderson always does some comparison shopping to get the best deal on her crazy expensive contact lenses.
Like any normal consumer, she clicks first on the lowest-price offer. But after doing so recently, she wound up with a final total cost at checkout that was 93 percent more than the original price.
These hidden, surprise charges are a classic example of the ubiquitous “junk fees” that deceive consumers into paying more for banking and internet services, concerts and movies, rental cars and apartments, and other common line items. The cost of all this swindling? Tens of billions of dollars a year.
President Biden's administration is determined to put junk fees where they belong — in the trash. Read on for Anderson’s analysis of the administration’s crackdown on this dishonest practice.
Share the Wealth vs. Waste the Wealth: Who’s Winning?
Close to a thousand taxpayers annually making over $1 million, U.S. Senator Ron Wyden points out, haven’t even bothered to file tax returns over recent years. Wyden, the Senate Finance Committee chair, wants to see the IRS devote more of the new funding the agency gained last year to helping increase the audit rate on America’s richest. Republicans in Congress, meanwhile, are pushing a budget for next year that would chop IRS funding by $67 billion, a cut that would leave the nation right back where Trump's crew left it: with millionaires pocketing one-sixth of the nation’s income getting audited less than 1 percent of the time. Inequality.org’s Sam Pizzigati has more.
PETULANT PLUTOCRAT OF THE WEEK
A Crypto Superstar Finally Ditches His Unkempt Curls
This week’s dour deep pocket: The “notoriously scruffy” Sam Bankman-Fried, the one-time billionaire king of crypto now sporting a suit and close-cut haircut as he sits on trial in New York for criminal fraud. If convicted, S.B.F. faces decades in prison.
What has him sour: Last week’s testimony against him by Caroline Ellison, his one-time top aide and lover who testified that Bankman-Fried instructed her to illegally use the millions customers had deposited into his crypto exchange to bail out his own separate, shaky crypto trading firm.
Bankman-Fried, this past August, had his own bail revoked after a judge ruled that he had been trying to intimidate Ellison and other witnesses from testifying against him.
During Ellison’s testimony, reporters noted, “Bankman-Fried typed notes on his laptop without a visceral reaction.” His legal team, meanwhile, “seemed to have trouble articulating its points.”
The last word: The Bankman-Fried scandal, Americans for Financial Reform analyst Mark Hays warned last fall, should remind lawmakers not to hitch their wagons “to charismatic founder types who make a lot of promises they can’t ultimately deliver on.” Bankman-Fried may be “the clearest example of that kind of hubristic figure, but there have been many before him and will likely be many after him.”
This week on Inequality.org
Sam Pizzigati, Private Yachts As Long As Football Fields. In what universe can this energy-guzzling reality possibly make any sense?
Bella DeVaan, Nurses are Standing Up to Profiteers and Demanding Universal Healthcare. As labor action rocks Kaiser Permanente, CVS, and Walgreens branches nationwide, take a look back at last year's first-ever Senate hearing on Medicare for All.
Elsewhere on the Web
Ryan Cooper, Inside the Walmart of Finland, People’s Policy Project. Finland’s largest private-sector employer, a consumer cooperative, reminds us that a modern economy can function quite nicely without having to manufacture billionaires.
Jessica Church, The Smart Corporate Tax Idea That Might Have Prevented the UAW Strike, Washington Monthly. Targeting out-of-control CEO pay via the tax code would be the right policy for our deeply unequal moment.
Rebekka Ayres, Big Philanthropy Is a Scam That Makes the Rich Look Better, Conceals Their Crimes, Teen Vogue. The world’s richest people aren’t going to save us.
Kenan Malik, Getting rich in order to give to the poor? The jury’s out, but it seems morally shaky, Guardian. The trial of philanthropic crypto poster boy Sam Bankman-Fried exposes the flaws in a philosophy that negates the need for social change.
Ryu Yi-geun and Ro Young-joon, Why America is facing the worst inequality since the Depression and what can be done, Hankyoreh Economy and Society Research Institute. An interview with UC Berkeley economist Gabriel Zucman.
Andrew Keshner, Americans owe $688 billion in unpaid taxes. That makes audits of super-rich more ‘urgent,’ IRS says, MarketWatch. The IRS is focusing on approximately 1,600 millionaires with tax debts of at least a quarter of a million dollars each.
Jeannine Mancini, The Top 20 Richest People On Forbes 400 Are So Rich They Could Buy The Bottom 340 Billionaires — And Still Have Billions Left Over, Yahoo! Finance. The top 20 people on the Forbes 2023 richest list have added $310 billion to their fortunes. Together, they have a combined wealth of $1.9 trillion, a 30 percent increase from a year ago.
Christopher Cameron, Servants seem out of touch. Enter the billionaire’s battalion of experts, Washington Post. The wealthy are employing an army of niche specialists — from shamans to hospitality directors — to optimize their lives in the name of self-improvement.
Brendan Bordelon, How a billionaire-backed network of AI advisers took over Washington, Politico. A sprawling network spread across Congress, federal agencies, and think tanks is pushing policymakers to put artificial intelligence at the top of the agenda, in the process boxing out other issues and benefiting top AI companies.
“Deaths of despair” — premature deaths from suicide, alcohol abuse, and drug overdoses — are at historic highs, with lower-income Americans particularly hard hit. The opioid crisis has driven the starkest gap. In 2021, people without Bachelor’s degrees were eight times more likely to die of a drug overdose than those with such degrees, Brookings Institution research shows.
Education level is a useful proxy for economic inequality, since the median income for college graduates in 2022 stood at $52,000, compared to just $34,320 for high school grads. For an interactive version of this chart and other health and inequality charts, check out the link below.
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Managing Editor: Isabella DeVaan
Co-Editors: Sarah Anderson, Chuck Collins, and Sam Pizzigati
Production: Isabella DeVaan