Rising inflation and the escalating cost of everything from gas to houses made Tax Day 2022 even more significant for many Americans this year. Rising economic anxiety collided with middle class tax bills as families worried about the future and made plans to tighten their belts.
The nation’s 700 billionaires face no such worries, however. Unlike the rest of us who struggled through the pandemic and are now trying to catch up in its aftermath, billionaires enjoyed an enormous increase in their wealth over the last two years.
Yet, thanks to our skewed and unfair tax code, they won’t have to pay more in taxes like the rest of us do. As a Black small business owner who works hard every day to make it a success, and who—like everyone else who isn’t rich—has to pay taxes on the income it produces for my family, I can’t see why the rich deserve this preferential treatment.
According to Forbes data analyzed by Americans for Tax Fairness, U.S. billionaires have gotten $1.7 trillion richer over the first two years of the pandemic while our state’s four billionaires have gotten more than 45% richer, with $6 billion more to their names since 2020. That’s a stark contrast to the number of people who lost jobs and businesses, and suffered through illness over that same period—or even to the number of people who did alright during the pandemic but did not significantly increase their personal wealth.
The concentration of wealth among the top .01% has become truly astounding. The nation’s 700 billionaires now collectively control more wealth than the bottom half of the American population — about 165 million people. That massive wealth doesn’t just enable them to buy rocket ships and professional sports teams, it also gives them nearly unfettered political power to keep the rules rigged in their favor.
When it comes to taxes, for example, the ultra wealthy don’t follow the rules that the rest of us live by because they have their own. And those built-in loopholes and tax breaks enable many wealthy people to consistently pay lower tax rates than nurses, fire-fighters and accountants.
While the rest of us pay taxes on the income we make from work, the wealthy pay nothing on gains they make from stocks and other financial assets–their chief source of income. When we get a raise on our jobs, we make more income and pay more taxes. But when rich people hit a stock market bonanza that increases their wealth exponentially, those gains are not taxed unless they sell the assets. Economists have determined that when wealthy people’s stock gains are counted as income, the nation’s 400 richest billionaires paid a tax rate of only 8.2% over a recent nine-year period. Meanwhile, the average federal income-tax rate for all taxpayers was 13.3% in 2019.
And, of course, most don’t need to sell assets in order to live a lavish lifestyle. That means they can hold on to most of their wealth indefinitely. To avoid paying taxes ever, they can pass their assets on to their heirs rather than sell them, thereby never paying what they would owe if the tax system treated them the way it treats the rest of us.
Americans love a good success story. Many of us enjoy the innovations and inventions that wealthy entrepreneurs have brought to the mainstream. But no matter how much money the wealthy make, they should still adhere to the same rules as everyone else. Twisted exceptionalism in the tax code enables the wealthy to profit from the American economy without actually contributing much back into it.
It doesn’t have to be this way. Wealthy people could continue to be wealthy while paying what they owe in taxes like the rest of us. But Congress needs to take action on good tax reform proposals that would finally require the richest people in America to pay their fair share.
President Biden and Oregon Senator Ron Wyden have proposed different versions of a Billionaires Income Tax that would finally require rich people with hundreds of millions or billions in wealth assets to pay taxes on the annual increases in their wealth generated by stocks and other assets—the same way the rest of us pay taxes on our income from work. Polling shows this policy is widely supported by 64% of voters, including 61% of Independents.
The revenue raised from taxing this richest Americans could be used for any number of critical investments including lowering the cost of healthcare and education; covering dental, vision and hearing services for seniors in Medicare for the first time; and increasing public safety.
If Congress took action to make the rich abide by the same tax rules that apply to everyone else, the rich would stay rich but the rest of us–who helped make people like Jeff Bezos and Elon Musk rich in the first place–would benefit from that wealth, too.
Michael De Los Santos is the owner of Mike D’s BBQ in Durham.