To support workers this Labor Day, let’s tax wealth like work

The author the U.S. needs to raise taxes on the super-rich. Photo: Scott Eisen/Getty Images

As a long-time union and community organizer, I care deeply about workers’ rights. As a long-term resident of the Black communities of Raleigh and Durham, I care deeply about racial, social and economic equity. As a patriotic veteran, I care deeply about democracy, and am increasingly concerned that widening income and wealth inequality is posing a growing threat to it. There is a lot we can do to strengthen democracy. Fixing our rigged, unfair tax system should be high on the list.

The pandemic caused massive unemployment, loss of health coverage, and financial hardship for tens of millions of working people. Many of the small businesses that employed them did not survive, and many that did are still struggling to get back to pre-pandemic capacity.

Swift bipartisan action by Congress to pass historic relief packages helped workers, business and local government to protect many of us from COVID’s worst harms and mitigate the loss of jobs, health insurance and housing. As a result, the unemployment rate fell from 14.7 percent in April 2020, the beginning of the public health crisis, to 3.5 percent this summer, the rate of healthcare coverage rose to an all-time high, and poverty actually declined even as the pandemic kept raging.

But the impact of the pandemic lingers even as infection rates have declined. Rising inflation has driven record costs for fuel, goods and services. Large corporations, seizing on an opportunity to fatten their profits, have used pandemic conditions as a pretext for price-gouging. Since the spring of 2020, corporations in the non-financial sector have raised prices by an annualized rate of 6.1%–a huge increase over the 1.8% annual price growth between 2007-2019. Over half this increase (53.9%) contributed to bigger profit margins, while labor costs accounted for less than 8% of the increase. In 2021, corporate profits surged by 35%, giving American corporations their most profitable year since 1950. But even as CEO pay and shareholder earnings soared, workers’ real wages have failed to keep up with the higher cost of living.

Higher corporate profits did not mean that they paid more taxes, however. In 2020, 55 of the nation’s largest firms paid ZERO in federal taxes thanks to loopholes and breaks in the tax code.

Billionaires also increased their wealth by an astonishing $1.7 trillion, or 57%, between March 2020 and March 2022.

Like their corporations, the ultra-rich have either avoided taxes or paid a much lower rate than working and middle-income families thanks to special tax breaks that help them hoard their wealth. The nation’s 400 richest billionaires paid an average tax rate of 8.2% between 2010-2018, while middle class people paid an average of 13.3%.

Our tax system is rigged, but we can fix it. Congress made a start with the Inflation Reduction Act (IRA). Along with lowering prescription drug prices, making Affordable Care Act premiums more affordable, and taking steps to curb climate change, it also makes the tax code fairer by requiring corporations that make over $1 billion in profits annually to pay a 15% minimum corporate rate. In addition, it provides the Internal Revenue Service (IRS) resources to track down the nation’s richest tax cheats and make them pay up. Contrary to partisan misinformation, no one making less than $400,00 a year will see their taxes increase.

It’s progress, but there is much more to be done. Congress should pass a Billionaire’s Income Tax that requires the ultra-rich to pay taxes on increased wealth the way most of us pay on our wages. We pay our taxes every year, while billionaires can go for years without paying any federal income taxes at all because their stock and financial assets income isn’t taxed until they are sold. Billionaires don’t need sell assets to live a lavish life, and they can then pass all their wealth on to the next generation without ever paying what they owe.

Adequate investments in healthcare, education, housing, infrastructure, workforce development, public safety and other vital programs and services depend on a tax system where everyone pays their fair share. Declining investments exacerbate growing inequality, and reward tax-dodging billionaires with concentrated wealth that they can then dump as “dark money” into elections so they can keep the system rigged while drowning out the voices of average voters.

The 2017 Trump tax cuts gifted trillions of dollars more in tax breaks to the rich and corporations. It’s past time we make them contribute their fair share back to the communities that make them rich, just the way American workers do every day.

Reverend Melvin Whitley lives in Durham and is on the board of Action NC.

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To support workers this Labor Day, let’s tax wealth like work