Millions of Americans will finish and file their taxes in the next few days, joining their family, neighbors and co-workers in fulfilling a basic responsibility that all Americans share.
Although a lot of us don’t love paying taxes, we should at least recognize that everyone paying their fair share is the reason the American way of life exists. After all, American taxpayers are the reason we have roads, bridges, fire and police departments, trash removal, public schools, community health centers and a plethora of other services including much of our healthcare system. The nation’s most reliable healthcare programs–Medicare, Medicaid, the Department of Veterans Affairs, the Children’s Health Insurance Program (CHIP)–all are supported with taxpayer funds.
A reliable social safety net is well worth paying taxes to support, but the truth is that in the coming decades we’ll need more revenue to accommodate the changing needs of our population, including the massive challenge created by the rapid aging of the population. More than 11,000 Americans will turn 65 every day in 2024 and in every year through 2027. The older population also grew five times faster than the total population between 2010 and 2020. The number of Americans ages 65 and older will more than double over the next 40 years, reaching 80 million in 2040.
Relative to peer countries, the United States will still be on the younger end and given the wealth in our nation, is well positioned if we plan now to accommodate the investments needed to ensure millions of people age with the healthcare and dignity they deserve over the coming years. That’s where President Biden’s commitment to taxing the wealthy and corporations more fairly comes in. The President supports raising revenue to deal with the nation’s fiscal challenges by closing tax loopholes that let the richest households and big corporations avoid paying taxes, which drains money from the economy and away from investments in healthcare and other services.
For most of us, our tax bills increase when our income increases. The American tax system is supposed to be progressive so that those who make more also pay more. Over the years, however, the system has gotten more and more skewed so that those who have the most– millionaires and billionaires–pay less than the rest of us. Thanks to an antiquated and increasingly two-tiered tax system, the super rich get taxed according to one set of rules while the rest of us are subject to a different set – helping the rich to get richer while the rest of us pay more.
New data from the federal reserve shows that the cumulative wealth of the richest 1% of Americans just hit a record high – $44.6 trillion at the end of 2023. The Fed defines the top 1% as people whose wealth exceeds $11 million. The total net worth of the top 1% increased by $2 trillion with all gains coming from stock holdings that are largely concentrated in the hands of the wealthy. In fact, 87% of all individually owned stocks are owned by the richest 10% . The top 1% own over half of all individual stocks. Plus, the wealthy aren’t taxed on stocks unless they sell them. That means they can collect increased wealth from stocks going up in value – and even borrow against that wealth – while paying nothing more in taxes.
A recent tax reform–the Trump tax law of 2017–has also helped America’s billionaires get richer over the last several years by cutting their taxes and keeping in place loopholes that help them avoid paying their fair share. Billionaire wealth has nearly doubled—up $2.9 trillion—since enactment in late 2017 of the Trump-GOP tax law. Under current rules, none of that nearly $3 trillion in wealth gain–the main form of income for the ultra-wealthy–may ever be taxed.
Under the Trump tax law, the top 1% of taxpayers got an average annual tax cut of $61,000 a year while the bottom 60% of American households only received about $500. Those big tax cuts for the wealthy cost the rest of us, adding over $2 trillion to the national debt. Now, leading Republicans in Congress are insisting on cuts to federal programs. services and benefits because of the mounting debt.
Yet despite Congressional hand-wringing about the debt, many Republicans are urging an extension of the Trump tax cuts that would lavish even more money on the wealthy in the coming decade. Congressional Republicans have already introduced the TCJA Permanency Act to make permanent parts of the Trump law that would otherwise expire at the end of 2025. The bill would cost $288.5 billion in 2026 alone and heap more benefits onto the wealthiest Americans while continuing to offer very little that benefits the rest of us.
As President Biden has pointed out, there are better ways to deal with the debt. Biden has proposed letting the Trump tax cuts expire on time, raising taxes on price-gouging corporations and the wealthy that have for too long avoided paying federal taxes, as well as closing the loopholes that unfairly privilege the wealthy. Already, the President is implementing a law that enables the Internal Revenue Service (IRS) to finally enforce tax payments from wealthy tax cheats making over $400,000 a year and enacting a corporate minimum tax so that billion-dollar companies can’t get away with paying $0 in Federal income taxes anymore.
These measures make the tax system more fair and ensure that the wealthiest Americans are contributing more toward supporting the economy that made them so rich to begin with. Paying taxes is everyone’s responsibility and we all benefit from the investments that tax dollars support. It’s time that those prospering the most from our economy and society–billionaires, millionaires, and large corporations–start paying their fair share.
