Republicans Should Raise Income Taxes on America’s Real Freeloaders: the Wealthy and Corporations

Morris Pearl is the chair of the Patriotic Millionaires, a former managing director at BlackRock, and co-author of Tax the Rich!

Florida Senator Rick Scott, the Chairman of the National Republican Senatorial Committee, recently released an 11-point plan that outlines the policies that he believes Republicans should enact should they retake control of the House and Senate in the 2022 midterms.

In the plan, Scott made the mistake of saying the quiet part out loud – that the Republican party wants to raise taxes on poor Americans. According to Senator Scott, “All Americans should pay some income tax to have skin in the game, even if a small amount. Currently over half of Americans pay no income tax.” This change would raise taxes on some of the poorest people in America by over $1000 per year.

Scott’s plan is all too reminiscent of Mitt Romney’s 2012 “47%” claim and Paul Ryan’s “makers and takers” assertion, both of which essentially divided America between hardworking taxpayers and freeloading, lazy tax-receivers.

What’s their answer to the problems caused by this divide? It’s to raise taxes on Americans who have to work for a living, because that will make those people hate the government as much as rich investors do, and then the country will be united in voting to get rid of taxes, get rid of social programs, and get rid of government.

Just look at the last several years for evidence. Donald Trump’s only major legislative achievement was a $1.9 trillion tax bill that overwhelmingly benefited millionaires, billionaires, and corporations. At the state level, it’s even worse.

We recently saw Iowa Governor Kim Reynolds (who was chosen to give the Republican rebuttal to President Biden’s State of the Union speech this year) sign into law a bill that eliminated the state’s progressive income tax, where higher income Iowans paid higher tax rates, and implemented a flat tax, leaving the poorest Iowans now paying exactly the same rate as people earning millions of dollars a year.

In Kentucky, the Republican-controlled state legislature is expected to pass a bill that would eliminate the state’s income tax entirely in favor of relying on increased sales taxes. This regressive move would, unsurprisingly, benefit wealthy Kentuckians and hurt poor ones.

Many of these decisions are justified using the same language of fairness, freeloaders, and “skin in the game” that we’ve heard from Senator Scott. But while Scott is technically correct in claiming that over half of Americans pay no federal income tax, what he conveniently fails to mention is that most of the 57% of American households who don’t pay federal income tax simply don’t make enough money to do so. Furthermore, most of these households do actually have “skin in the game” through paying federal payroll taxes and state and local taxes.

If Senator Scott wants to go after freeloaders, he shouldn’t be looking at the bottom of the socioeconomic ladder. Instead, he should be looking at the top of it in C-suite executive offices, superyachts, and space rockets.

Just look at the two richest men in the world. In 2018, Elon Musk paid nothing in federal income taxes. While he is set to make the largest individual tax payment in US history – $11 billion – for the 2021 fiscal year, this is just 9% of the $121 billion that he added to his fortune last year, lower than what any ordinary worker pays on their first $10,000 of taxable income. His company is no better. Despite raking in a record $5.5 billion, Tesla will pay nothing in corporate taxes for the 2021 fiscal year, just like they did in 2020 and 2019.

Similarly, Jeff Bezos paid nothing in federal income taxes for two years out of the last fifteen, and when he did pay between 2014 and 2018, his effective tax rate was around 1%. As for his company, over the past four years Amazon has paid an average 5% effective tax rate on billions of dollars in profits, all while being one of the top employers of food stamp and Medicaid recipients.

We should not allow billionaires like Bezos and Musk and their supersized corporations to be “takers,” and we should not allow the lawmakers that work on their behalf to undermine our country’s ability to support itself. We cannot allow them to suck the lifeblood out of our collective social infrastructure – our roads, bridges, schools, courts, police forces, and more – and then give nothing back.

Our nation is at a crossroads. Are we going to go the direction of the rich getting richer and everyone else falling further and further behind? Or are we going to take the other path: the path of having the most fortunate members of our society pay a little bit of their vast fortunes so that our grandchildren can grow up in the same nation of opportunity that we grew up in?

Scott is right – Americans do want everyone to pay their fair share in taxes. But they rightly understand that it is the wealthy and corporations, not the poor, that are the true freeloaders in America today. It’s time that we honor the wishes of the American people and make the real freeloaders, not hardworking Americans just barely scraping by, pay more.

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