Millions of Americans are one paycheck away from complete catastrophe. When I worked as a consumer advocate, I saw this first-hand when talking with people struggling to keep their lights on.
Take the example of a woman I once worked with, Ms. Garcia. When I met her, Ms. Garcia was facing a utility shutoff for an accumulated bill of $300. At 82 years old, Ms. Garcia used her monthly Social Security checks to pay rent on a studio in Los Angeles and worked as a housekeeper to cover the rest of her living expenses. As I talked to her, I tried to imagine my mom—just a few years Ms. Garcia's senior—working, and my heart broke. No one in the United States should have to put retirement off or come out of retirement to afford electricity.
As negotiations over federal spending heat up in a divided Congress, the fault lines are clear and familiar: Republicans are calling for spending cuts, while Democrats want to raise revenue.
What is also clear is that, at a time of heightened insecurity and gross economic disparities, Congress should not be cutting or sunsetting social safety net spending or taking from hardworking people like Ms. Garcia. Our elected officials should close tax loopholes, collect the billions owed by the ultra-rich, and seek to increase their taxes, especially for those who grew exponentially richer in recent years while the rest of the country struggled. There is something wrong with having most of the country's wealth concentrated in the hands of a few, and there is something even worse about those individuals holding our government hostage.
Ultra-rich Americans don't just game the system, they rig it to their advantage, and hoard their wealth through access to tax loopholes and preferential policies enforced by lawyers, accountants, wealth advisers, and the politicians they've bought. While the vast majority of Americans are one unfortunate event away from disaster, the ultra-rich—individuals who have $40 million or more in assets or earn at least $2 million per household in annual income—must pay what they owe.
There are four types of tax solutions we can use to stop the hoarding of excessive wealth by the ultra-rich: an income tax, a wealth tax, estate or inheritance tax, and changes to the rules for charitable deductions.
An income surtax would impose an additional tax on the income of individuals earning above a certain threshold—usually, in the millions of dollars. A wealth tax would curb past and existing accumulations of excessive wealth by imposing a tax on things that the ultra-rich own, like yachts, real estate, and vehicles. An estate tax would impose a tax of at least 45 percent on any estate worth more than $1 billion and could raise approximately $315 billion over 10 years. Lastly, we need charitable tax reform to address the wealth hoarding by private foundations and ultra-wealthy philanthropists. That means stepping up foundation payout requirements for large foundations, ending loopholes that allow the wealthy to use charitable contributions to evade taxes, and democratizing charitable giving by increasing charitable tax incentives for middle-and-low income Americans.
Taxing the ultra-rich will help protect our democracy by reducing their ability to influence everything, from our politics to how we educate our children, and what art we see in museums. Revenue raised by fixing our tax code will help fund our schools, our health care system, a just and equitable transition to green energy, Social Security, and more. It will help ensure people like Ms. Garcia are able to keep their lights on.
In order for this to work, we also need to enforce the rules. The new Republican House majority is planning to block funding for the IRS at a time when it is critical that the IRS receive the resources it needs to bolster its ability to audit high-income and corporate taxpayers. If Republicans are truly concerned about the deficit, it makes no sense to defund the agency charged with collecting government revenue. We must make sure the wealthiest households pay what they owe instead of evading taxes and cheating a system while the rest of us pay our taxes.
Leaders in Congress have an opportunity to fix our tax code instead of protecting the wealthiest and denying hardworking families opportunities to thrive. Some lawmakers will continue to side with the ultra-rich, but voters can and should demand that lawmakers rewrite the rules to reward work, not wealth.
Gabriela Sandoval, Ph.D., is the new executive director of the Excessive Wealth Disorder Institute (EWDi).
The views expressed in this article are the writer's own.
Uncommon Knowledge
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