Inflation Reduction Act: An Advance for Tax Fairness
- The Ultrarich Have Rigged the Tax System over the Last 50 Years: In 1970 the ultraweatlhy paid about 50% of their income in taxes, today they pay 23%. Corporate profits in 1960 were taxed at 52%, and today are taxed at 21%, and with so many loopholes that many of our biggest corporations pay no taxes (source, Emmanuel Saez and Gabrial Zuchman, The Triumph of Injustice (W.W. Norton, 2019)).
- The Ultrarich Have Rigged the Economy to Grab and Lion’s Share of Gains: The share of income earned by the top 1% has doubled since 1980, from 10% to 20% of national income. At the same time, the bottom 50% of wage earners have dropped from earning 20% of national income to only 12% today (source, Emmanuel Saez and Gabrial Zuchman, The Triumph of Injustice (W.W. Norton, 2019)).
- The Only Solution is Shifting Power Back to Democracy: The rigged economy and tax system was only possible because the ultraweatlhy used their resources to place our democracy in chains, taking control of our political system and the creation of public public policy with hundreds of billions in dark money spending and massive armies of lobbyists. Creating a fair tax system requires we take the power back to create a democratic tax code and an economy which benefits the working and middle class.
The Inflation Reduction Act Makes Major Steps Towards Tax Fairness
- Addressing the Defunding the IRS: The IRS by design of the ultrach currently lacks the resources to crack down on an epidemic of tax cheating by high income earners and the corporations they control. The Act provides funding for the IRS to go after wealthy tax evaders and corporations, raising at least $124 billion from wealthy tax cheats over the decade.
- Corporate Minimum Tax a Step Breakthrough for Tax Fairness: Many of the most profitable corporations pay no taxes because they are able to use a myriad of loopholes to eliminate all their taxable income. The Act institutes a 15 percent minimum tax rate on the wealthiest corporations, raising roughly $300 billion in revenue, and imposes a 1 percent tax on stock buybacks used to enrich wealthy shareholders, raising an additional $73 billion from large corporations. This also taxes the ultrarich, who make their money through corporations.
- The Act Holds the Middle and Working Class Harmless: Despite Republican lies, there are no new taxes on any family making $400,000 or less, and no new taxes on small businesses. This is a bill that finally goes after the wealthy and corporations.
- The Tax Provisions are a Step Forward: The tax provisions of the Inflation Reduction Act meet Citizen Action’s standards for a good compromise because they provide immediate benefits while advancing initial steps towards more transformational reforms if we can build the grassroots power to win them.
Next Step to a Fair Tax System is the Billionaires Tax: President Biden strongly advocated a Billionaires Tax which would set a 20% minimum tax for people who make $100 million per year. The proposal was blocked by the two most conservative Senate Democrats, Senators Manchin and Sinema, and all 50 Republicans The only way to win this next advance is to build the grassroots people power to add to the Senate majority, including by winning the Senate context in Wisconsin, and then build grassroots pressure for action in the next Congress.