Tax Day touches deep nerves about the fairness of our tax system and the way our tax dollars are spent. It also offers a great opportunity to talk about what we value most—and what kind of society we want to live in.
This April 15 will also be a day of tea party protests and cable news-stimulated rage. While some of this anger is misdirected, much of it is justified: It’s hard to stand by while many global corporations and wealthy individuals dodge paying their fair share of taxes.
Over the last half-century, we’ve witnessed a dramatic shift in who pays taxes. The responsibility has moved off the very wealthy and onto the middle class, off of global corporations and onto small businesses, and off the federal government and onto state and local budgets. And, by adding to our national debt, we’re shifting taxes from today’s taxpayers and onto tomorrow’s workers, who will pay interest for decades to come.
According to a new report from Wealth for the Common Good, an organization that I co-founded, the wealthy have received massive tax cuts, not only under President George W. Bush but also for decades before his election. Since 1960, America’s wealthiest taxpayers have seen their tax outlays, as a share of income, drop by almost half. The top 1 percent of taxpayers, those with incomes starting at $2 million, saw the share of income paid in federal taxes decline from 60 to 33.6 percent between 1960 and 2004. During President Bush’s eight years in office, Congress expanded tax cuts to Americans with incomes over $250,000, adding another $700 billion to the national debt.
Meanwhile, despite fifty years of "tax cutting," the share of household income that middle class households pay in federal taxes has increased slightly, from 15.9 to 16.1 percent.
Congress has failed to close tax loopholes for global corporations, allowing thousands of profitable U.S. companies to pay no corporate income taxes—at all—between 1998 and 2008. For example, General Electric generated $10.3 billion in pre-tax income in 2009, but ended up paying nothing in U.S. taxes. Global corporations dodge taxes by setting up subsidiaries in countries that have low or no corporate income tax. They claim their profits are made there and their losses are made in the United States, thereby avoiding paying any U.S. taxes. A small business, anchored in our country, has to unfairly compete against companies that utilize such loopholes.
When big corporations and high income individuals don’t pay their share, the bills get passed to the middle class and our debt grows. That’s hard to appreciate until things start to hit close to home in the form of cuts to public schools, veterans’ services, mass transit, and thousands of other services on which we depend every day. Our public service commons have been chronically underfunded for the last 40 years.
Reversing the tax shift would not only reduce the tax burden borne by the bottom 70 percent of taxpayers; it would also allow us to make long overdue investments in upgrading our aging public infrastructure and defending the commons.
In the United States, we tend to take for granted the advanced commons (public infrastructure, property, and knowledge institutions) that our ancestors built for us. We’re like fish who swim in an ocean of publicly funded services without seeing the water around us. Taxes are the way we pay for this healthy common heritage, ensuring that they exist for the next generation.
Here are five things you can do to support the commons this tax week:
- Talk Taxes with Your Neighbors. See our “Tax Day Talking Points” to clear up some of the common confusions and myths about taxation.
- Write a Letter to the Editor. It’s easy! Click here, decide your type of letter, enter your zip code, choose a newspaper. You can edit our sample letter or insert your own.
- Sign a petition calling on Congress to let the 2001 and 2003 tax cuts for the wealthy expire.
- Close overseas tax havens. Business for Shared Prosperity and Wealth for the Common Good are enlisting investors and small businesses to speak out against tax haven abuse. Go to businessagainsttaxhavens.org.
- Support a financial speculation tax. See the petition to institute a modest financial speculation tax on Wall Street transactions including the purchase and sale of financial investments such as derivatives, hedge funds, and speculative stock trades.
The most recent Nobel Laureate in Economics was recognized for her studies of cooperation, not competition.
Oregon residents voted to increase taxes on corporations and the wealthy to help fund programs that assist low and middle-income families.