Photo via pxHere.com
By Marty Marks
If you bought tickets to a professional baseball game and wanted to sit directly behind your home team’s dugout, you would expect to pay more than if you were buying tickets in the upper deck, nose-bleed section down the right field line. Behind the dugout you might get other benefits beyond a nearly perfect on-the-field view such as being close enough to grab an autograph, more frequent visits from the beer vendors or a ball tossed into the stands by one of your favorite players. You would, or should, expect to pay more for the extra benefits your premium ticket gets you.
If we think of the economy as one big baseball game, there are certainly premium seats, cheap seats (like the ones I usually sit in) and a range of values in between.
If you have one of the premium seats in the economy like Jeff Bezos or Bill Gates, you certainly should expect to pay more. It seems to make sense to me, like going to the baseball game, the better your seat in the economy and the more benefits you get, the more you should pay.
People who benefit more from the system reasonably can be expected to pay more for the advantages the system begets.
But that is not how it works today. If we think of paying taxes as the way we buy our tickets for our seats in the system that is our economy, some of the people with the best seats are not paying a dime and others who are sitting in good seats and receiving a disproportionate amount of economic benefits are not paying their fair share.
According to the Institute of Taxation and Economic Policy (ITEP), at least 55 major U.S. Corporations paid $0 in federal taxes for 2020. Companies like Archer Daniels Midland, FedEx, Nike, Dish Network and Salesforce paid no taxes on profits totaling billions of dollars. Furthermore, if the 55 free-rider companies cited by ITEP had paid the current 21% corporate tax rate (down from a pre-Trump era corporate tax rate of 35%), the U.S. treasury would have netted $8.5 billion instead of having paid these same companies $3.5 billion in tax rebates.
Top Democrats in the U.S. House are pushing a plan that raises as much as $2.9 trillion to pay for President Biden’s human infrastructure proposals.
Highlights include raising the top rate on wealthy individuals from 37% to 39.6% for individuals earning $400,000 per year and couples earning $450,000; those who earn more than $5 million will pay a 3% tax surcharge; the plan also raises the top capital gains rate from 20% to 25%. The House proposal is significantly less than what President Biden was originally looking for but likely reflects what can actually bring moderate Democrats on board to pass it via the reconciliation budget process, likely without a single Republican vote.
What’s the big deal? First let me say, like most of my friends, I only have passing acquaintances (if any connection at all) to the 1.8% of Americans who earn $400,000 or more.
Quite honestly, if the economy was a baseball game the top 1.8% of earners would be sitting in skyboxes and not in the stands with the rest of us. In reality, the tax plan the Democrats are proposing isn’t really going to change where people are sitting in the economy, it is only raising the price of premium tickets for the best seats.
The Democrat’s tax plan will take a bite out of wealth disparity. The tax cut passed in 2017 by Donald Trump and the Republican controlled Congress was a windfall for the rich and famous.
According to a Forbes analysis of a report from the non-partisan Congressional Research Service, “…the 2017 tax cuts for the richest Americans did not work.” Corporate job-creating investments did not skyrocket and workers did not see a projected increase in pay. What did happen is the federal government racked-up massive deficits and wealth inequality swelled to the highest levels of disparity in 30 years.
The Trump tax cuts once again revealed what economists and economic data has postulated for decades, trickle-down economics is only a myth. When you hear a politician tell you that tax cuts for the rich will “trickle-down” to wage earners at the lower level of our income strata, prepared to be trickled-on.
But I digress. Let’s get back to the ballgame. Most of us don’t mind sitting in the cheap seats of our economy. We just don’t want to be paying for the tickets of the well-healed fans sitting behind the dugout.
Marty Marks is a life-long baseball fan and communications specialist working with Democratic candidates and labor unions. He writes from Pittsburgh.
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