A week ago, ProPublica, an independent, non-profit newsroom that produces investigative journalism in the public interest showed how the wealthiest Americans pay little in income tax compared to their wealth in “The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax”.
Pro big business libertarians were outraged at ProPublica’s decision to release private tax information of people who, in their view, have contributed disproportionately to the public good.
The extremely well written report left many others shocked by the findings and gleeful that the billionaire class was exposed.
Long story short, most Americans pay 14% of their income in taxes, billionaires pay 3+% on average. That’s because we tax income and not wealth and billionaire’s wealth grows much, much faster than their income.
Everyone concedes that the highlighted billionaires haven’t done anything illegal, which leaves many wanting to make our tax system much more progressive.
A few thoughts:
- As long as we tax income and let wealth slide, the Great Tax Divide will only widen. At some point, billionaires’ physical safety may very well be threatened. It is in their self-interest that we have a more egalitarian society. Therefore, it is in their interest to pay more in taxes.
- We need to invest a whole lot more in the Internal Revenue Service. Specifically, we need more, better trained agents who understand of how the ultra-wealthy avoid taxes sometimes illegally. Right now the ultra-wealthy are emboldened by the ridiculously low rate at which they are audited.
- Conservatives often defend things like video surveillance by asking, “Well, what do you have to hide?” In that same spirit, when it comes to personal income taxes, maybe we should go the way of Norway.
- Debates about the ethics of ProPublica’s decision-making will continue especially since they’ve said this is just the first of several related reports. As will debates about the implications of the data and related policy questions.