ProPublica published a stunning exclusive report documenting how billionaires like Elon Musk, Michael Bloomberg, and Jeff Bezos pay very little – sometimes even nothing – in income taxes. Based on a cache of confidential IRS documents, the ProPublica report found that the nation's 25 richest Americans "saw their worth rise a collective $401 billion from 2014 to 2018," but in that same time they "paid a total of $13.6 billion in federal income taxes in those five years," a total that "amounts to a true tax rate of only 3.4%."
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ProPublica’s reporting on the wealthy's true tax rate is ironclad proof of what we’ve long known to be true: Everyday working Americans pay a much higher percentage of their net worth than billionaires do – and the wealthy are able to do it perfectly legally. Our broken tax policy has created some of the wealthiest corporations in the history of the world and helped to divert $50 trillion away from the paychecks of working Americans and toward a handful of wealthy people.
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Take Elon Musk, for example – the world’s third richest person, worth about $153 billion dollars. If he paid the same percentage in taxes as the average American, his day-to-day life wouldn't change at all. He'd still be able to fly on his private jet to any of his homes, terrestrial or otherwise, whenever he chooses. He'd vacation in the same spots, eat the same food, enjoy the same fame, and enjoy the same status that he enjoys right now.
But if all the Elon Musks who right now pay very little (or even nothing) in taxes were held to the same standards as average Americans, the lives of everyday Americans would improve in immeasurable ways. The government could provide affordable child care for every parent, allowing people more freedom to join the workforce. Our infrastructure could again be the envy of the world, rather than a slowly unfolding disaster movie. This social safety net would allow Americans the security to start small businesses, take bold career risks, and establish better lives for their children. Why should just the top 1% hoard all the wealth while the rest of America is struggling to get by?
This isn’t some pie-in-the-sky idea for how society should work. It’s how plenty of other countries function effectively. Take Denmark, for example.
In a recent episode of Nick Hanauer's podcast, Pitchfork Economics, millionaire Danish entrepreneur Djaffar Shalchi discusses how Denmark’s system is the real product of the “American dream” and why he's an advocate for wealth taxes: As a millionaire many times over, Shalchi has a very high tax bill. He says he pays more than 50 percent of his annual earnings to Denmark in an average year, and depending on how good a year he's had, the tax bill "can go as high as something like 70 percent" of his annual income.
But while wealthy Americans love to complain about taxes, Shalchi knows that he gets great value in return for what he pays. In Denmark, "I don’t see people sleeping in the streets like I see in many other countries," he says. "We don’t leave anybody behind in Denmark. Everybody can make a pretty decent living. And we have security, which is extremely important for everybody."
When people don't have to worry about basic health care, education, or where their next meal is coming from, life changes from a zero-sum game to something to be enjoyed. "That’s why we are always among the top 10 in the world when happiness reports come out every year," Shalchi says. High-tax Scandinavian countries are always competing with each other to top the UN's annual Happiness Report, while America tends to stagnate in the mid-to-high teens.
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"Nobody is self-made," Shalchi adds. "Everybody is directed by the society, their friends, and so on." The Danish welfare system provides the security for smart people like Shalchi to become wealthy.
The only reason this sounds so foreign in the United States is because the worst of the worst trickle-downers have conditioned us to just be happy with the leftover scraps. They’ve conditioned Americans to think if we create a social safety net, somehow their wealth will decrease because of taxes. But in reality, the only thing they’ve done is shrunk their tax rate to be LESS than that of the average American family, and for what? So they can own two yachts, charter their private plane, and for some, even take a seat on their private rocket and fly to space. I can’t stress this enough: Life in America does not have to be a zero-sum game. We can all prosper in our economy, and thus, have a better quality of life.
So what will it take to build a happier, more equitable America? On the policy side, it will take better wages and protections with ordinary workers, as well as taxes on all income at 45 percent. On top of that, reinstating corporate taxes and more taxes on wealthy people. That alone could combat poverty, drastically reduce child care costs, and make community college free for all.
But the other side of the equation is you, John. An overhaul of our nation’s tax structure and social safety net policies will take consistent and significant grassroots advocacy. So in light of this bombshell reporting from ProPublica, we need 5,000 members of this team to speak out and urge Congress to take drastic action to reduce wealth inequality. Please respond before our 11:59 p.m. deadline:
Should the ultra-rich pay a higher percentage of taxes than the average American?
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The evidence is clear that wealth inequality in this country has reached sickening levels, and if people like us don’t take action, it will only get worse. Thanks for doing your part.
Paul
Are you fired up to finally build an economy that works for all Americans? Ready to learn more from the world’s leading economic and political thinkers? Listen to the Pitchfork Economics podcast now!
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