I’m interviewing a lot of candidates this week, more than usual in just one week. They all agree that the super-rich should be “paying their fair share.” I don’t even have to bring it up most of the time. But when they do, I ask them how much “fair share” translates to. Everyone has tried to avoid answering and no matter how much I press no one has a response. In fact, sometimes I feel some negativity directed towards me for asking.
When they try to worm out of it by pretending I’m talking about a person from the upper-middle class, I’ll clarify by saying I’m talking about people who are billionaires or people with $100 million. Still no responses. I didn’t realize it was such an uncomfortable question. I’m getting the impression that none of them understand that the American glory days— from the late ‘40s into the mid-’60’s-- saw marginal income tax rates over 90% for people with incomes of $400,000 and above (the equivalent of today's millionaires).
Those high tax rates contributed to very significant revenue generation, which helped fund various government programs and infrastructure development during the post-war period, particularly the interstate highway system. Funding for education programs, including the expansion of public schools and investment in higher education, was supported by those revenues. The GI Bill, enacted in 1944, provided educational benefits to veterans, fostering increased access to education. And there was more— amendments to the Social Security Act in the 1950s broadened coverage (disability insurance, dependent benefits, widow benefits and increased benefits), and increased benefits and government spending supported healthcare programs, with the 1965 establishment of Medicare and Medicaid marking significant milestones in providing health coverage for seniors and low-income individuals. And let’s not forget how the federal government invested in housing programs, including initiatives to provide affordable housing and address urban renewal. The Housing Act of 1949 aimed to improve housing conditions and increase access to decent and affordable homes. Oh, those were the days!
The super-rich— and the conservative politicians they finance and own— hate all of these expenditures and have worked-- very successfully-- to lower taxes on the rich. The tide turned with the election of the scion of one of America's richest families, JFK, who championed and signed an immense reduction of taxes on the rich— from 91% to 70%. It got much worse with the election of Ronald Reagan, who oversaw the top marginal rate go from 70% to 50% but before he left office, the Tax Reform Act of 1986 further lowered the top rate to 28%. The top rate has gone up and down since then but has never gotten to 40% again. And the loopholes… the ultra-rich have access to conservative-crafted loopholes and deductions that significantly reduce their effective tax rates, including capital gain's preferential tax rates, tax credits only available to the richest Americans, offshore tax havens, carried interest, etc.
I just got off the phone with one candidate and I should have brought up the new Tax Excessive CEO Pay Act that Bernie introduced, along with Elizabeth Warren, Ed Markey and Chris Van Hollen in the Senate and Barbara Lee and Rashida Tlaib in the House. I didn’t because I knew from what she had already said that she would never support anything like it. The legislation is meant to take on corporate greed by raising taxes on companies that pay their top executives at least 50 times more than the pay of a typical worker. Bernie: “The American people understand that today we are moving toward an oligarchic form of society where the very rich are doing phenomenally well, while working families continue to struggle to put a roof over their heads, feed their families, and pay for the basic necessities of life. The American people are sick and tired of CEOs making nearly 350 times more than their average employees while over 60 percent of Americans live paycheck to paycheck. At a time of massive income and wealth inequality, the American people are demanding that large, profitable corporations pay their fair share of taxes and treat their employees with the dignity and respect they deserve. That is what this legislation will begin to do.”
Barbara Lee, currently running for the open California Senate seat, noted that “New reports from Oxfam International indicate that if current trends persist, poverty will not be eradicated for another 229 years. With the shareholder class raking in greater profits than ever in history, I refuse to accept this future. As elected officials, we have a moral obligation to address this corrosive inequality at the source. I urge my colleagues to support workers who are fighting for a fair share of the fruits of their labor by endorsing the Tax Excessive CEO Pay Act.”
Rashida will be in the House— unless AIPAC manages to destroy her— and she’ll have to deal with some of these timid and conservative New Democrats. “Corporate greed,” she said, “is a disease that has long afflicted our country. CEOs are now making 400 times more than their average worker. It’s disgraceful that corporations continue to rake in record profits by exploiting the labor of their workers. Working families deserve to live with human dignity. I’m proud to join my colleagues in reintroducing the Tax Excessive CEO Pay Act to address the massive income and wealth inequality in our nation. It’s time for the rich to pay their fair share.”
Now, I trust her to work on what “fair share” means. “The Tax Excessive CEO Pay Act would impose tax rate increases on companies with CEO to median worker ratios above 50 to 1. If the CEO did not receive the largest paycheck in the firm, the ratio will be based on the highest-paid employee. The tax penalties would begin at 0.5 percentage points for companies that pay their top executives between 50 and 100 times more than their typical workers. The highest penalty would kick in for companies that pay top executives over 500 times worker pay. These rates, if current corporate pay patterns continue, would raise around $150 billion over 10 years. If the Tax Excessive CEO Pay Act had been in effect in 2022:
Walmart would have paid up to $754 million more in taxes.
Google would have paid up to $3.07 billion more in taxes.
Home Depot would have paid up to $840 million more in taxes.
JPMorgan Chase would have paid up to $1.04 billion more in taxes.
Nike would have paid up to $233 million more in taxes.
McDonald’s would have paid up to $92 million more in taxes.
The opposition to fair taxes, however you want to define "fair":
If companies increased annual median worker pay to just $60,000 and reduced their CEO compensation to $3 million, they would not owe any additional taxes under this plan.”
Original co-sponsors in the House include Bonnie Watson Coleman (D-NJ), Ro Khanna (D-CA), Chuy García (D-IL), Jim McGovern (D-MA), Ilhan Omar (D-MN), Pramila Jayapal (D-WA), Cori Bush (D-MO), Jared Huffman (D-CA), Raul Grijalva (D-AZ), and Jamaal Bowman (D-NY).
