By Reverend Sandra L. Strauss
Did you know that an emergency nurse who cares for COVID patients or a truck driver who delivers the food and essentials that support us even during a deadly pandemic pays more taxes than the billionaires living on Wall’s investments? Street? This is because our tax code unfairly favors wealth over work: the maximum tax rate on the main sources of investment income (20%) is only about half of the maximum rate on wages. and treatments (37%).
Most of us live day to day paying a job. But the super-rich let their money do its job for them. Their income is largely in the form of investment gains: the growing value of their stocks, bonds, real estate, private companies and more. When they sell one of these investments for more than the purchase price, it is called a âcapital gainâ. It is capital gains – and a related payment to shareholders known as âdividendsâ – that benefit from the tax rate cut by almost half.
This is how billionaires enjoyed obscene gains in their wealth during this pandemic, while millions of regular workers lost their jobs, small businesses, incomes, healthcare and more. In Pennsylvania, 17 billionaires more than doubled their fortunes during the pandemic; their wealth rose from $ 28.4 billion in March 2020 to $ 61.4 billion until August 17 of this year. During roughly the same period, 3,365,507 Pennsylvanians lost their jobs, and many of them lost health care as well.
But it is worse. Not only do the rich get richer while millions of us barely make it, the rich can also keep their wealth tax-sheltered with a special tax break that allows a lifetime of investment income completely avoid income tax forever. . This loophole is called a âreinforced baseâ.
Another way our rigged tax system rewards wealth over work is how little it charges the corporations that the wealthy own through their stocks. The richest 10% of Americans own almost all of the shares of companies in the country. Last year, 55 major companies, including FedEx, Nike and Salesforce.com, paid no federal income taxes despite combined profits exceeding $ 40 billion. Multinational corporations dodge taxes by hiding their profits and shipping jobs overseas.
This award is in addition to the Trump tax law of 2017 which already gave companies a significant discount on their taxes, from 35% to 21%. Under the same law, millionaires also received significant tax breaks, while average families received much less. In 2020, the richest 1% of Pennsylvanians got an average tax break of $ 49,510, while middle-income people got an average reduction of $ 770.00.
President Biden and his supporters in Congress want to start dismantling this rotten system by rewarding work, not just wealth. Their reforms would ensure that the super rich, those who earn more than a million dollars a year, pay the same tax rate on their investment income as they do on their wages. They would close the loophole on the enhanced base for capital gains over $ 1 million. And they would reduce overseas corporate tax evasion and raise the corporate tax rate to ensure that big companies pay a fairer share and keep well-paying jobs here.
No one earning less than $ 400,000 a year would pay higher taxes under this plan.
Income from fairer taxes on the rich would help working families by making health care, child care and education more affordable; and offer tax credits to working families so they have more money to spend and save.
If these tax reforms and public investments make sense to you, you are not alone. Polls consistently show that Democrats, Independents and even Republicans want the rich and corporations to pay their fair share and for that money to be used to improve the lives of working families.
The rich and the politicians they finance obviously want to keep a system that favors them. This is why they attack these reforms with bogus arguments. None of us should be fooled.
As people of faith, we believe that all people are created in the image of God and as such deserve to live in safety and health, with dignity and respect. We live in a country with more than sufficient resources for all, if all contribute equitably to sustaining our economy so that all can live the abundant life that we believe God wants for everyone, not just the rich.
This year we have a historic opportunity to change our tax code so that the rich and businesses pay closer to their fair share and that we have enough money to invest in the needs of working families. We urge members of Congress in Pennsylvania to support this effort.
Reverend Sandra L. Strauss is the Director of Advocacy and Ecumenical Outreach for the Pennsylvania Council of Churches. For more information on the Council, please CLICK HERE.