Benjamin Franklin said there are two things we can be certain of: “death and taxes.” As the deadline for filing taxes is fast approaching, Americans are filing their returns and hoping they don’t have to pay any more tax than they’ve already paid. Many more will hope for any kind of refund based on their deductions.
The majority of Americans pay income taxes, both federal and state, although nine states do not levy a state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. But living in a state without an income tax doesn’t necessarily make it more beneficial, and those residents likely pay more in property or sales taxes.
In America’s progressive federal income tax system, the more income you make the higher your tax rate. But if that is the case, how is it that a teacher, nurse, police officer or firefighter can pay a larger percentage of their income in taxes than a wealthy billionaire? How does our system shield the rich from their fair share? Everyday Americans complain about “giving handouts” to the poor and universal health care as socialist ideals. But how ironic is it that hard-working Americans subsidize the super wealthy?
In the United States, there is a distinction between how we tax working income and how we tax investments. Investment income like long-term capital gains and dividends are taxed at lower rates, and that is one of the reasons why billionaires often pay a smaller percentage of their total income in taxes than those with considerably less money. The wealthy often utilize loopholes, too, such as stashing their profits in tax havens.
Scott received a 4 percent stake in Amazon.com when she and Jeff Bezos divorced. She's already given away more than $14 billion of her $36 billion fortune.
The wealthy also can ower their tax bill via deductions — for example, by making charitable contributions. The news that Amazon Billionaire Mackenzie Scott is giving away billions of dollars to charity is an example of philanthropy that every billionaire should aspire to, and not just because of the tax benefit. Since 2019, a year after her divorce from Jeff Bezos, Scott has given away more than $16.5 billion. Through her “Yield Giving” initiative, Scott recently gave $2 million to Community Access to the Arts, a nonprofit based in Great Barrington that serves those with disabilities through its art programs and workshops. Scott is giving $640 million to 361 nonprofits that responded to an open call for applications.
While giving money to charities is a choice many Americans embrace, including billionaires who enjoy big tax breaks, perhaps some of these charitable causes wouldn’t need as much help if targeted with adequate public funding (through taxation) to begin with.
Wouldn’t it be great if our tax dollars went toward causes like finding cures for all the various types of cancer, funding the American Society for the Prevention of Cruelty to Animals and the Special Olympics? Tax dollars pay for our public schools and infrastructure as well as police, fire, ambulance and other vital services. But these publicly funded organizations often struggle when funding is limited and lacking, which impacts us all.
The constitutional rights of corporations have been expanding since the beginning of our nation’s government. The expanding interpretation of corporate personhood has given power to corporations beyond what our forefathers could have imagined. Corporations hire workers, many of whom were educated in public schools funded by taxpayer dollars. Their trucks drive on roads and highways that are maintained by taxpayer dollars. They sell their goods for whatever price the market bears to everyday Americans. If the government is going to shield corporations, these “individuals” should be required to do far more to invest in their employees and give concessions to the consumers and communities upon which they rely for their profits.
According to Oxfam America, the United States government lost out on around $135 billion in revenue because of corporate tax avoidance in 2017 alone. Meanwhile, corporate philanthropy has amounted to less than $20 billion a year.
Imagine how the world could be a better place if corporations paid their fair share in taxes. We could fight climate change, lift children out of poverty, give fair wages to workers who struggle to make ends meet, improve our crumbling infrastructure and make the world a better place for everyone.
In January 2022, Pope Francis said that everyone should pay their fair share of taxes, particularly the wealthy, so that the weakest members of society are not “crushed by the most powerful.”
“In reality, taxation is a sign of legality and justice,” he said.
Economic inequality is a centuries-long problem in our world. But as Americans we have to ask the question: Is having the majority of wealth concentrated in the hands of a few truly a democracy?
