The headlines have been buzzing lately that over half of the world’s money will belong to about 80 people by next year. This is especially problematic in America, where the corporate tax is higher than anywhere else in the world.
The main causes of the widening income gap in America are weakened financial regulations, tax loopholes, and companies hiding their money in international bank accounts. According to Forbes, the 400 richest Americans pay only an 18 percent tax rate. However, tax rates on the wealthy weren’t always this horrifically low.
AlterNet reported that during World War II, the tax rate on incomes over $2.6 million (in today’s value) was 94 percent. The money funded education, built infrastructure, and built up the American military. That was clearly a wartime tax to fund American military campaigns, but the fact remains that everyone paid their fair share.
As the decades progressed, however, the tax rates on the wealthy got progressively lower. By 1956, there was a 91 percent tax rate on incomes over $3.4 million, still really good. But 20 years later, in 1976, the downturn began. The tax rates decreased, as well as the benchmark income amounts with 70 percent now being taxed on incomes over $807,000.
Skip to today, include Reaganomics, and the George W. Bush tax cuts. The current, on paper, tax rate is 39 percent on income more than $440,000. However, when you factor in all the little tax breaks, incentives, and loopholes, the wealthy often pay in way less than that in taxes. That’s a lot of money being hoarded that could otherwise be used by the country to reinvest in itself.
Because the mega-rich are enabled by offshore accounts and expanded tax breaks, the government misses out on $184 billion in taxes every year. AlterNet calculated that amount as being enough to “eliminate tuition at every public university, college, and community college in the country.”
American corporations and the one percent are now hiding more money offshore than ever before. As of last November, there is $2.1 trillion worth of American money being kept in international tax havens where the money is taxed very little or not at all.
“Tax subsidies for the 288 companies over the five years totaled a staggering $364 billion, including $56 billion in 2008, $70 billion in 2009, $80 billion in 2010, $87 billion in 2011, and $70 billion in 2012,” said Citizens for Tax Justice. “These amounts are the difference between what the companies would have paid if their tax bills equaled 35 percent of their profits and what they actually paid.”
There’s also the role of money in politics to consider. Citizens United enabled corporations and the wealthy to dump unlimited amounts of money into the political campaigns that will continue supporting policies that favor the rich, and slaughter the pocketbooks of middle- and lower-class Americans.
With financial institutions like Citigroup and legislative bill mills like ALEC penning our laws, the rich and powerful have a tight stranglehold on American democracy while ordinary Americans are made to suffer. We are losing the country to the dollar bill, by the hands of the wealthy.