$750.
That’s right, $750.
By now, most people have either seen or heard about the story in the New York Times about Donald Trump’s taxes. They know that in both 2016 and $2017, Trump filed returns saying his total federal income tax liability was only $750.
They know that in 10 of the 15 years prior to that, he claimed a tax liability of … wait for it … zero.
Zero.
Of course, his first response was that it was “fake news,” and most of the hard-core Trumpanzees will take that as gospel. After all, there is nothing worse in print than the Times, with the possible exception of the Koran.
Trump paid less in federal income tax than many people do for a medium-sized car repair.
$750.
I’m going to let that go for now, though. I doubt there’s much I could say here that would change anyone’s opinion about our beleaguered president
There is actually a more important point to be made.
How did we get to a point where people who are fabulously wealthy pay almost no income tax?
In the years after World War II, our economy boomed as it never had before. A lot of that was because our manufacturing base was unchallenged. The rest of the world was rebuilding. In addition, our tax rates were high as we paid down the public debt incurred to fight the war.
Yes, the top tax rate in the 1950s was 91 percent, but that was only for income earned above a certain level. It was no coincidence that the ‘50s were the time of least income inequality and the American middle class was the strongest ever.
But if one thing is certain, it’s that rich people want lower taxes, no matter how low their taxes already are. The tax that offends them the most is the estate tax, and some of the wealthiest people in America — the Walmart heirs — have spent tens of millions of dollars trying to get it eliminated.
Of course, that’s the only thing that keeps us from becoming a permanent oligarchy.
In 1961, President Kennedy put through a tax cut, and Republicans use that to try and convince people that if JFK were alive today, he would be a Republican. The only problem with that is that Kennedy’s tax cut only took the top rate down from 91 to 70 percent.
That’s a rate that still supported the idea of a progressive income tax and still favored investment in a growing economy instead of merely accumulating wealth. That was pretty much where it remained until the mid ‘80s when Ronald Reagan’s tax “reform” gave the rich a massive gift by lowering the top rate from 70 percent to 28 percent.
Reagan justified the cut, saying it would be revenue neutral because all sorts of deductions would be repealed.
Of course, it wasn’t true.
And that was when the biggest shift of wealth to the rich started. In 1965, the top 1 percent wealthiest Americans controlled 7 percent of American wealth. With the Reagan tax cuts, the Bush cuts in 2002 and the Trump cuts in 2017, that same 1 percent now controls more than 20 percent of American wealth.
My guess is that the pandemic this year has made it even worse. Most of the people who have lost their jobs are either working-class or small-business owners. Many are people who live paycheck to paycheck, and even when this is over, it may take them years to catch up.
If they ever do.
But those at the top have plenty of advantages. The two biggest someone in real estate like Trump has are being able to write off losses against future taxes and of course depreciation.
Some of the losses are just paper losses, too. Trump was losing money on his casinos in the early ‘90s and would have lost more, so he surrendered his stake and was able to take a loss of more than $900 million. That gave him nearly 15 years when he didn’t have to pay any taxes.
He got another huge break during the great recession of 2008-09 that enabled him to have taxes from the previous five years refunded. That gave him nearly $73 million.
I really don’t want to make this about Trump, though.
It’s much more about the damage we have done to our country over the last 40 years by tilting so much toward the rich. Fifty years ago there were only a handful of billionaires, and they were only worth $1-2 billion.
As of October 2019, there were 540 billionaires worth a combined $2.9 trillion. The top two are Jeff Bezos ($145 billion) and Bill Gates ($115.8 billion). They couldn’t go broke if they tried.
One fascinating thought:
Bezos, for example, could give away $1 billion and still be worth $144 billion, while the money he gave away could create a thousand millionaires from scratch.
I’m not suggesting that, just using the numbers to show how out of whack things have gotten.
Of course, that other number says it all.
$750.