Will The Wealthy Finally Pay A Fair Share to Restore America?

April 7, 2021

By Joe Rothstein

Roll up your sleeves. There’s about to be a big fight. The headlines say the battle will be about President Biden’s American Jobs Plan. But jobs won’t be the main issue. Taxes and the future of American capitalism will.

Even the U.S Chamber of Commerce is in favor of spending hundreds of billions of dollars to upgrade American infrastructure. But not if big business and the wealthy have to pay for it. That debate, who pays the bill for long-neglected improvements to America’s transportation, education, health, energy and social services will open the door to a long-delayed reassessment of American capitalism.

For the last half century the wealth of the nation has been tilting to those who already have a great deal of it, leaving tens of millions of Americans struggling for basic survival and the nation as a whole weaker and poorer. The imbalance has become so extreme that in 2020, 650 U.S. billionaires collectively had more total wealth than 165 million Americans at the lower rungs of the economic ladder.

The financial industry, which theoretically exists to underwrite such traditional services as business and mortgage costs and to provide ways for individuals to grow their savings, has ballooned to comprise 40% of the U.S. economy. Many of those who have grown wealthy from what is now the multi-trillion dollar gambling casino we call the "financial industry," leverage that money in vehicles like equity funds that place short term profit over healthy long term business. Those with great fortunes hire high priced accountants and lawyers and lobbyists to game the economic system to minimize their tax bills, and then hide much of that wealth in offshore shelters.

We experienced that inequality in its rawest form in 2020. In the midst of a great national crisis, while tens of millions lost their jobs, when food banks struggled with a 60% increase in the number of families who lined up for food baskets, the net worth of the nation’s 650 billionaires rose by a trillion dollars. Jeff Besos, the world’s richest person, saw his fortune rise from $113 billion to $178 billion. Members of the Walton family, heirs to the Wal-Mart fortune, collectively became $50 billion richer.

How much is a trillion dollars? Enough to cover the cost of all federal spending on Medicare and Medicaid for a year. Four times the amount of the emergency stimulus checks Congress approved in 2020.

The fact that the wealthy profited so grandly from the pandemic doesn’t necessarily mean they did anything illegal. And that makes the need for reform even more urgent. A system that legally allows so few people to accumulate such great wealth while so many Americans struggle to put food on the table is an indictment of the system, not those who reaped the windfalls.

Except.

Those who reaped the windfalls will fight furiously to keep that system intact, even against proposals as modest as those proposed by President Biden. Biden’s tax plan would increase the corporate tax rate from 21% to 28% (the actual corporate tax paid in 2018 averaged less than 8%), create a minimum corporate tax (91 Fortune 500 companies paid $0 corporate taxes on U.S. income in 2018), crack down on tax havens where the wealthy hide their assets, ramp up enforcement of tax laws and provide a number of other penalties for sending jobs offshore and hiding profits and wealth.

According to the non-partisan Congressional Budget Office, multinationals shift $235 billion abroad each year. Numerous studies estimate the U.S. loses $100 billion a year to offshore tax dodging.

The net result has been that the richest country in the world, by far, has allowed its manufacturing sector to wither, its infrastructure to deteriorate, and its programs for child care, education, health and other essential services to be chronically underfunded.

No wonder there’s so little trust that our government leaders will do the right thing for the most people. Now the bills are coming due for the free lunches the wealthy have been enjoying for at least the past half century.

Biden has opted for a modest increase in taxes on the wealthiest corporations and individuals. Those taxes should be welcomed by those who would pay them. For most, it amounts to chump change given the fortunes that would remain untouched.
But if they want to fight, the richest among us should realize that if they win this battle that only would set the stage for a Warren or Sanders type revision of the tax code in the next round. America’s economic productivity has been declining and its unity has been shredding largely due to economic inequality. Eventually there will be a reckoning.

However this particular fight ends, it will move the question of the future of American capitalism to the front burner, where it belongs.

(Joe Rothstein is a veteran political strategist and author of the political thrillers “The Latina President and The Conspiracy to Destroy Her,” and “The Salvation Project.” Rothstein can be contacted at jrothstein@rothstein.net).