Just Taxes Blog by ITEP

Tax the Wealthy and Reject Austerity for a More Just and Thriving Democracy

July 1, 2024

This op-ed, co-authored with Dēmos President Taifa Smith Butler, originally appeared in Common Dreams

Two of the last five presidents won office over the objection of the majority of the people; California, with 65 times more people, has the same voting power in the U.S Senate as Wyoming; and the U.S. Supreme Court just permitted South Carolina lawmakers to dilute Black votes in drawing districts. These obvious flaws undermine our claim to be a strong democracy. One less appreciated but similarly undemocratic trend is our extreme inequality that supercharges the power and wealth of corporations and the uber-rich, weakens what the public sector can deliver, and often feeds on itself.

The U.S. tax code will be on the table in 2025 as some parts of the Trump tax cuts expire. We can use that moment to demand a just, inclusive, multiracial democracy, starting with better taxes on corporations and the wealthiest one percent.

Excessive Wealth and Corporate Power Fuel Inequality

Wealth is unequally distributed in the U.S., more than in other wealthy countries and more now than in our own recent history. Concentration of wealth leaves millions strugglingCitizens United and other Supreme Court decisions let the wealthy and corporations exert undue political power, destabilizing our communities. The elite sway voters with exorbitant spending on political ads, capture politicians with campaign contributions, and lobby elected officials to do their bidding—often undermining policy solutions supported by the public.

Taxes, it turns out, are one of the best ways to curb excessive wealth and power. But we tax the forms of income that flow almost entirely to wealthy people at a much lower rate than the income that most of us get in our paychecks. We let some income from wealth accumulate and get passed on without ever taxing it at all. And beyond property taxes, which focus on the main source of wealth for middle-income families, we don’t tax wealth itself. This fuels a tremendous racial and economic gulf.

The holder of the purse-strings in America controls more than just their ever-fattening bank accounts. Wealthy people and corporations demand decisions that enhance their fortunes, often making the rest of our lives worse. Fossil fuel companies call for special tax breaks and lobby against ecological alternatives even as their emissions led to 1,400 record-shattering thermometer readings last week. Drug companies like Purdue Pharmaceuticals, peddlers of Oxycontin, spent hundreds of billions to reduce regulation in ways that ultimately cost hundreds of thousands of lives and trillions of dollars. And financial firms write their own rules, leaving people entangled in subprime mortgages, payday loans, and other exploitative products that deepen debt.

Bolster Investments in Essential Public Institutions

Democracy requires strong public institutions, but a robust public sector only exists with adequate, fair taxation: schools, transportation, healthcare, and other basics need funding. Our tax system raises too little, leaving many communities without quality schools and infrastructure, and leaving all Americans with a weaker social contract than in other wealthy democracies. This is a problem for families of all races and incomes but it’s particularly poisonous for poor communities, urbanrural, and suburban.

The result: the wealthiest opt out of public institutions and set up parallel segregated systems which only they can access. They are then even less invested in the public good, further motivating them to siphon resources and seek lower taxes. See, for example, how wealthy families exploit private school voucher credits to make a quick buck for themselves, at public schools’ expense.

The list goes on. State colleges and universities get too little public funding, generating higher costs and deeper debt for working-class students. High wealth plus low taxes means plenty for elite private clubs but constrained resources for parks and recreation centers. And our paltry care economy means even middle-class families struggle to afford care for children or aging parents.

When we reimagine and bolster public goods, we reinforce the scaffolding that helps every person obtain economic security, build wealth, and experience upward mobility. These build economic power for the people, mitigate concentration of power, and make our democracy more inclusive in the process.

Strengthen Our Democratic and Economic Systems

When the vast majority of us live with economic precarity, America can’t be called a functioning democracy. And when people see their own public communities in shambles, they lose faith that their vote counts or their civic participation matters in making good lives for themselves and those they love.

Reforming our tax code can repair past economic harm, center working-class people, and bolster systems that support quality of life for all. We must consider and fund a different vision where everyone gets excellent schools, affordable colleges, modern ecological infrastructure, and the care they need for their families – from the littlest infants to the oldest grandparents – to thrive. It requires empowering regular people to use their voices to ask for and get what they need. It necessitates that much more of our collective resources be directed not into bank accounts of billionaires, but into the ecosystem that serves us all. A more just tax system strengthens our democracy, and a more inclusive democracy improves the tax code.

As the 2017 tax cuts come up for reauthorization in 2025, we are poised for a tremendous leap forward if we reject the austerity and undemocratic excess of recent decades and prioritize fairness, abundance, and freedom.


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