A fair economic recovery is possible and affordable. It’s time for billionaires and corporations to chip in.
In Washington, Congress is debating how to help families get back on their feet after a challenging 18 months. However, with so many Montanans still struggling, we cannot afford to return to the way things were. We need to move forward to something better.
While businesses are grappling with the fallout of the global health pandemic and economic downturn, many families know that this crisis has merely laid bare the barriers they have long faced. Rising housing costs and the pressure of balancing caring for family — both young and old — have made it nearly impossible to earn enough to make ends meet. Investments in child care, affordable housing, and home- and community-based services will help people return to work and build a future for their families. They will also foster the workforce that businesses need to get back up and running.
Congress has the opportunity right now to fund these and many other critical investments by ensuring the wealthiest Americans pay their fair share in taxes. Currently, our federal tax system is riddled with loopholes that benefit the wealthiest households and corporations at the expense of investments in the rest of us. Lopsided tax cuts enacted in 2017 made the tax code even more unfair, showering the wealthiest with additional, excessive perks. In 2020, the richest 20 percent of Americans received nearly three-fourths of the tax cuts, costing our country $205 billion. Congress’s plan would make sure the richest 1 percent are paying their fair share.
Making matters worse, the top 1 percent of earners avoid $163 billion in taxes every year. A recent investigation exposed how the country’s wealthiest individuals pay far less than they’re supposed to in federal income taxes. Simply improving tax collections of taxes already due and avoided, mainly by the wealthiest, would add $1.6 trillion in revenue over the next decade.
It is long past time to make a change. Congress should do what’s necessary to ensure billionaires can’t use loopholes and other tactics to avoid paying income taxes on their fortunes.
Congress’s plan would make sure people like Jeff Bezos are paying their fair share. The proposed individual income tax changes would require the richest 1 percent to pay for 97 percent of the tax increase, which will start to address inequities in America’s tax system. And when paired with increases in the child tax credit and the earned income tax credit, these improvements will help families with the lowest incomes – who are often left out of tax reform.
What’s more, a recent study by the Institute on Taxation and Economic Policy found that at least 55 of the nation’s largest companies paid no federal corporate income taxes in 2020. The current plan being discussed by Congress calls for increasing the corporate income tax rate for companies with over $5 million in annual profits and lowering the rate for small corporations with income below $400,000. The proposal also helps level the playing field so small businesses can compete by limiting the amount of taxes avoided by multinational corporations that shift income overseas.
Corporations and the wealthiest have been getting a special deal for too long. Congress should reduce our tax code’s inequities. Most importantly, it should make the investments needed to ensure everyone is included in our economic recovery. Congress has a historic opportunity to close offshore tax haven loopholes, make billionaires pay their fair share, and go after tax cheats. And with new investments in child care, education, and housing, we can make sure all Montanans can thrive.+1
Rose Bender is Deputy Director of Research and a Senior Fiscal Policy Analyst with the Montana Budget & Policy Center - a nonprofit organization focused on research and advancement of public policies that help families living on low incomes.
MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.