Time for tax revolt:
This piece is a call for tax revolt against the wealthy that are starving America’s Treasury and making life more difficult for the majority of Americans. Tax revolts have shaped American history since the founding of our country. The Boston Tea Party is perhaps the most memorable. Americans dressed up as Mohawk Indians boarded a British vessel loaded with tea and dumped 92,000 pounds of it into Boston Harbor on December 16, 1773. The tea belonged to the British East Indian Company, which was provided special subsidies, tax advantages, by the British crown. This would result in low priced tea flooding American markets. Boston’s colonial merchants couldn’t compete and revolted.
America’s wealthy occupy a similar position today as when the colonies revolted against the British crown in the 18thcentury. Their exploitation of tax laws, many of which they have caused to be enacted thorough unjust political connections and power, needs to be abolished. We cannot grow a more perfect union with existing tax laws that are intrinsically exploitive, racist and economically unsustainable.
There are 670 billionaires in the U.S., with a total wealth of 4 trillion dollars, or twice the total wealth held by the bottom half of the population, or 165 million Americans. Since the beginning of the Covid-19 pandemic, for example, their wealth has leaped by 1 trillion dollars, or more than the entire pandemic relief bill at market close on Monday, December 7, 2020.
Americans are victims of tax laws without representation. Faulty tax laws are causing capital to flood up at rates only imaginable by financial wizards. Berkshire Hathaway, a public company primarily owned by America’s favorite billionaire, Warren Buffet, increased its net worth by $63 billion, $29 billion as a direct result of reductions in the corporate tax rate from 35% to 21% in 2019. Mr. Buffet’s responded that the tax change did indeed provide a “huge tailwind”. In Mr. Buffet’s defense, he has stated publically that he needs to be taxed more, as has billionaire Bill Gates.
Elon Musk, the business magnate and billionaire, is most known as the product architect of Tesla, and chief designer of Space X. Mr. Musk has become a celebrity among the entrepreneurial set who pride themselves on hyper-independence and the myth of making it on your own. Deeper insight reveals other forces at work.
Musk’s companies live off of government subsidies and tax incentives to prosper. Tesla relied first on rebates in California of $7,500 per auto, which made it its best selling market. Then when the rebates dried up, Musk moved on to Texas. The world’s three richest people, Elon Musk, Jeff Bezos and Bill Gates worth an estimated $462 billion live in states where they pay no state income taxes; none. State income taxes pay for such things as infrastructure, education and road maintenance. Out of 50 states, Texas ranks 43 in educational attainment.
Tesla’s financial condition is shored up by regulatory credits, fueled by taxpayer money—your money. Three months of these credits flowing into Tesla rose to approximately $428 million; they showed up in Tesla’s second-quarter financial report. These credits are, according to Forbes, almost pure profit because there are no operating expenses against them. Without these credits, Tesla would be unprofitable. This taxpayer- funded business allowed Musk to turn around and use Tesla money—public money— to buy $1.5 billion in Bitcoin because he’s speculating that his cash cow won’t last forever.
Musk’s use of subsidies—taxpayer money—your money— is a key to his business strategies and financial success. He has received $4.9 billion in government subsidies to date covering Solar City (which he bought), Space X and Tesla Motors. Musk received $1.3 billion in subsidies for Tesla’s “Gigafactory” in Nevada. While Musk played job-hungry states off against each other to get the factory, economists have commented that his projects come with a very “high cost-per-job”, whereby taxpayers are the losers in a race to the bottom. Rankings of pay for jobs against other states and comparative job categories, according to ZipRecruiter, vary between 25th to 75th percentiles.
Billionaires Elon Musk, Jeff Bezos’s and Richard Branson have business ventures that have targeted space and mars for exploration and joy rides for the wealthy. Space X built a launch operation along the Texas-Mexico border; Blue Origin built a $200 million rocket engine plant in Alabama Research Park; and Richard Branson built his Virgin Galactic Holdings space tourism center in New Mexico, receiving $220 million of state money.
All of these space projects are located in Opportunity Zones created by former President Trump. If they hold these investments for 10 years, all appreciation and capital gains will be excluded from tax, in perpetuity. The argument that these projects are creating local jobs doesn’t fit the data as local real estate agents have complained that they are hiring outside of the region.
Tax avoidance, known as subsidies, helps shore up entire industries. Musk and his billionaire friends aren’t alone in using your money to grow unsustainable business. The fossil fuel industry receives over $20 billion in tax incentives annually, with ExxonMobil receiving over $1 billion alone, while corporate farm subsidies amount to $20 billion annually as well.
There is no shortage of cash for the Treasury, it’s just stolen from all of us in tax avoidance schemes to subsidize the wealthy and corporate America.
Hoarding Cash & CEO Whining:
Apple now has over $190 billion in cash on hand. It has used tax loopholes to place cash offshore and avoid its tax obligations. When Apple used a complex legal scheme that named an Irish subsidiary to avoid taxes, Paul Krugman, Nobel Prize-winning economist referred to this move as “leprechaun economics”. Between 2004-2014, according to the EU, Apple should have paid the Irish state 16 billion dollars. Apple first lost in court, then appealed and won. It’s amazing what money and power can get done. Time Cook, Apple’s CEO, saw to it that the company’s lead attorney was rewarded with a bonus of $20 million; and since Cook has become a billionaire at Apple this might have seemed like a small gratuity.
This cash hoard is not only unproductive but bringing the $1.2 trillion parked overseas by Fortune 500 companies would result in a deferred tax bill payment of $59.2 billion.
Wealthy individuals whine about paying taxes as well. Michael Bloomberg, former New York City mayor, is estimated to be worth $ 58.4 billion, according to Forbes. When he ran for mayor of New York on a Republican ticket he spent approximately $268 million on his campaigns, giving him a huge monetary advantage. While he’s given credit for his philanthropy donating $1.8 billion to John’s Hopkins financial aid programs, all of it is tax-deductible, and represents roughly 3% of his worth. This is less on a proportional basis than most individual Americans give to charity annually. He has also defended himself as a billionaire by telling Senator Elizabeth Warren when she raised issues of billionaires not paying their fair share of taxes, “don’t kill the goose that lays the golden eggs”.
Oprah is a family favorite worth an estimated $3.3 billion. She repeatedly complains about writing $100,000 checks to the IRS. Imagine if she paid 1percent of her worth to the government as a tax, or approximately $33 million. That’s a lot of $100,000 checks. This whining belies the desire to pay no tax at all. One can hear her singing the Frank Sinatra song “I Did It My Way” all the way to the bank.
What you can do:
Time to sow the seeds of revolt. The U.S Treasury doesn’t have a spending problem for social, educational or medical programs per se; it has an income problem. Corporations and the rich are starving it of tax monies. Tax laws must be rewritten and tax avoidance must be stopped. Not only are they economically exploitative, but also they are racist and sexist. African Americans and women, for example, lack access to capital to build businesses. The tax for capital gains, which is a tax on business income, is significantly lower than the tax on earned income, acting as a preferential wealth building tax. The wealthy elites know how to exploit these tax differentials. Jeff Bezos’s Amazon, for example, paid zero tax on $10 billion in profit, due to losses to grow, called loss carries forward, against profit. The rest of us are taxed full-throttle on what we earn.
Below are simple activities to take back what belong to us as a nation:
- Petition President Biden and your congressional representatives to close all corporate tax loopholes, demand minimum right offs and defund subsidy to industries such as fossil fuel and agriculture. Reduce loss carries forward to 50 percent of their value prior to write off.
- Send emails of support for tax the billionaire’s initiatives to Senators Sanders and Warren.
- Demand 75% of all money stashed overseas to be brought home to pay tax obligations immediately
- Increase capital gains tax to a minimum tax of 25 percent on anyone earning over $500,000 annually.
- Tax all income over $1 million annually at the rate of 45 percent; and over $10 million at 50 percent.
- Require that corporations pay a minimum tax of 10 percent of all monies horded as cash annually; limit stock buybacks to 30% of cash on hand. Stock buybacks only enrich a relatively few shareholders and billionaire corporate managers.
Most Americans don’t like the idea of sending tax monies to the government, which they see as wasteful. Here’s a workable alternative strategy that could be instituted right away on a test basis: require a minimum tax of 25 percent on any monies parked or earned overseas, hoarded or reported as business income, and reduce this to 10 percent if monies are directly spent in the U.S. on local communities and states for social and economic issues within 12 months of being reported.
Important issues could be determined and prioritized by majority votes by targeted populations. Digital networks make this easy to administer and track. The government’s role could be one of catalyst, putting out a list of potential areas to fund and be voted on by local populations. This would redirect cash directly into communities where it is needed.
A tax revolt against the wealthy and corporations is necessary to help our country thrive economically and get Elon Musk and his billionaire associates off of welfare that you pay and receive nothing for.