It’s not news that in 2019, just before the COVID-19 pandemic hit, income inequality had reached the widest gap in more than half a century, according to the United States Census Bureau.
We’ve been talking about “the shrinking middle class” for years. It’s been the subject of conversation with friends and grandparents and at get-togethers and cocktail parties. It seems it wasn’t long ago that there were way more people — not just high-level executives — who could afford to own a home.
According to the nonpartisan Congressional Budget Office, the share of all before-tax income acquired by the highest-earning 20 percent of households increased from 46 percent in 1979 to 54 percent in 2016. For the top 1 percent, the income share went from 9 percent to 16 percent — more than the income brought in by the bottom 40 percent of households combined.
COVID made it worse. During the lockdown, reports that Amazon’s then-CEO Jeff Bezos was on track to become a trillionaire hurt deeply as Amazon workers were in a bitter battle for workplace protections and personal protective equipment. That year lost to the pandemic amplified inequities that economists warn could be devastating even after COVID subsides. And Congress, as of this writing, has yet to approve the $3.5 trillion reconciliation package that would positively affect millions of Americans most impacted by inequalities.
Passage of the 10-year Build Back Better Act would provide two free years of community college; child care assistance and two years of universal pre-K for 3- and 4-year-olds; extension of the child tax credit through 2025; Medicare expansion to add coverage of dental, hearing and vision services; plus investment in infrastructure and jobs and money to fight climate change. All paid for by raising taxes on Americans making over $400,000 a year and corporations.
The way we’re doing things makes no sense. A thriving economy can’t rely on so many Americans living paycheck to paycheck to carry much higher tax burdens than the mega-rich in proportion to their incomes. According to a recent ProPublica report analyzing the income taxes of billionaires like Bezos and Elon Musk, often the uber-wealthy are masters at evading their share of taxes. And, considering that lower-income households spend a greater proportion of their income as compared to higher-income households, lower-income families pay a higher share of the retail sales tax compared to their income. Given that the average white family has wealth nearly 10 times greater than that of a Black family (with more of it going out for retail taxes as opposed to services), it’s not difficult to see how tax codes perpetuate racial economic inequality and oppression.
Nicholas A. Bloom, a professor of economics at Stanford who was researching the underlying dynamics of income inequality, told The New York Times in 2016, “There is no reason the free market will solve this.”
The “free market,” unchecked, has only exacerbated wealth disparities and will continue to do so. Tax codes — both state and federal — that provide asylum for exploited capital but do not value the labor that builds this wealth, are complicit in theft and the struggle of the middle class. The U.S. Tax Code is a way for the government to collect revenue and then distribute it to programs and operations that benefit all of us. Equitable tax codes help build wealth by giving incentives for buying homes, furthering education and establishing financial security. Inequitable ones grow disparity by giving tax cuts to the obscenely wealthy and corporations (as did the passage of the Tax Cuts and Jobs Act of 2017.
It is easy to say “pull yourself up by your bootstraps” if you are using someone else’s boots or laces to make that leap. The United States has never had an economy that was liberatory and inclusive of all people — and it is time to utilize the current popularity of taxing wealth as a measure to build one.
Read More: Opinion: Tax the rich | Diversecity