The real crisis for American democracy is our cowardly inability to tax the rich | Will Bunch

In 2018 — after his then-planetary-record net worth had hit $131 billion, yet right before the pandemic that would make his Amazon the alpha and omega of online shopping for so many American families — Jeff Bezos admitted he had so much money the only thing he could think to do with it was to blast himself into space. He told a reporter that year: “The only way that I can see to deploy this much financial resource is by converting my Amazon winnings into space travel ...”

“That is basically it.”

Really, Jeff? I’m thinking that some of America’s schoolkids — you know, the ones in classrooms where students don’t have the right textbooks but they do have asbestos or lead in the fountain water — might have a few ideas on deployment. In fact, they might also have some idea for multibillionaire investor Warren Buffett, who famously complained that his secretary pays a higher tax rate than he does, and then proved it by watching his wealth grow by more than $24 billion (with a “B”) in the mid-2010s but only paid $23.7 million (with an “M”) in federal taxes, or just a 0.1% rate.

Then there’s the case of Tesla and SpaceX mogul Elon Musk, whose stocks exploded despite a global pandemic and its overlapping recession to make him currently the world’s richest man, even with the fact that — according to an unconvincing Insider profile — “he doesn’t care about money.” Perhaps, but either he or his accountant cared enough in 2018 to file a return showing that Musk owed zero federal income taxes.

To paraphrase Hemingway and Fitzgerald, the rich are very different than you and me — they pay a much lower rate of taxes. OK, you probably already had a hunch this was the case, but this month a major article from ProPublica based on leaked IRS documents finally proved it. The tax records from 25 of the wealthiest Americans found the real tax rate on their expanding wealth was just 3.4%, while the typical family paid 14% of its income to the IRS.

In theory, ProPublica’s bombshell report couldn’t have come at a better time — right when Congress is considering a proposal backed by President Joe Biden that would increase taxes on the very rich and the large corporations that have done so well, even during a deadly pandemic, in order to pay for America’s many unmet needs, from fixing crumbling roads and bridges (and maybe some buildings?) to converting to clean energy to a chronic lack of child care. Getting corporations like Amazon — one of 91 Fortune 500 companies that paid no federal taxes in 2018 — and its billionaire founder Bezos to cough up their fair share could finance a lot of Biden’s $4 trillion proposals.

In reality, virtually every Republican and a handful of moderate-or-maybe-conservative Democrats like West Virginia Sen. Joe Manchin and Arizona Sen. Kyrsten Sinema have made it clear that significant new taxes on the rich or on corporations — not even the high rates the wealthy paid in the 1950s and ‘60s when the U.S. economy was booming, but merely a return to the already low levies that existed in 2017 — are a deal breaker. They insist that if America wants to stop bridges and other stuff from falling down, the dollars will have to be squeezed elsewhere.

This impasse comes at a moment when 245 years of always imperfect American democracy is now under attack on multiple fronts. On the left side of the political dial, there’s rising — and legitimate — concern about a GOP-led assault in state capitals, including measures that in 2024 could allow lawmakers to anoint either Donald Trump or whatever “Trump lite” comes next as the 47th president, regardless of the actual vote. That’s horrifying, but the nation’s inability to make its billionaires pull their own weight — a matter of fundamental fairness, supported by an overwhelming majority of voters — suggests that the American Experiment folks are trying to save is, in the immortal words of rock’s The Eagles, already gone.

» READ MORE: Until we punish American greed, no coronavirus bailout will save our warped economy | Will Bunch

The ProPublica exposé ratifies the notion that America is now a kleptocracy — our political system so weakened by years of unlimited “dark money” campaign contributions by wealthy interests that Congress is trained to serve the interests of the donor class over not only the needs but the stated desires of its voters.

In a government so finely tuned to service the needs of the super-rich, it took an illegal act — the self-appointed whistleblower who sent individual IRS returns of the wealthiest Americans to ProPublica — to show the public how low their effective tax rate really is. My position on that maneuver is a complicated one. As a progressive who a) believes citizens’ privacy should be protected and b) finds past misuses of the IRS to target individuals, by the likes of Richard Nixon or J. Edgar Hoover’s FBI, to be appalling, I condemn this leak. It was wrong. But once that information reached ProPublica, its journalists had an obligation to determine if the material was real and, more importantly, in the public interest. And clearly, it is.

The train of fundamental economic unfairness in America has been a long time coming. In 2019, an analysis by economists Emmanuel Saez and Gabriel Zucman with the fitting title, The Triumph of Injustice, used official (and anonymous) IRS data to show how the tax rate paid by the 400 wealthiest American families declined from 56% in 1960 and 47% in 1980 — when Ronald Reagan won the presidency — to just 23% by 2018. That is less than the 24.4% paid by the bottom half of U.S. households. The road to this outrage took years of reducing top marginal tax rates, steep cuts in capital gains and estate taxes, slashed IRS enforcement and approval of tax shelters — deliberate political acts by Congress and presidential administrations.

That stunning — but not personalized — finding failed to get a lot of attention. But in a celebrity culture that so recently elected a celebrity fascist as president, maybe the tabloid-style details of the ProPublica report — how Bezos was able to claim in 2011 that despite a net worth of $18 billion he’d lost money, even claiming a $4,000 child credit, or how Mike Bloomberg paid no federal taxes some years even as he pumped hundreds of millions of dollars into a 2020 bid to buy the White House — could make a difference. The reporting also reveals loopholes like that one that allowed billionaire Trump backer Peter Thiel to use the Roth IRA vehicle — meant to help middle-class Americans retire — to instead build a $5 billion tax-exempt nest egg.

But the truth is Americans didn’t need salacious details to believe the rich should pay higher taxes. Last year, a Reuters poll found 64% of Americans strongly or somewhat agreed that “the very rich should contribute an extra share of their total wealth each year to support public programs.” That included a majority of rank-and-file Republicans. Despite that strong support, Biden’s initial plan to pay for his ambitious $2 trillion-plus infrastructure agenda was a modest one, focused mainly on the corporations that also dodge taxes. But merely proposing a corporate tax rate of 28% — less than the 35% rate when Trump took office in 2017 — was a bridge too far for Congress.

Republicans like Senate Majority Leader Mitch McConnell and the lobbyists and donors behind his power — like Business Roundtable president Joshua Bolten, who said “policymakers should avoid creating new barriers to job creation and economic growth, particularly during the recovery” — called new taxes a nonstarter. But even moderate Democrat Manchin — under heavy pressure from the oil-billionaire Koch family — freaked out at the modest 28% corporate rate. So far, the desire of a majority of American voters for tax fairness can’t match the clout of a donor class that in 2010 was given carte blanche by the Supreme Court’s Citizens United ruling to pump dollars into the body politic.

The bipartisan infrastructure deal announced by Biden last week — much less ambitious than his initial proposal, yet already on shaky political ground — would actually aim to squeeze additional tax dollars from the Bezos crowd, not by higher rates but through aggressive IRS enforcement. If enacted, these audits are yet long overdue — but let’s also be clear that keeping tax rates for the rich at just a fraction of what they were before the “Reagan revolution” produced massive inequality is an act of rank political cowardice.

The Democrats may get another crack at this, if they proceed with the current plan to increase spending on the public good, for things like child care or climate action, through a budget reconciliation bill that could be passed with 51 votes. Even then, though, the party will have to work around Manchin’s and other moderates’ Koch-fried reluctance to do more than tinker around the margins of our massive tax unfairness. If so, the anger that has permeated American politics on both the right and the left — which is rooted in this lack of equity — will only get worse.

Over the rest of 2021, you’ll hear a lot about preserving the rotting foundation of U.S. democracy, by somehow pushing to end voter suppression and the increasing anti-democratic bent of the GOP. Meanwhile above the surface, the actual house is on fire from space-traveling plutocrats pocketing the funds that could make America a fair and livable place for the middle class. Saving the American Experiment is only an academic exercise unless it works for all the people.

» READ MORE: SIGN UP: The Will Bunch Newsletter