Paying your fair share of taxes is at the heart of basic fairness. Will we all play by the same rules? Will our government have the resources it needs to provide the services we all depend on, from our schools to our roads to our firefighters?
The importance of fair taxation has taken on new urgency. As corporate profits and billionaire wealth soar, and climate change sleepwalks toward catastrophe, families struggle to pay the bills.
“You can have democracy in this country, or you can concentrate vast amounts of wealth in the hands of a few people, but you can't have both,” said former U.S. Supreme Court Justice Louis Brandeis. He left behind famous words.
Oxfam has been tracking the growth of corporate power and billionaire wealth for years. So we ask: Will billionaires and mega-corporations pay their share, and what does it mean for the ambitions of ending poverty and injustice if the wealthy pay their share? We will answer this question step by step.
Are billionaires paying their fair share?
America's billionaires pay a lower tax rate than most teachers and retail workers. Thanks to a tax system that favors income from wealth over income from work and a number of tax avoidance strategies, the wealthiest among us send a smaller percentage of their income to the federal government than most working families. is to be paid.
Here's what we know:
- US billionaires are 46% ($1.6 trillion) richer than they were in 2020.
- A 2021 White House study found that America's 400 wealthiest billionaire households paid an average federal personal tax rate of just 8.2%. For comparison, the average American taxpayer in the same year paid 13%.
- The 25 richest Americans paid $13.6 billion in taxes from 2014 to 2018, on an income of $401 billion, according to leaked tax returns uncovered by a ProPublica investigation. The “real” tax rate is only 3.4%.
It's not paying its fair share. Rather than rewarding wealth over work, our tax system should ensure that billionaires play by the same set of rules as everyone else. It's good for the planet and essential to preserving our democracy.
So what should they pay?
- Raise tax rates: The IRS law should raise personal tax rates for billionaires and equalize taxes on capital gains and labor income, ensuring that labor is not taxed more than wealth.
- Tax wealth fairly: Billionaires should pay a wealth tax and tax loopholes that allow the wealthy to stash their profits in tax havens should be closed.
“In fact, taxation is a sign of legality and justice,” Pope Francis said.
Are giant corporations paying their fair share?
Although giant corporations have made record profits in recent years, many still pay lower taxes than most working families. Part of the reason is that many people take advantage of generous tax breaks and stash their profits in tax havens around the world.
Here's what we know:
- At least 55 of the largest U.S. companies paid no federal corporate taxes in 2020, according to the Institute on Taxation and Economic Policy.
- The U.S. government is estimated to have lost approximately $135 billion in revenue to corporate tax avoidance in 2017. By contrast, corporate philanthropy amounts to less than $20 billion annually.
- Corporations will shift nearly $1 trillion of global profits to tax havens in 2022, depriving countries around the world of much-needed tax revenue.
It's not paying its fair share. Companies should do more to support the employees, consumers, and community members on whom they depend to make a profit, rather than just maximizing profits for their overwhelmingly wealthy white shareholders. It is.
So what should they pay and what should they do?
- To reduce the abuse of tax havens and the offshoring of corporate profits, companies should pay the same tax rate on foreign profits as domestic profits, and all large multinationals should pay the world's lowest tax rate.
- To end the secrecy that masks corporate tax avoidance, companies will need to make key financial data public, including country-by-country revenue, profits and taxes paid.
“We want an economy that works for everyone, not just an elite few,” said former U.S. Secretary of Labor Robert Reich.
What does it mean for the wealthy to pay their fair share for ending poverty and injustice?
Taxing the wealthy would have incredible benefits in eliminating poverty and inequality. Oxfam calculations have found that a progressive wealth tax on America's millionaires and billionaires could generate $664 billion each year to lift people out of poverty.
This type of revenue allows the United States to invest in programs such as:
- protect the climate
- Building on the climate investments in the Inflation Control Act of 2022, the creation of the 21st Century Civilian Conservation Corps, a jobs program for consumers and businesses to reduce carbon emissions and aggressively fight the climate crisis. Tax credits can be funded to help.
- lift children out of poverty
- Reinstating the child tax credit could lift more children out of poverty. This credit reached over 60 million children in her 2021, reducing child poverty by 30%. You can also fund child nutrition waivers, which 90% of U.S. schools do by providing lunches to children in need to help fight child hunger.
All of these programs would greatly benefit workers, caregivers, and communities of color, unlike corporate tax avoidance that only benefits white wealthy elites.
Gina Cummings, vice president of Oxfam America, said, The time has come to donate the appropriate amount of tax money to the cause.” Advocacy, Alliances, and Policy.
conclusion
When billionaires and large corporations rig the rules so that they pay a lower percentage of taxes than the average American taxpayer, they are not paying their fair share. Everyone should play by the same rules, and working families should not pay more than their fair share.
By raising taxes on America's richest people, taxing the wealth of billionaires, and making corporations pay their fair share, we can help the wealthy protect the climate and lift children out of poverty. You will be able to do it. And it is the key to saving our democracy and solving our planet's toughest challenges.
Hundreds of thousands of people like you are joining Oxfam to demand that the wealthy pay their fair share of tax. Your voice in this fight matters, and when we join together, our message will be impossible to ignore.
