WASHINGTON – The federal tax code has become increasingly unfair over the past 30 years, giving wealthy individuals more breaks than middle- and low-income Americans, according to a new report released today by the Campaign for America’s Future. The report shows that the tax rates on the top 1 percent dropped significantly since 1980, while the relative tax burden on the middle 60 percent has increased.
Thirty years ago, the tax code was broadly progressive, reflecting shared contributions to public investments and our common good. Loopholes were fewer and covered items like home mortgages that everyone could understand and appreciate.
Campaign for America’s Future co-director Robert Borosage said this is no longer the case, because of policy decisions that should’ve been made differently. Instead of making taxes more progressive to counteract the increasingly regressive distribution of income, policymakers chose the reverse, lavishing tax breaks on the very wealthy.
“The size and number of loopholes and tax breaks available to the richest 10 percent of Americans is a scandal,” said Borosage. “It’s inconceivable to most people that billionaire hedge fund managers pay taxes at a lower rate than their receptionists. But this is increasingly where we find ourselves.”
To return America to a progressive and fair tax rate, the report recommends repealing President Bush’s tax cuts for the wealthiest individuals, instituting a “transaction tax” on financial trades to discourage speculation, taxing all types of income at the same rates and keeping the estate tax.
Every Republican senator this month pushed for another tax break for the super-wealthy, voting to raise the full exemption on inheritances from $7 million to $10 million for a couple, and to drop the top rate on fortunes over $10 million from 45 percent to 35 percent.
President Obama tried to keep the estate tax at the current rate in his budget proposals and the House agreed, but 10 Democratic senators joined the Republicans to pick a fight on the estate tax – Senators Max Baucus, D-Mont.; Evan Bayh, D-Ind.; Maria Cantwell, D-Wash.; Mary Landrieu, D-La.; Blanche Lincoln, D-Ark.; Patty Murray, D-Wash.; Bill Nelson, D-Fla.; Ben Nelson, D-Neb.; Mark Pryor, D-Ark.; and Jon Tester, D-Mont.
**NOTE: A copy of the report is available at http://www.ourfuture.org/gilded-age-taxation.**