Thousands of demonstrators marched on Saturday to demand that Donald Trump release his tax returns. But, barring an unexpected surprise – a W2 form issued by Vladimir Putin, for example, or a payment in kind from Anthony “Fat Tony” Salerno – we already know Trump’s ugliest tax secrets. We will reveal those secrets …
… right after this break.
Most readers will recognize that reference to Rachel Maddow’s televised release of Trump’s 2005 tax return, where viewers were kept in suspense for a total of 84 minutes before learning that Trump paid an effective federal tax rate of 24 percent that year. That was considered an anticlimax. It even led some observers to speculate that Trump might have leaked the return himself, since many people had assumed that Trump hadn’t paid any federal taxes at all for years.
That gets us to Trump’s first terrible tax secret: His tax return was not unusual. Few wealthy individuals pay the official rate, which is currently 39.5 percent, even though the rich have never been richer at any point in this country’s history. A tax return released during Mitt Romney’s presidential run, for example, showed that Romney paid just over 14 percent in 2011 (and that year may have been chosen because others were even more embarrassing.)
The tax code has been heavily rewritten by lobbyists for wealthy individuals and corporations. The resulting loopholes make it very rare for any individual or corporation, no matter how prosperous, to pay anything close to the top rate.
Given their eagerness to avoid paying the official rate, you might think that rate is excessive. But the top marginal tax rate in this country is much lower than it’s been for most of the last century, despite today’s extreme concentration of wealth at the top:
Eskow/OurFuture.org; Source: IRS.gov
Although the official rate is only slightly more than one-third of its highest levels, an entire industry has been formed to help the wealthy avoid paying it. (This story shines a light on one small corner of that industry.) As James Kwak points out, Warren Buffett – a much more altruistic figure than Trump – takes advantage of today’s tax code on a much larger scale than Trump does.
Trump’s second terrible tax secret is one he shares with the entire Republican Party: Instead of being grateful toward the country that has allowed them to accumulate such wealth, Trump and the GOP are willing to let people die for an additional tax cut. They were willing to deprive millions of people of health insurance in order to repeal a 3.8 percent tax on investment income and a tax of less than one percent on high wages. (More detail here.)
Trump’s third tax secret? The tax-driven attack on the Affordable Care Act is just the start. His tax plan represents a massive tax giveaway to his billionaire friends and associates, and to corporations that are also paying far less than the official tax rate. Americans for Tax Fairness has summarized the injustice behind Trump’s tax plan, including the fact that it would raise taxes on approximately 9 million families while lowering the top tax rate even more.
The fourth secret is this: Trump and his party don’t believe in progressive taxation at all. As we wrote recently, Trump Budget Director Mick Mulvaney recently suggested that he preferred to let the ultra-wealthy “keep their money” – an extremist and inaccurate framing that is well outside the mainstream of both Republican and Democratic thought over the last century. They especially dislike the idea of taxing billionaires to help people in need.
That’s pretty terrible.
The fifth and final secret is this: Trump and his billionaire friends are able to pay these low tax rates because rich people have far too much influence over our political system. In fact, as political scientists Martin Gilens and Lawrence Page found in a 2014 study, “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.”
In other words, the wealthy are de facto oligarchs who almost always get the policies they want.
In a response to their critics, Gilens and Page wrote, “The affluent are, not surprisingly, (even) better at blocking policies they dislike than achieving policy change they desire. When a policy is strongly opposed by the affluent … that policy is adopted only 4 percent of the time.”
That’s why today’s tax code is so excessively favorable to the wealthy and corporations. It’s very difficult to make changes that they dislike, and tax increases for the wealthy are certainly among the changes they dislike the most.
But that’s no reason to quit. Americans have overthrown oligarchies before, most notably at the end of the era Mark Twain described as “the Gilded Age.” (We are, by any reasonable definition, going through a second Gilded Age today.)
You don’t need Donald Trump’s tax returns to know that we need a more just tax system, one that calls upon the wealthy and corporations to pay their fair share. What’s more, the fight for fair taxation is inseparable from the fight against oligarchical wealth. That’s more reason to keep fighting.
This weekend Donald Trump tweeted that “someone should look into who paid for” the “small” rallies demanding that he release his tax returns. The real question is, who pays for all the tax breaks that are given to people like Donald Trump?
The answer is, we all do.