To tackle income inequality, we need economic justice.
Millions of Americans are working harder than ever just to keep from falling behind — families are struggling, the middle-class is shrinking, and many rightly feel that the deck is stacked against us.
Our current tax system is full of loopholes and tax breaks which allow the wealthy and giant corporations to escape their obligations, paying almost no taxes while working Americans shoulder the burden of funding social services, government programs, and critical investments. This hurts all of us who work hard and play by the rules, and transfers more and more wealth to the richest Americans.
Put simply, economic justice and equal economic opportunity cannot be achieved without tax fairness.
It’s time for Congress to support the American people, instead of the wealthy donors and well-connected lobbyists that unfairly benefit from a rigged system. Creating an economy that works for everyone requires bold and progressive tax reform that raises much more revenue from the wealthy and from big corporations, which currently pay lower tax rates than those they employ.
The fight for economic justice starts with taxing wealth the way we tax work. Currently, income derived from wealth — capital gains and dividends — is taxed at about half the rate as income from labor. Middle-class families shouldn’t pay a higher tax rate than millionaires and billionaires. There are clear steps we can take to correct this deeply unfair system. We can institute the Buffett Rule, first proposed by President Obama, which would institute a minimum tax rate of 30% on people earning more than a million dollars a year. We can also create a surcharge above the top marginal tax rate, re-establish an effective and fair estate tax, tax capital gains when assets are inherited, and place a Wall Street Speculation Tax on the trading of stocks, bonds, and other financial products — which would help curb volatility in the markets.
To effectively combat poverty, we must also respond to the economic challenges faced by lower-income workers. In addition to statewide and nationwide minimum wage increases, we can raise take-home pay with a direct wage subsidy that sets a “target wage” in every locality, federally subsidizing wages to meet that target without harming local businesses that operate there. Wage subsidies also provide a mechanism to enforce equal pay for equal work laws, ensuring transparency and equity in wages regardless of gender, race, sexual orientation, or any other factor.
Wage subsidies will increase worker pay and workforce participation, and reduce the strain on government anti-poverty programs. A federal wage subsidy program could put at least $150 billion toward a wage subsidy by replacing the $65 billion spent on the earned-income tax credit and redirecting current spending from other, less effective anti-poverty programs for the working poor.
We must also restore the State and Local Tax (SALT) deduction that was repealed by the GOP Tax Plan. Restoring SALT is the first step to closing tax loopholes that only benefit corporations and the ultra-wealthy. Previously, SALT allowed people to deduct the taxes they pay to their city and state from the taxes they owe to the federal government. Trump’s near-total repeal of SALT is a sizable federal revenue grab, unfairly punishing blue states and liberal cities that choose to provide a higher level of services for their residents.
In my district, more than half of all households will see their taxes go up while Trump gets to decide whether to cut our funding for public schools, health care, and other services that middle- and lower-income families rely on. Taxpayers in California and New York, both populous states with high taxes and many high-income taxpayers, will unfairly pay thirty-one percent of this total tax increase.
While I support ongoing state-level efforts to alleviate the unfairness of SALT repeal, we need a comprehensive review and reform of the disastrous tax cut hastily passed by Republicans which repealed the SALT deduction, worsened inequality, and ballooned the deficit.
Taxes and wages are the best levers we have to enforce economic justice and combat growing economic inequality in our country, but our current representatives have failed to utilize them to level the playing field for working Americans. Instead, the rich are getting richer while billionaires and giant corporations fail to pay their fair share in taxes. It’s time to elect a new generation of elected officials who will restore economic opportunity through fair taxes and higher wages for every single American.