Read

Search form

The Numbers Are In: Tax the Rich to Pay the Deficit

The Numbers Are In: Tax the Rich to Pay the Deficit
Mon, 9/3/2012 - by Paul Buchheit
This article originally appeared on Nation of Change

Conservatives force the deficit issue, ignoring job creation, and insisting that tax increases on the rich wouldn't generate enough revenue to balance the budget. They're way off. But it takes a little arithmetic to put it all together. In the following analysis, data has been taken from a variety of sources, some of which may overlap or slightly disagree, but all of which lead to the conclusion that withheld revenue, not excessive spending, is the problem.

1.Individual and small business tax avoidance costs us $450 billion.

The IRS estimates that 17 percent of taxes owed were not paid, leaving an underpayment of $450 billion. In way of confirmation, an independent review of IRS data reveals that the richest 10 percent of Americans paid less than 19% on $3.8 trillion of income in 2006, nearly $450 billion short of a more legitimate 30% tax rate. It has also been estimated that two-thirds of the annual $1.3 trillion in "tax expenditures" (tax subsidies from special deductions, exemptions, exclusions, credits, capital gains, and loopholes) goes to the top quintile of taxpayers. Based on IRS apportionments, this calculates out to more than $450 billion for the richest 10 percent of Americans.

2.Corporate tax avoidance is between $250 billion and $500 billion.

There are numerous examples of tax avoidance by the big companies, but the most outrageous fact may be that corporations decided to drastically cut their tax rates after the start of the recession. After paying an average of 22.5% from 1987 to 2008, they've paid an annual rate of 10% since. This represents a sudden $250 billion annual loss in taxes. Worse yet, it's a $500 billion shortfall from the 35% statutory corporate tax rate.

3.Tax haven losses are at least $337 billion.

The Tax Justice Network estimated in 2011 that $337 billion is lost to the U.S. every year in tax haven abuse. It might be more. A recent report placed total hidden offshore assets at somewhere between $21 trillion and $32 trillion. Using the lesser $21 trillion figure, and considering that about 40% of the world's Ultra High Net Worth Individuals are Americans, at least $8.4 trillion of untaxed revenue sits overseas.

4.That's enough to pay off a trillion dollar deficit. Reasonable tax changes could pay it off a second time:

(a) A non-regressive payroll tax could produce $150 billion in revenue.

Get ready for some math. The richest 10% made about $3.84 trillion in 2006. A $110,000 salary, which is roughly the cutoff point for payroll tax deductions, is also the approximate minimum income for the richest 10%. A 6.2% tax paid on $1.43 trillion ($110,000 times 13 million payees) is about $90 billion. The lost taxes on the remaining $2.41 trillion come to about $150 billion.

(b) A minimal estate tax brings in another $100 billion.

The 2009 estate tax, designed to impact only the tiny percentage of Americans with multi-million dollar estates that have never been taxed, returns about $100 billion per year.

(c) A financial transaction tax (FTT): up to $500 billion.

The Bank for International Settlements reported in 2008 that annual trading in derivatives had surpassed $1.14 quadrillion (a thousand trillion dollars!). The Chicago Mercantile Exchange handles about 3 billion annual contracts worth well over 1 quadrillion dollars. One-tenth of one percent of a quadrillion dollars could pay off the deficit on its own.

More conservative estimates by the Center for Economic and Policy Research and the Chicago Political Economy Group suggest FTT revenues of a half-trillion dollars annually.

Add it all up, and we've paid off the deficit, almost twice. More importantly, the avoided taxes and a few other sensible taxes could provide sufficient revenue for job stimulus without cutting the hard-earned benefits of middle-class Americans.

Add new comment

Sign Up

Article Tabs

Jeremy Corbyn, MPs

The anti-Corbyn forces within Labour might very well have achieved the complete opposite of what they aimed to achieve.

shady financial practices, financial crimes, Dodd-Frank Act, Roosevelt Institute, too big to fail, Glass-Steagall Act, Gerald Epstein, Juan Antonio Montecino

The average U.S. household loses over $100,000 to destructive activities of bankers and financiers.

Bernie Sanders supporters traveled to Philadelphia from every corner of the country this week to show their enduring support for his candidacy.

This week, as the DNC rages on, we're talking state surveillance – digging deep into the past and present with surveillance expert, Chip Gibbons from Defending Dissent

"We are in a political moment where we can dismantle not only the racist neoconservative Republican Party, but also the racist and equally destructive neoliberalism of the Democratic Party."

Greek privatizations, transit privatization, Panhellenic Railway Association, TrainOSE, water privatization, Thessaloniki Water Supply & Sewage, Greek austerity policies

Late last month, the Panhellenic Railway Association took to the streets to protest a slew of public transport privatizations scheduled to take place later this year. "The government defiantly and shamelessly gives away the national wealth," it said.

Posted 6 days 12 hours ago
Democratic National Convention, DNC, DNC protests, Hillary Clinton, Bernie Sanders, Bernie supporters, Food & Water Watch, March for a Clean Energy Future

More than 10,000 people calling for a “clean energy revolution” filled the streets here Sunday.

Posted 3 days 16 hours ago
anti-fracking protests, Keep It In the Ground, protester arrests, undercover agents

Emails obtained through an open records act request show that the Lakewood Police Department in Colorado collected details about a BLM oil and gas lease protest from undercover officers as the event was being planned.

Posted 6 days 11 hours ago

“Reverse redlining” flooded communities of color with toxic mortgages, practically ensuring default.

Posted 6 days 21 hours ago
#WebOfDenial, climate denial, fossil fuel industry, Exxon climate lies

In the U.S. Senate, champions for climate action and accountability are loudly putting the blame on think tanks and denier-for-hire front groups that have created doubt about climate science.

Posted 6 days 21 hours ago

Bernie Sanders supporters traveled to Philadelphia from every corner of the country this week to show their enduring support for his candidacy.

More than $50 billion in foreign aid is pumped into Africa annually – but did you know that roughly the same amount is illicitly siphoned out of the continent?

anti-fracking protests, Keep It In the Ground, protester arrests, undercover agents

Emails obtained through an open records act request show that the Lakewood Police Department in Colorado collected details about a BLM oil and gas lease protest from undercover officers as the event was being planned.

“Reverse redlining” flooded communities of color with toxic mortgages, practically ensuring default.

Democratic National Convention, Bernie Sanders, Jill Stein, Bernie protesters, progressives, Equality Coalition for Bernie Sanders, Migrants Rights March, Juntos, immigrant rights, Democracy Spring

We’re supposed to have a government of and by the people, but the government we have is only interested in protecting the rights of big corporations and billionaires.