The main reason for the drastic fall in tax rates for wealthy Americans over the past 75 years is not the reason many people would guess. It’s not about lower income taxes (although it definitely plays a role), and it’s not about lowering property taxes (though they’re also important).
It was the biggest tax boon for the wealthy The sharp drop in the corporate tax rate.
In the 1950s, 1960s, and 1970s, many companies paid about half of their profits to the federal government. The money helped pay for the US Army’s costs and investments in roads and bridges, schools, scientific research, and more. “Dirty little secret,” Richard Clarida, economist who is now vice chairman of the Federal Reserve, He once said, “Is that the corporate income tax is used to collect a fair amount of revenue.”
But since the mid-20th century, politicians from both parties have supported cuts in the corporate tax rate, often under intense pressure from US companies. The cuts have been so large – including President Donald Trump’s 2017 tax reform – that at least 55 large companies are I paid zero federal income taxes last year, According to the Institute for Taxation and Economic Policy. Among them: Archer Daniels Midland, Booz Allen Hamilton, FedEx, HP, Interpublic, Nike and Excel Energy.
“Currently, the United States collects less corporate tax revenue as a proportion of economic output compared to nearly all other advanced economies,” Alan Rapaport and Jim Tankersley write for The Times.
The tax cuts have often been justified by the economy as a whole Will benefit – That lower corporate taxes will lead to expansion of the company, more jobs and higher incomes. But it didn’t go that way. Instead, economic growth has been modest since the 1970s. Income grew more slowly than the economy for each group except for the wealthy.
It turns out that the US economy does not perform very well when tax rates for the rich are low and inequality is high.
Corporate taxes are taxes on wealth
Corporate taxes are an important part of the total taxes that wealthy people pay because so much of their holdings tend to be shares. As owners of companies, they actually pay corporate taxes. Most of their income does not come through a salary or bonus; It comes from the proceeds of their wealth.
“In fact, the only big tax for these billionaires is the corporate tax that they pay through their companies,” Gabriel Zucman, Economist and tax expert at the University of California, Berkeley, tell me. “The main reason the American tax system was so progressive before the 1980s was the exorbitant taxes on corporate profits.”
President Biden is now trying to reverse some (but not all) of the corporate tax decline. His plan It will raise the corporate tax rate, penalize companies that transfer profits abroad and establish a rule aimed at preventing companies from paying zero taxes, among other things. The money will help pay for his infrastructure plan. At the White House yesterday, Biden said, “It’s straightforward, it’s fair, he’s financially responsible, and he’s paying for what we need.”
But one chunk of the cash is clearly inconsistent with the facts: The long-term drop in corporate taxation doesn’t seem to have delivered many benefits to most American families.
For more: If you haven’t listened to yesterday’s episode of “The Daily” – which featured Jesse Drucker Explains how the Bristol-Myers Squibb Company avoided taxes – I recommend it.
Live live: Beginning in the late 1950s, Lois Kirschenbaum has been a staple of New York opera, as her constant desire to get behind the scenes helped her make friends with some of the industry’s biggest stars. She died at the age of 88.
Arts and ideas
What does love look like
“Love is a slippery and intangible thing,” novelist Celeste Ng wrote in an article for The Times.
Captured in surprising and ordinary moments: parents drive an hour and a half to visit children and replenish their refrigerators; A young couple ride a motorcycle at night; A sleeping child surrounded by a dinosaur game.
In the wake of Violence and harassment against Asians swell In the United States, nearly 30 Asian and Asian American photographers have shared what love looks like in their lives.
The photos come from Oregon, Hawaii, Georgia, Taiwan, Japan and beyond. There are glimpses of food, texts, and emails from sleepy friends and loved ones – “the everyday and mundane little things that add up to what I understand as love,” wrote photographer Anne Rong Shuo.
Play, watch, eat
what are you cooking
In the garden
Make friends with fungi, The kind you grow and the ones that emerge on their own.
what are you reading
“First Person Singular”, Haruki Murakami’s new collection of stories, allows “the author’s voice – or what feels like his own voice, which Philip Gabriel has subtly translated – into narrations”, David Means He writes in the review.
in late Time of night
Late night hosts talked about Rep. Matt Getz.
It’s time to play
Thanks for spending part of your morning with the Times. see you tomorrow. – David
PS New York City changed the name Longacre Square to Times Square, in honor of The New York Times’ move to the area, 117 years ago today. The Times story immodestly – but correctly – Predicted The new name is “unlikely to be forgotten”.
you can see The first page printed today is here.
Lalina Fischer, Ian Prasad Filbrick, Tom Wright Pearsanti and Sanam Yar contributed to The Morning. You can reach the team at firstname.lastname@example.org.