Our tax code is rooted in a simple principle: If you work hard for a living and pay what you owe, you deserve a fair shot at building wealth. As a professor of labor and employment relations, I have studied why this fundamentally American concept feels more like mythology for most working people.
Between 1980 and 2018, the top 1% of Illinois households saw their incomes rise by 111.6 %. In that same time, the median household saw a real income growth of only 8.5%. Since inflation rates reached an eye-opening 8.5% in March, that income growth has already failed to keep up with historically high costs for gas, fuel and housing.
But inflation alone doesn’t explain why working-class and middle-class families in Illinois actually pay a larger share of their income in taxes than wealthy households.
The real sources of wealth in America’s richest households do not come from hourly wages or yearly salaries. The bulk of their wealth lies in the assets they accumulate. As the value of those assets continues to rise, legal maneuvers allow the richest perpetually to avoid paying taxes on their gains in wealth.
Until the ultrawealthy pay what they owe on their gains, the entire economy will continue to divide. Congress should take this rare bipartisan opportunity to pass the Biden administration’s Billionaire Minimum Income Tax, or BMIT, and ensure that the wealthiest Americans pull their weight — just like the teachers, nurses, construction workers, police officers and working Illinoisans do with every paycheck.
It does not take a scholar to see the win-win impact of tax fairness in our future. In the next decade, the BMIT would generate upward of $360 billion to fund the projects and services that benefit us all, such as repairs for aging schools, preschool for all children and the refurbishing of deteriorating public spaces. This new source of revenue could reduce the costs of unaffordable child care and care for a growing population of older Americans and help disabled Americans live with dignity.
These are vital investments that strengthen our middle class. Unlike what working folks experience when they pay a disproportionate amount of their income in taxes, the BMIT only applies to a fraction of enormous untouched fortunes. It would apply only to about 700 billionaire families across the country, which includes around two dozen Illinoisans, but it would benefit our entire economy — including those who live off our labor income.
Working residents of Illinois will not pay this tax, but everyone would benefit from the needed investments in our communities. And while the superrich will still be super rich, their fair share would strengthen the financial security of the vast majority of Americans — which is better for everyone.
Ultimately, money from currently untaxed wealth could help us confront the long-term challenges that affect our entire economy. We could focus on securing current and new sources of renewable energy, reducing the cost of prescription drugs, helping uninsured Americans gain coverage, and expanding access to affordable higher education and housing.
With single mothers and people of color representing a growing slice of our working class, we need our economy to grow with them — not against them. The tax code is a powerful tool that can restore fairness to how we treat minimum-wage and middle-class workers who are playing by rules they didn’t create. It can help prevent those few patriarchs who own so much of America’s assets from weighting down our economy by hoarding their wealth for generations.
People who live paycheck to paycheck don’t have that kind of time.
Elected officials toss a lot of bipartisan rhetoric around about honoring America’s workers. Here’s an actual chance to turn political talking points into meaningful action. Passing the BMIT is a necessary step toward valuing work and workers the same way we value the opportunity to pursue and acquire wealth.
It’s a simple concept that we can all agree on. We know that it’s possible because it has already been done by one of Illinois’ most prominent politicians over 160 years ago. When President Abraham Lincoln signed the Revenue Act of 1861 into law, it introduced the first progressive wealth tax that would secure the future of our democracy. This tax is not new to America, but it offers new opportunities in a time when we are desperate for one.
It’s an opportunity to take the quotations off the “American Dream” — because, with a little courage from our leaders, it won’t feel like a big myth for hardworking people.
Robert Bruno is a professor of labor and employment relations and director of the Project for Middle Class Renewal, a research-based group at the University of Illinois at Urbana-Champaign’s School of Labor and Employment Relations.
via Chicago Tribune
June 6, 2022 at 07:29AM