By Craig Sandler and Susan Harley
Almost exactly two years ago, Congress passed, and President Trump signed into law, the Tax Cuts and Jobs Act of 2017 (TCJA)—the massive tax giveaway for corporations and the ultrawealthy that left ordinary Americans in the dust while adding nearly $2 trillion to the deficit. That’s why it’s only billionaires who are celebrating.
Two years later, what are the results? Corporations—who, it was promised by the TCJA’s supporters, were supposedly going to use their extra money pay their workers more and hire more workers—have instead spent more than 150 times as much on buying back their own stock as on increasing wages for workers. The promised boom in investment has not occurred. And America’s massive wealth inequality—already at unacceptable levels before the bill was passed—has only continued to worsen. Today, the wealthiest 1 percent owns 40 percent of the country’s wealth.
It is clear that if our public policy is geared toward building an economy where prosperity is widely shared, where ordinary households are not constantly on the brink of financial disaster, and where no one is forced to live on the street or in dire poverty, repealing the TCJA is a good move. But it is also only step one on a much larger path toward a fairer tax code. If we unrig our tax code, we can ensure corporations, Wall Street and the ultrawealthy pay their fair share, and thereby increase government revenues to reinvest in communities. By a margin of 2 to 1, the public overwhelmingly supports raising taxes on the wealthy.
There are a number of exciting proposals that could guarantee that corporations and banks pull their own weight when it comes to taxes. A financial transaction tax, for instance, could raise as much as $777 billion over 10 years, according to an analysis by the Congressional Budget Office. It would also discourage high-frequency trading, estimated to account for more than half of stock trades, which pose a massive risk to ordinary investors—just look at the 2010 “flash crash” for proof.
Along with the financial transaction tax, a number of other promising policy ideas could raise massive revenue by ensuring that the ultrawealthy pay their fair share of taxes. For instance the estate tax (which was notably weakened significantly by the TCJA and had already been under assault for decades) is paid out for only 0.18% of deaths among the wealthiest households. Strengthening the tax through legislation like the For the 99.8% Act (S. 309, H.R. 4857) could raise over $300 billion over 10 years.
Another option that Public Citizen strongly endorses is the Millionaires Surtax legislation introduced in Congress last month. This legislation, which would add an additional 10% tax on top of existing rates for households whose incomes exceed $2 million, would raise about $634 billion over 10 years, according to the Tax Policy Center. And these ideas need not compete with one another; taxing financial transactions, strengthening the estate tax, and adding a Millionaires Surtax are all ideas we could implement simultaneously to raise massive revenue and ensure corporations, Wall Street and the ultrawealthy pay their fair share.
It is important to remember that the hundreds of billions of dollars of revenue these proposed policies could bring in are not just abstract figures. Instead, they are an incredible opportunity to reinvest in our communities. To name just a few of the many ways this money could be spent to meet communities’ needs, we could invest in public education, health care for seniors and low income individuals, aid for the less physically and mentally able, providing nutrition assistance to the hungry, rebuilding roads and water pipes, tackling climate change and growing green jobs.
As we observe the two-year anniversary of the TCJA and recognize its disastrous effects, we should recommit to repealing that massive giveaway bill. But this is the floor, not the ceiling, of making our tax code fairer. To truly meet the many investment needs in our communities, we should take ambitious, multipronged action. It’s time to unrig the tax code.