George Zimmer has done well in business. This does not seem to translate over into having the first clue about economics, inequality, or the tax system.
If Donald Trump really wants to make America great again, he’d do what our country did when it was at the height of its economic stability and equality: increase the top income tax rate to 90%.
Instead, what we have now is a tax system put into place for present-day robber barons – one that enables the interests of a small number of powerful industries to dominate national policy, for the benefit of only themselves and to the detriment of working people.
Under the current revenue system, companies such as Facebook and Exxon pay a lower rate on their 20 billionth dollar of profit (21%) than the top rate that dental assistants, sales workers, mechanics, telephone operators, painters and postal clerks pay on their average annual wage of $39,400 (22%).
Thanks to Trump and his 2017 tax bill, income inequality has now reached its highest level since the US Census Bureau first began to tabulate it 50 years ago.
As a successful entrepreneur and founder of Men’s Wearhouse, I’ve seen how tax breaks for corporations and the rich perpetuate income inequality.
Last year, the country’s “Gini” index, which measures the nation’s income distribution, reached its highest reading ever. In our modern-day Gilded Age, more of the nation’s wealth is going to fewer people.
Well George, if you think you should be paying more in tax – entirely your right to do so, of course – then all you’ve got to do is send a check to the “Gifts to the United States” account. The nice people there will even send you a thank you letter.
Not all that many people agree with you all that much as it collects perhaps $4 million a year. But the option is available to you.
It’s the other bits of this that really don’t make sense though. At which point, a little advice:
That’s why the Patriotic Millionaires are hosting a Tax the Rich! conference in November. We’re meeting at the ground zero of 21st-century inequality – San Francisco – to challenge our wealthy peers to fight for a fairer tax code.
We’ll be joined by Robert Reich, Gabriel Zucman and Emmanuel Saez, three University of California, Berkeley economists whose research has shifted the way we look at taxation and inequality, as well as an array of other thinkers, activists and elected leaders.
While you’re there you might want to ask some pertinent questions.
Zucman and Saez could usefully inform you of a few things. For example, their current claim is that all corporate taxation is really paid by stockholders. It’s a reasonable claim as long as we stick with it. But note what sticking with it does mean. It’s not the companies paying the tax, it’s the stockholders. And those stockholders also pay income tax when they receive those dividends, cash in those capital gains. So, the tax rate actually being paid on those profits is higher, isn’t it? It’s the amount paid at the corporate level plus the amount paid at the individual. It is, after all, only the one set of profits being taxed twice, the tax rate on profits being the sum of the two taxes.
It would also be useful to ask a question or two about that Gini Index. Because here’s the measure of income being used:
Census money income is defined as income received on a regular basis (exclusive of certain money receipts such as capital gains) before payments for personal income taxes, social security, union dues, medicare deductions, etc. Therefore, money income does not reflect the fact that some families receive part of their income in the form of noncash benefits, such as food stamps, health benefits, subsidized housing, and goods produced and consumed on the farm. In addition, money income does not reflect the fact that noncash benefits are also received by some nonfarm residents which may take the form of the use of business transportation and facilities, full or partial payments by business for retirement programs, medical and educational expenses, etc.
That is the before tax and before welfare benefits measure of inequality. For the US the one after it is rather lower, at around 0.37 rather than the roughly 0.50 recorded. Which is interesting on two points. Firstly, the IMF (hmm, coulda been the OECD) has told us that redistribution, up to a certain level, makes a country better off. Above that level it makes us, in aggregate, worse off. What is that level? Moving the Gini by about 0.13 points. That is, the level of redistribution in the US is currently, according to this research, about optimal. More is therefore non-optimal.
It’s the second point which is more interesting. If we use pre-tax income as our measure of inequality then changing the taxation system doesn’t change inequality, does it? We could double the taxation of the rich and the Gini, as we’re measuring it, would still be 0.50. We could halve the taxation of the rich and our Gini would still be 0.50.
That is, the action you’re proposing would have sod-all effect on the problem you identify and wish to correct.
Now, it’s true that you made good money in business. Well done you. You didn’t have that success by diverting scarce resources to pissing up a rope. So, why are you proposing for the body politic what you’d laugh out of your own boardroom?