Congress Needs to Rewrite My Taxes
Credit: Roll Call, David J. Trone
Our tax code is one of the biggest scams in America, and the wealthy have been taking advantage of it for years. The worst part of this scam is that it is all legal. I would know because my family benefits from it.
My story could only have been written in America. I grew up on a family farm that went bankrupt and was repossessed. I took out loans, went to graduate school and started a small business. Over the course of 30 years, with a lot of hard work and a good deal of luck, that small business turned into a company with an annual revenue of more than $5 billion. Along the way, we created tens of thousands of good jobs for Americans, and I have enjoyed a measure of financial success I could not have imagined when growing up on that farm.
In America, my story is possible, but it is growing more improbable in large part because our tax system has grown more and more unequal. How is it that a coffee shop barista pays 12 percent in taxes a year when Elon Musk paid less than 3 percent? How is the America that sent the first man to the moon the same America that has the largest gap in wealth between the rich and the poor? I’ve seen both ends of the spectrum, and the disparity boggles my mind.
The search for the source of this inequity stops in the halls of Congress. The 2017 tax breaks engineered by Donald Trump and the Republican Party marked some of the darkest days in the fight for tax fairness. Follow the data: Most of those tax breaks went to the wealthiest families and corporations in America and left many Americans wondering if they would ever see any benefit from this trillion-dollar scam.
The tax breaks also decimated revenue for the federal government. Roads in America are crumbling, and our children are drinking poisoned water in part because America’s billionaires and millionaires are not paying their fair share.
President Joe Biden and others have proposed monumental steps toward making our tax system fairer to help fund universal pre-K, free community college, national paid family and medical leave, and other critical priorities. The new revenue could also help fight the mental health and addiction epidemics in our country, which have killed over 840,000 people in the past 20 years and have no vaccine cure.
But reforming our tax system should not just be about paying for major programs. It should be about making sure billionaires, corporations and, frankly, people like me pay their fair share. Tax fairness should be a goal in and of itself.
The good news is there is no shortage of good ideas to make our tax code more equitable.
First, we need to tax capital gains for wealthy Americans just like ordinary income. Coffee shop baristas pay taxes on their earned income every year. If they don’t, the IRS will be on their doorstep. But wealthy investors can defer taxes for decades on money they make in the stock market, real estate or some other investment.
But the real scam is a giant loophole in our tax code known as stepped-up basis. This allows wealthy Americans to avoid paying any taxes on their investment gains for their entire life if they keep it until they die and pass it along to their children. More than 60 percent of the wealth of billionaires, nearly $3 trillion, goes untaxed because of this loophole. While every other American pays a tax on their income, the rich get an exception that benefits themselves and their heirs.
The solution is not hard. Tax capital gains for the wealthy at ordinary rates and repeal the stepped-up basis loophole. This would raise $324 billion over ten years, enough to finally pass universal pre-K for all American children. I love my kids, but they also need to pay their fair share to ensure every kid has a shot at the American dream.
Congress has the opportunity through the Build Back Better Act to finally level the playing field for every American. We can make our tax code even fairer by enacting the Paying a Fair Share Act, raising the corporate tax rate, closing the carried interest loophole and imposing an inheritance tax that protects farms and small businesses. These changes would raise trillions over 10 years, enough to provide paid family and medical leave, universal child care, universal high-speed internet and more important services for every American. At the same time, we need to ensure that Americans who earn less than $400,000 a year don’t pay a dime more in taxes. That’s a promise Biden made, and I intend to help him keep it.
These aren’t radical ideas; they are just common sense. What’s radical is giving a tax break to billionaires year after year while giving nothing to working- and middle-class Americans. It’s time to give every hard working American the same shot at this dream. Increasing taxes on people like me is a good start.
Rep. David Trone is a Democrat representing Maryland’s 6th District. He serves on the House Appropriations and Veterans’ Affairs committees and on the Joint Economic Committee.