Economy Ralph Nader

Ralph Nader: Reforming Our Broken Tax System to Benefit Us All

Congress needs to change our disgracefully unfair, wasteful, and inefficient tax laws.
[CafeCredit / CC BY 2.0]

By Ralph Nader

What if $10 billion were raised over ten years to transform Congress and make it do what it should be doing for the people (See, Think Big to Overcome Losing Big to Corporatism, 1/7/22)?  In a more recent column, Facilitating Civic and Political Energies for the Common Good, 2/2/22, I outlined how $1 billion per year could be spent lobbying Congress for a people’s agenda.

First $100 million per year would be used to get through Congress long-overdue legislation such as full Medicare for All, a living wage, preventing corporate abuses, etc. The second $100 million would be devoted to create facilities making it easy for people to band together in their various organized roles (e.g., workers, consumers, patients, savers) so they could counter corporate bosses who unite their investors and many lobbying trade groups.

Now, I wish to suggest the third $100 million per year be used to make Congress change the disgracefully unfair, wasteful, and inefficient tax laws.

Start with Congress providing the Treasury Department with adequate funds to crack down on tax evasion – estimated to be between $600 billion and $1 trillion a year! Republicans in the Congress, since 2011, have strip-mined the IRS budget, especially in the area of enforcement against tax evasion by the Big Boys and the Big Global Corporations.

The GOP has cut the IRS budget by 20 percent below its 2010 level, inflation adjusted. Thousands of skilled IRS auditors, investigators, and accountants could not be retained. Audits of large companies plunged by 58 percent between 2010 and 2019. Congress was turned into a recidivist enabler of massive tax evasion – which if done by ordinary people would constitute a crime.

Last year, 55 large corporations made $40 billion in U.S. profits and paid NO federal income tax. Other companies paid less than 10 percent. To give you an idea of the size of yearly uncollected taxes, the lowest estimate is $600 billion, which is $168 billion less than the entire $768 billion military budget approved last year. The current IRS Commissioner, Charles P. Rettig, says the sum of uncollected taxes last year was a trillion dollars!

When super-rich individuals and corporations escape taxes, either middle-class taxpayers have to pay more or there are fewer government services or the federal deficit gets bigger. The last two results are the ones usually favored by Congress.

Turning to tax reform, there are lists and lists of proposals to get rid of grossly unfair tax loopholes, parking money in overseas tax havens, unjustifiable commercial tax deductions, arbitrary deferrals of income, rapid depreciation, shell corporations, and other complex travesties cooked up by corporate tax lawyers.

There is the notorious “carried interest” tax escape, condemned by Warren Buffett and just about every impartial tax expert. This is where private equity and hedge funds, in particular, get their no-risk net services for investors taxed at a much lower capital gains tax rate instead of higher ordinary income rates.

These legal tax escapes are called “tax avoidance” and are carved out by commercial interest lobbyists who wine, dine, and give campaign cash to many of the 535 members of Congress. Some of these “avoidances” have existed for years, while others are quietly pushed through at the end of many congressional sessions. If people only knew more specific examples of what profitable freeloaders are getting away with, their ire would spark indignation and civic action. Think tax deductions for extravagant entertainment or paying wrongfully injured people and so forth.

Spending $100 million a year could fund hundreds of skilled peoples’ lobbyists on Capitol Hill and back home in congressional districts. These advocates would make tax reform front-page news, push for revelatory public hearings and encourage disclosures by whistleblowers. They would also propose airtight specific legislation. These and other initiatives would make “tax reform” a top-ranked election issue.

For years, all kinds of fair tax proposals have been developed by law professors, and public interest groups, such as the Citizens for Tax Justice and its former director Robert McIntyre. But no legislative muscle has been applied to Congress to counter the relentless corporatist assault on fair and proper tax laws.

Some reformers are concluding that giant corporations are moving the tax code toward de facto tax exemption for themselves. David Cay Johnston, author of many articles and books on this subject, has concluded that corporations, using global tax escapes, can now decide what to pay, when to pay, and where to pay their dwindling taxes. He thinks unenforceable federal income taxes for corporations should be scrapped in favor of a much simpler, more collectible corporate tax system.

Western European nations rely heavily on “value-added taxes” a cascading form of sales tax starting with mining to manufacturing to wholesale and retail levels. Sales taxes are usually easier and quicker to collect.

Other tax reform advocates urge that we start first with taxing pollution, (“tax what we burn before taxing what we earn”) corporate crime, and financial transaction taxes on Wall Street trades and speculation.

Doubters of much success in Congress, take note. There are no more than a tiny handful of full-time advocates doing this work. Not a single full-time person, for example, is lobbying to end the “carried interest” tax escape. Similar voids exist for any one of hundreds of such unconscionable and indefensible schemes.

Why would you expect anything to happen with nobody on top of Congress? With $100 million a year, a corps of savvy experts, publicists and communicators could decisively take on Capitol Hill.

For now, Congress must pass the Biden administration’s restorative funding to the depleted IRS to make the Big Boys pay up.

16 comments

  1. Reforming our tax system is best accomplished by first modifying the underlying monetary model.
    When real economic growth becomes the focal point and the sustainable end-in-mind for free market consciousness, this goal will lead people to use their own sovereign currency along with existing legal tender in a symbiotic dance that brings the law of weights and measures to fruition. (USD/oz)

    The legal door to make this all come about has been open since Dec 31, 1974 on the basis of Executive Order 11825.

    Americans need to wake up and shrug off some of the debt dealing habits they have gotten too comfortable with. The consumer now has the monetary stage, bottom-up and fully market driven. Believe it because the facts support it.

    Tax is not a problem but only a symptom of over-leveraged inflationary debt. Strike the root. Treat the disease.

    https://www.usgoldbureau.com/gold-confiscation

  2. I say nothing short of trashing the entire corrupt system of payola over the years with Congress selling their souls to their Corporate boss who undoubtedly are engaging in Satanic practices to influence the masses subliminally should be trashed in one huge fell swoop. Thereafter will emerge a new system built upon truth, trust, complete clarity and compassion. It will take time and we have plenty of that.

    1. That system built upon truth is already in motion from the bottom-up, which it must be according the monetary law of weights and measures, a law that goes back to the Old Testament but a law that also demands congruence with economic truth and economic reality given that an economy is a real-time event.

      There has never been congruence with this law on the axiom of capability given that real-time prices and the use of real-time pricing in debt-free transactions could never take place short of the digital age.

      We could never pour new wine into an old wineskin. Surprised ?

    2. That system built upon truth is already in motion from the bottom-up, which it must be according the monetary law of weights and measures, a law that goes back to the Old Testament but a law that also demands congruence with economic truth and economic reality given that an economy is a real-time event.

      There has never been congruence with this law on the axiom of capability given that real-time prices and the use of real-time pricing in debt-free transactions could never take place short of the digital age.

      We could never pour new wine into an old wineskin. Surprised ?

      https://members.lode.one/register/joinwith/1130057960/link

  3. Oh, so taxation is the key? These people at the top are sociopaths. The entire capitalist system set forth by PayDay Dollar Tree Walmartization USA is set up to fleece the 80 percent. Oh, those code violations for grass too long in wheelchair bound granny’s yard. The tolls, the fines, the penalties, the fees, the tickets, the triple and quadruple taxation, the add ons, the entire “externalities” killing communities large and small, as business as usual for corporations depend on us to pay for their dirty industries, their corporate welfare, their funding (state schools, grants, etc.) for their mean, lean businesses, whether the dirty Big Pharma or dirty Amazon dot crazy. Imagine that, all that death, disease and destruction, but let’s tax ourselves back to health.

    They mostly need to stop. STOP. The businesses that have been set up for huge profiteering, huge gouging,, huge rip-offs, huge scams, all of them, we could tax them until the cows come home, but still we are people filled with microplastics, nanoparticles, agricultural poisons, PFAS’s, and more, as part of the price to pay for CAPITALISM with a big “c” for corruption.

    You end the military industrial rip-off complex, not tax these whores. You stop mountaintop removal, not tax the coal barons. You end private prisons, not tax the culprits. You end massive pollution of land, air, soil and water, not tax the polluters.

    As many have said, “It is much easier to believe in or imagine the end of human kind, the world, than it is to imagine or believe in the end of this dirty rotten “there will be blood” capitalism. Taxing criminals. What a stupid idea.

    I’ve worked on Ralph’s failed campaigns. The younger Ralph was more open to pitchforks and socialism. Now, he is just juggling more failed ideas. End the system. How? Are the readers really going to ask me how? Come on. Be creative. Think. Go outside your kitty litter boxes.

    These millionaires, multimillionaires and billionaires, and their families and entourages, they are sociopaths. It’s akin to taxing Son of Sam or Jeffrey Dahmer/Epstein for their murders and crimes:

    https://dissidentvoice.org/2022/03/the-blunt-economic-mental-spiritual-ravages-of-the-millionaires/

    1. There’s a serious case of cognitive dissonance taking place these days. Unfair taxation is NOT a problem. It’s a symptom of highly over-leveraged debt where no sector is immune and somebody has to pay the government bill.

      Inflation is not a fiscal issue like taxation. Inflation is a monetary concept and the free market has power to role back inflation with the use of its own sovereign , debt-free money, legally and lawfully. There is no law today that says people within the USA must trade with the use of legal tender. That was dissolved decades ago but everyone is asleep or not listening to facts.

  4. How, Ralph, how?

    HOW do we get Congress to reform the tax system let alone the absence of democracy and constitiutional, civil and human rights in the USA?

    Nice woids but how?

    1. The practical way to change the political model (and fiscal tinkering) is by way of the monetary model where power is granted in the monetary model that gives the free market participants a monetary stage. No parallel stage exists in the political model, by comparison. Tax is not a problem, only a symptom of inflationary costs due to debt. Strike the root or you’ll chase windmills forever. Debt is a monetary concept.

      Take what they allow. Your” vote” and my “vote” are far greater in the economic model than in the political model, by far. Our “votes” always get counted and we even have the option to use our own “ballot” which in this case means our own sovereign money. Debt is not required.

      It’s on the back and introduction of debt-free market based currency that real economic wealth will spring back to life and central banks can be let of the hook by raising interest rates on the back of real growth that is approaching economic completion. We need some monetary “Yang” with our Yin” and it’s only the free market that has the legal privilege of entering debt-free medium into circulation. This is self evident but grossly overlooked on the basis of Executive Order 11825, signed on DEC 31, 1974.

      Market gold with real-time market pricing cannot be entered into circulation from the top-down. It would be impossible given real-time pricing and the size of the humongous debt bubble that needs a leak but must avoid a deadly POP.

      We have the stage to do this …. and we now have the practical ability too. It’s actually begun and best of all, it’s a full market process. No government involvement because those details have already been put into place.

  5. Ralph is daydreaming again. He continues to think that the sociopaths and corporations running our political system could be interested in meaningful tax reform that would be against their business interests, and benefit the American public. Unfortunately, these delusional ideas about political reform are shared by 99 percent of our electorate. We cannot have political reform unless we replace politicians with honorable representatives.

  6. A better solution is to tax the unearned increment, as Henry George and others called it. This is what Joe Stiglitz has endorsed, and I’ve written about at https://schalkenbach.org/wp-content/uploads/2019/09/Batt-The-Tax-Solution.pdf
    Recent computer power and available data makes it possible to show that George was right — that taxing the ground rent on the gifts of nature of every sort could easily supplant taxes on labor and goods that are so resented and cause so much inefficiency. I’ll suggest a few more of my papers at https://theiu.org/maps/.

  7. You have to understand the key change in the US since the Reagan/Clinton years. The middle class want to redistribute wealth from the rich to the middle class, and don’t want a penny to trickle down. This fact has changed everything, so assumptions based on the pre-Reagan/Clinton perspective of America no longer apply.

    1. The bar for everyone’s standard of living is raised as the society adopts debt-free transactions that support REAL economic growth and the safe and sane purging of inflationary debt.

      The process is fully market driven. Don’t screw it up by assuming that government has to take on some role in the process. The legal framework is already in place.

  8. “There is the notorious “carried interest” tax escape, condemned by Warren Buffett and just about every impartial tax expert. This is where private equity and hedge funds, in particular, get their no-risk net services for investors taxed at a much lower capital gains tax rate instead of higher ordinary income rates.”

    Maybe if Mr. Nader wants to eliminate the financial services industry tax dodge, he should refrain from relying on financial services industry jargon. Most people, including me, have no idea what “no-risk net services” are?

    Pardon my financial illiteracy, but what are “no-risk net services”?

Comments are closed.

%d bloggers like this: