Nothing has changed much since that hearing. When you open the tax code’s sewer cover and look into its muddy contents, the biggest beneficiaries are the richest who accumulate great fortunes and yet pay little or no tax. See a June 8 ProPublica article that provides startling details that demolish the myth of the U.S. tax system that everyone pays their fair share and the richest Americans pay the most.

The rich do this through a variety of tax avoidance strategies and wealth-creating loopholes without claiming income on a W-2. In addition, tax rates were cut by the GOP-dominated Senate in 2017, which disproportionately benefited the wealthy. The rich with their lobbyists and donations to members of Congress seem to write the tax rules. The result is that they roll in gobs of dough. With little physical endurance or a need to earn their daily living by working hard in the trenches, many doze off during the day and are oblivious with so little to do except write a check every month on the trunk. campaign of their congressman.

Meanwhile, the vast majority of Americans who live paycheck to paycheck to work for a living pay taxes that range from 10% to about 40%. Do you agree that a fundamental overhaul of the US tax system is needed?

Ken: On the other hand, the US income tax system looks pretty progressive if you look at some of the data for 2020. The richest 1% of taxpayers, around 1.5 million tax filers, paid around 40% of the total. of US tax revenues. The top 50% paid around 90%; the lower half paid 10%. The richest 1% paid an average tax rate of 27%, the bottom half, 4%. What exactly is her fair share, whether rich or poor?

Investment whale Warren Buffett has expressed sadness for paying taxes at a lower rate than some of his employees. The reason is that he does not receive any salary (as indicated by the W-2), but, like many middle-class retirees, his income largely comes from capital gains (reported on Form 1099) which are taxed at 20% rather than the cap. 37% bracket.

As for “loopholes,” they include deductions from income for charitable donations, business expenses, business losses, mortgage interest, and state and municipal taxes. The alternative to listing on a tax return is to take the standard deduction of $ 12,400. Retirement, IRA and 401 (k) accounts are tax-sheltered until the money is withdrawn.

There’s one loophole that has recently come to attention: Hedge fund managers are paid out of the company’s profits, called deferred interest, which is taxed as capital gains. The Biden administration has expressed a desire to remove this one. If you think about it, as a group, the Rifts aren’t sneaky cheaters but serve a purpose, and most are aimed at boosting the economy that benefits everyone. A low rate of capital gains encourages idle dollars to be put at risk while investing. Finally, Congress passed the loopholes, and those same lawmakers can remove them at any time.

Joe: From your answer, it appears that you consider the tax system to be fair and transparent. The GOP Senate seems to be with you. Some have likely been offered a spot on Jeff Bezos’ planned space trip. Currently, the tax code has different tax rates for various sources of income, such as capital gains, dividends, and labor income, giving the rich an economic advantage. If all sources of income were taxed as ordinary income, everyone would be on an equal footing. Given Washington’s political makeup, the likelihood of anything changing is low, as many senators are in the grip of billionaires.

Yet, according to the WSJ, the number of expatriates is on the rise, the cause being the likely change in the tax code. Do they know more than we do? The real problem comes down to money in politics. Mandatory campaign finance reform and the elimination of a lot of black money would let members of Congress work for the people and not for the money, don’t you think?

Ken: First, campaign finance reform is a topic for another day. Second, there are several members of Congress who wouldn’t mind if they were shot in space. Third, let’s get back to taxes. Although Congress seems to have forgotten these days, it is incumbent on lawmakers to exercise some restraint in spending. If the government seems to be going too far by overspending and trying to balance by taxing too much, there are negative consequences. American companies will be packing their bags and moving abroad. People will move – as Governor Pritzker found out – to avoid being bled dry by paying the inordinate spending of the Illinois government; also, ins should remember that this might just be rejected.