On June 19, 2016, Paul Buchheit writes on Nation Of Change:

While candidates bicker and Congress stagnates and the rest of us dwell on the latest shooting tragedy, the super-rich enjoy the absence of attention paid to one of our nation’s most destructive issues.

The richest Americans are takers of social benefits. Yet they complain about paying 12%to 20% in taxes, even as respected researchers estimate an optimal revenue-producing rate of 80% to 90%, and even with the near-certainty that higher marginal tax rates will have no adverse effects on GDP growth.

The super-rich pay little in taxes because, as Senator Lindsey Graham said, “It’s really American to avoid paying taxes, legally…It’s a game we play…I see nothing wrong with playing the game because we set it up to be a game.” In reality, it’s a game of theft from the essential needs of education, infrastructure, and jobs.

The Richest Individuals Cheat the Most

According to a recent IRS report, an incredible $406 billion annual gap exists between owed and paid taxes, with individuals accounting for over three-quarters of the total, and with the most egregious misreporting coming from the highest income-takers.

That’s about $3,000 per U.S. household in annual lost revenue. Yet even though the IRSretrieves well over $100 for every dollar in salaries paid to their agents, the agency has been rapidly losing staff, making the tax avoidance game a lot easier for the biggest cheaters.

Corporations Cheat Most Creatively

Relative to a dollar of payroll tax, corporations used to pay $3 in income tax. Now they pay 30 cents.

Exxon uses a theoretical tax to ‘pay’ its bill, and grandfatherly old Warren Buffett’s company Berkshire Hathaway uses hypothetical amounts to avoid paying taxes.

Despite having billions in profits and nearly half of its sales in the U.S., Pfizer claimed enormous losses in the United States.

Each year the Chicago Mercantile Exchange (CME) sells contracts worth about a quadrillion dollars, four times more than all the wealth in the world. Yet ZERO sales tax is paid on the purchases.

Indebted Young Americans Have Lost the Freedom to Innovate

The richest Americans believe they drive the economy. They babble about the “freedom” they create. But experience has shown that productive new ideas, and the job creation that comes with them, are generated by young middle class people, who recently have been devastated by debt and underemployment. As a result of their loss of freedom to take chances, the number of new startups in the U.S. has dropped dramatically.

Revenue lost to tax avoiders is desperately needed to educate and enable our young would-be entrepreneurs.

Decades of Theft from Taxpayers

To the uninformed, Steve Jobs started with boxes of silicon and wires in a garage and fashioned the first Apple computer. The reality is explained by Mariana Mazzucato: “Everything you can do with an iPhone was government-funded. From the Internet that allows you to surf the Web, to GPS that lets you use Google Maps, to touchscreen display and even the SIRI voice activated system — all of these things were funded by Uncle Sam through the Defense Advanced Research Projects Agency (DARPA), NASA, the Navy, and even the CIA.”

It’s the same story with our medicines. Pharmaceutical companies wouldn’t exist without money from the taxpayers, who have provided support for decades through the National Institutes of Health, and who still pay over 80 percent of the cost of basic research for new drugs and vaccines. Yet the drug companies claim patents on medications that were developed with our tax dollars.

Other businesses rely on our roads and seaports and airports to ship their products, the FAA and TSA and Coast Guard and Department of Transportation to safeguard them, and a nationwide energy grid to power their factories, while they pollute our air and water at almost no cost.

Two More Victims of Tax Cheating: K-12 Education and Mental Health Care

Most of the 50 states have cut funding for K-12 education, and they continue to cut it.Teachers haven’t received a raise in 15 years. School infrastructure is crumbling, so severely in Detroit that the kids in some of the schools have nowhere to go to the bathroom.

For the increasing number of Americans (one out of five!) with mental health problems, there is no place to go. The Department of Health and Human Services reportsthat most U.S. counties “have no practicing psychiatrists, psychologists, or social workers.” In 44 of the 50 states, the majority of mentally ill people reside in jails rather than in psychiatric hospitals. There’s no tax money to support the needs of society, and so people in need are thrown into prison.

Society’s takers, hoarders, and cheaters just ignore the injustice, and go on avoiding taxes while they blame the less fortunate for their own misfortunes.

www.nationofchange.org/news/2016/06/19/growing-case-massive-taxes-rich/?platform=hootsuite

The place to start to reform our tax code is the tax rate on corporate earnings. That rate should be raised to 90 percent, with the caveat that the tax would be zero on the condition that the earnings of the corporation were fully paid out to the OWNERS as dividend earnings subject to personal tax rates. Why? This would abate retained earnings financing of future corporate capital asset formation and incentivize corporation to issue and sell new stock to raise raise money to invest in future viable corporate capital asset growth while simultaneously creating new capital owners (workers, other citizens). The stock purchases would be financed using insured, interest-free capital credit, repayable out of the future earnings of the investment in growing the economy, without the requirement of past savings (which only the wealthy possess). This would empower EVERY child, woman, and man to acquire significant OWNERSHIP shares in the future formation of viable wealth-creating, income-producing capital assets, and enable far more efficient production using advanced technologies, robotics, computerization, etc. with increasingly less reliance on human input, thus significantly strengthening the productive capability of our economy over time and producing better quality at lower cost. At the same time, individual citizens will replace wage earnings for dividend earnings, while steadily advancing to an affluent lifestyle with secure retirement income from a portfolio of productive assets.

Such a policy approach uses the logic of corporate finance. Capital acquisition takes place on the logic of self-financing and asset-backed credit for productive uses. People invest in capital ownership on the basis that the investment will pay for itself. The basis for the commitment of loan guarantees is the fact that nobody who knows what he or she is doing buys a physical capital asset or an interest in one unless he or she is first assured, on the basis of the best advice one can get, that the asset in operation will pay for itself within a reasonable period of time––5 to 7 or, in a worst case scenario, 10 years (given the current depressive state of the economy). And after it pays for itself within a reasonable capital cost recovery period, it is expected to go on producing income indefinitely with proper maintenance and with restoration in the technical sense through research and development.

The proposed Capital Homestead Act (aka Economic Democracy Act) is the necessary legislation to achieve this aim. See http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

Also see Monetary Justice at http://capitalhomestead.org/page/monetary-justice.