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After
many months of anticipation and nearly three years of investigation,
the Manhattan district attorney’s office has charged
the Trump Organization and its chief financial officer Allen
Weisselberg with 15 offenses related to tax fraud. According to the
lengthy indictment,
former President Donald Trump’s namesake corporation engaged in
a 15-year scheme to “compensate Weisselberg and other Trump
Organization executives in a manner that was ‘off the books.’”
While many are disappointed that Trump himself was not directly
indicted, the sweeping charges offer some vindication for those who
have watched wealthy elites like Trump hoodwink authorities for
decades. Recall his response
to his rival Hillary Clinton during a 2016 presidential debate when
she accused him of evading taxes: “that makes me smart.”
But when put into the broader context of how the wealthiest Americans
manage to avoid paying taxes without breaking any laws, the Trump
Organization charges seem like a minor affair.
A much bigger
story than the Trump Organization’s alleged tax fraud was a
ProPublica
story
in June of how fabulously wealthy individuals like Amazon founder
Jeff Bezos, Tesla founder Elon Musk, and former New York City Mayor
Michael Bloomberg have paid little to nothing in federal income taxes
for years. Reporters obtained confidential tax records for thousands
of wealthy Americans from the Internal Revenue Service (IRS) and
concluded that, “the wealthiest can - perfectly legally - pay
income taxes that are only a tiny fraction of the hundreds of
millions, if not billions, their fortunes grow each year.” The
heart of the story is that the form of wealth owned by the richest
Americans - stocks, real estate, and other assets - is simply not
taxed until it is sold.
Based
on tax information published
by the New York Times
last fall, Trump, like Bezos and other billionaires, has paid little
to nothing in taxes for years. The scheme that the former president
relied on in order to do this was somewhat different. “His
reports to the I.R.S. portray a businessman who takes in hundreds of
millions of dollars a year yet racks up chronic losses that he
aggressively employs to avoid paying taxes,” explained the New
York Times.
The point is
that there are so many legal ways for wealthy elites to avoid paying
taxes that it’s no wonder the Manhattan DA Cyrus Vance took
nearly three years to come up with charges that involve a paltry $1.7
million worth of “perks” that ought to have been reported
to the IRS as income. The “sweeping
and audacious illegal payments scheme“
that Vance accused Weisselberg of meant that the Trump Organization
CFO pocketed less than a million dollars that he should have paid in
taxes and reaped a little over $100,000 in tax refunds he should not
have received.
The inordinate
focus on the tax fraud charges against the Trump Organization
obscures a far larger grift that Trump and his party were responsible
for - all conducted through the legislative process and considered
perfectly legal - the 2017
Tax Cuts and Jobs Act.
A recent
investigation
by Greenpeace UK’s Unearthed showcased just how financially
significant that law was for the world’s largest corporations
such as ExxonMobil. A lobbyist for Exxon named Dan Easley admitted on
video
that, “the executive branch and regulatory team for Exxon had
extraordinary success over the past four years in large part because
the [Trump] administration was so predisposed to helping.” When
asked what Exxon’s biggest wins were under Trump, Easley
rattled off a series of victories and then added, “tax has to
be the biggest one. The reduction of the corporate tax rate was
probably worth billions to Exxon.” In fact, ExxonMobil’s
profits reportedly quintupled
after the Trump tax cut.
Republican
lawmakers also directly
benefited
from the 2017 Tax Cuts and Jobs Act, as did Trump
himself. The far more scandalous punchline is that most elites need
not resort to risky efforts such as tax fraud when such generous and
perfectly legal giveaways are available.
Ordinary
Americans are supposed to sit out the debate on tax rates, as complex
economic analyses are apparently required in order to fully
appreciate the ramifications of raising or lowering taxes. The tax
code is so complicated, we are told, that we could
not possibly understand the rationale
for why rich individuals and corporations deserve to be taxed less.
The part we are not told is that the complexity
is deliberate.
In spite of
the media missing the broader context for stories such as the Trump
Organization’s tax fraud charges, there is massive
public support
across the political spectrum for a seemingly radical and yet far
simpler idea: enact stiff taxes on wealthy individuals and large
corporations. Even CNBC commentator and economist Jim Cramer, who has
claimed he is wedded
to higher stock prices
rather than any political affiliation, admitted
when he read ProPublica’s story of billionaire tax avoidance
that “these revelations make me sick,” and that he
favored a surtax on the massively wealthy.
While
Republicans are honest about their craven allegiance to the profits
of the wealthy, Democrats claim to care about fairness and rising
inequality. Unsurprisingly, much of the Democratic Party noise on the
matter amounts to lip service and empty gestures such as
reintroducing
a bill
to tax millionaires. Even Senator Elizabeth
Warren’s tax plan
aimed at the richest Americans doesn’t go far enough and
targets only 2-3 percent of amassed wealth.
President Joe
Biden earlier this year proposed a series of reforms that would
generate
$1.5 trillion
in federal revenues largely based on higher taxation of the
wealthiest Americans but still bowed at the altar of wealth by making
a wholly unnecessary pledge to elites that “I think you should
be able to become a billionaire or a millionaire… but pay your
fair share.”
Democrats, who
won’t
even ensure through the legislative process
that their own party is able to win future elections through fairer
voting rules, are hardly going to be aggressive about legislating
higher taxes on the wealthy. As long as they can demonstrate to their
voters that they care about higher taxation, actually enacting higher
taxes will remain purely theoretical.
At the global
level, President Biden recently led an effort at the G-7 to impose a
minimum corporate tax rate to undermine offshore tax havens. But the
rate that governments settled on was so embarrassingly
small
- only 15 percent - that a spokesperson for Oxfam complained, “They
are setting the bar so low that companies can just step over it.”
Unsurprisingly, Republicans
are opposing even this.
Only Senator
Bernie Sanders
and Representative Alexandria
Ocasio-Cortez,
two of a handful of self-declared socialists in Congress, have stated
a belief radical enough for our times: that billionaires should
simply not exist. Yet, this should not be a radical notion. Facebook
founder and CEO Mark
Zuckerberg,
one of the world’s wealthiest people, admitted that Sanders’
remarks were justified when he said, “On some level, no one
deserves to have that much money.”
Considering
that the global pandemic has foisted suffering on so many millions of
people worldwide while enriching
the already-super-wealthy,
the current moment could not be more appropriate for a rethinking of
wealth and how it is taxed at both the individual and corporate
level. Not only should the world’s governments be redirecting
needed resources to those suffering the worst economic impacts of the
pandemic, but they should also be preparing for the massive public
spending that will be required to mitigate the catastrophic impacts
of climate change.
The
obvious source of funding such things is the mountain of money that
wealthy elites have been silently amassing. While it may give many
Americans a small modicum of satisfaction at seeing the Trump
Organization being slapped with minor tax fraud charges, the
headline-making story is sadly a distraction from the vast wealth
that elites and corporations even wealthier than Trump have legally
accumulated.
This
commentary was produced by Economy
for All,
a
project of the Independent Media Institute.
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