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COMMENTARY ROBERT REICH ON TAXING THE WEALTHY Robert Reich: Can We Fix Our Rigged Tax System? PLAY YOUTUBE VIDEO Original article: https://www.youtube.com/watch?v=wkiO0_uSJAk Peter Burgess COMMENTARY Robert Reich covers a lot of economic ground in this video. It is motivating me to rework the material to make it fit more closely withmy onw fraining of how the economy works ... and more important, how it needs to work. Peter Burgess
Can We Fix Our Rigged Tax System? Robert Reich Apr 1, 2025 1.2M subscribers ... 260,982 views ... 17K likes For nearly a half century, trickle-down economic policies have resulted in a tax system rigged in favor of the rich. This is not only bad for our economy, but it’s leading to a billionaire takeover of our democracy as well. Watch. Transcript 0:00 Is it time to “eat the rich”? More and more people are suggesting this. Well, I don’t know if we should eat the rich. But I do think we should tax the rich. And unlike eating them, there’s nothing radical about asking the rich to pay their fair share. Our current tax system is rigged in their favor — and I’ve been sounding the alarm on this for years. I think the taxes right now, John, on the people at the very top, who have more income and wealth (as a percentage of total income and wealth) than they have in about 80 years. They are paying a lower effective tax rate than they have in 40 years. So, doesn't it make sense? I mean, this is not a radical statement to go back to a tax rate that we had after the Second World War, up until 1980. So you're a socialist. [Crowd laughs] So here are the 10 videos I think best sum up why we need the rich to pay their fair share, 1:02 and how we do it. First, let’s be honest about who the rich are and how they got that way. 'Self-made' billionaires are a myth. Just like unicorns. Of course, being 'self-made' is a nice idea — it suggests that anybody can claw their way to the top if they're willing to work hard enough. It’s what the American Dream is all about. If Kylie Jenner can become a “self-made” billionaire at age 21, so can you and I. Even as wages stay stagnant and wealth inequality grows, it’s a comfort to think that we’re all simply one cosmetics company and some elbow grease away from fortune. Unfortunately, a nice idea is all it is. The origins of self-made billionaires are often depicted as a “rags-to-riches” rise to the top fueled by nothing but personal grit and the courage to take risks — like dropping out of college, or starting a business in a garage. But in reality, the origins of many billionaires aren’t so humble. They’re more like “riches-to-even-more-riches” stories, rooted in upper-middle class upbringings. 2:10 How much risk did Bill Gates take on when his mother used her business connections to help Microsoft land a deal making software for IBM? Elon Musk came from a family that reportedly owned Shares in an emerald mine in Africa. Jeff Bezos’ garage-based start was funded by a quarter-million dollar investment from his parents. If your safety net to joining the billionaire class is remaining upper class – that’s not pulling yourself up by your bootstraps. Nor is failing to pay your fair share of taxes along the way. Along with Musk and Bezos, Michael Bloomberg, George Soros, and Carl Icahn have all gotten away with paying ZERO federal income taxes some years. That’s a big helping hand, courtesy of legal loopholes and American taxpayers who pick 3:01 up the tab, all while our tax dollars subsidize the corporations owned by these so-called 'self-reliant entrepreneurs.' Did you get a thank you card from any of them? I sure as hell didn’t. Other common ways that billionaires build their coffers off the backs of others include paying garbage wages and subjecting workers to abusive labor conditions. But portraying themselves as rugged individuals who overcame poverty or 'did it on their own' remains an effective propaganda tool for the ultrawealthy. One that keeps workers from rising up collectively to demand fairer wages – and one that ultimately distracts from the role that billionaires play in fostering poverty in the first place. Billionaires say their success proves they can spend money more wisely and efficiently than the government. Yet they have no problem with government spending when it comes to receiving corporate subsidies. 4:04 When arguing for even more tax breaks, they claim each “dollar the government takes from [them] is a dollar less” for their “critical” role in expanding prosperity for all Americans, through job creation and philanthropy. Well that’s rubbish. 50 years of tax cuts for the wealthy have failed to trickle down. As a result of Trump’s tax cuts, 2018 saw the 400 richest American families pay a lower tax rate than the middle class. And U.S. billionaire wealth grew by $2 trillion during the first two years of a pandemic that was economically catastrophic for just about everybody else. They want to have their cake – and everyone else’s cake – and eat it, too. Behind every ten-figure net worth is systemic inequality, inherited wealth, labor exploitation, tax loopholes, and government subsidies. 5:02 To claim these fortunes are “self-made” is to perpetuate a myth that blames the wealth gap on the choices of everyday Americans. Billionaires are not made by rugged individuals. They’re made by policy failures. And a system that rewards wealth over work. Know the truth. Now here’s one of the biggest tricks those billionaires use to get away with paying a lower tax rate than you! Billionaires now pay a lower effective tax rate than working Americans. One reason why? Trump's tax cuts. Another reason? We don’t tax wealth. While workers live off paychecks that are taxed, people like Jeff Bezos and Elon Musk don't. They live off their wealth, which is mostly tied up in the value of their stocks. Unless they sell off those stocks, their taxable income is small. But they don't have to sell in order to reap the benefits. Billionaires can use their massive portfolios as collateral 6:06 to borrow the money they need to finance their lifestyles at low interest rates — lower than the rates they’d pay on capital gains or income taxes. Should billionaires be allowed to get away with this? Absolutely not. If we want the wealthiest Americans to pay their fair share, we’ve got to tax their wealth — not just their income. A wealth tax. Now. Now whenever progressives talk about making billionaires pay their fair share, there’s always someone who accuses us of just being jealous of billionaires. So let’s hear from an actual billionaire, Tom Steyer. I worked as a professional investor for many years. I loved investing because I loved solving economic puzzles. If I could see into the future accurately, I succeeded. The results were clear and measurable. 7:05 I like to think my success was built on knowing a lot about our economy and how it works. That’s why the Republican obsession with tax cuts for wealthy people seems so stupid and so selfish to me. There is a moral case against the tax cuts but the Republican argument is that the tax cuts will grow the economy, so let’s just focus on the economic argument for now. Since the 1980s, the top tax rate has been cut from 70% to less than 40%. And during that time, wages for workers have stagnated. and economic inequality has skyrocketed. Our economy has become dangerously imbalanced. The richest people in the nation -- the top 1% -- now take home more than 20% of the national income. Their share of the pie has more than doubled since Ronald Reagan became president. 8:00 So if the goal is to grow the economy, create jobs, and raise living standards how do tax cuts for the rich fit into the puzzle? Look at the numbers. They don’t fit. Take it from me, tax cuts for wealthy people haven't helped anyone except wealthy people. There is no trickle-down. If we want to see stronger economic growth, we need to invest directly in the American people. Successful societies are driven by educated and skilled workers. When working Americans do well, we have a strong economy. And it’s common sense to any business owner or anyone else who thinks about it. A growing, well-trained workforce not only strengthens our economy, give it us an edge over our competition overseas. That requires public investment in workers, not cutting programs to pave the way for tax cuts that only work in the short-run. Serious investors care much more about long-term growth than quick-fixes to the tax code. 9:07 The Republicans want to finance tax breaks by gutting education, by slashing job training, and by denying people their healthcare. They want to undermine the very foundations that make America a greatest place to live and to invest. I told you I like to solve economic puzzles. If you want to solve the puzzle of how get a stronger economy, make sure that working class and middle class families are doing better and making more money. We're the hardest working people in the world. Give workers the skills to compete. But don’t give rich folks like me a tax cut. I don’t need a raise. But American families do. One of the biggest obstacles to taxing the rich is a series of myths that they have tricked a lot of Americans into believing. Here’s how we debunk them. Some politicians are calling for higher taxes on the rich. And naturally, these proposals 10:02 have unleashed a torrent of opposition – mostly from… the rich. Here are the 12 biggest myths they are propounding. Myth: A top marginal tax rate applies to all of a rich person’s total income or wealth. Why aren’t you giving 70% of your income to the government? You could... We’re gonna tax 70% of your paycheck. Wrong. It would only apply to dollars in excess of a certain level. The 70 percent income tax rate proposed by Congresswoman Alexandria Ocasio-Cortez would apply only to dollars in excess of 10 million dollars a year. The2 percent wealth tax proposed by Elizabeth Warren would apply only to wealth in excess of 50 million dollars. Myth: Raising taxes on the rich is a far-left idea. She wants to radically tax the rich. Taxing rich people, that’s an old saw from the left. Baloney. 70 percent of Americans — including 54 percent of Republicans — support raising 11:05 taxes on families making more than 10 million dollars a year. And expecting the rich to pay their fair share is a traditional American idea. From 1930 to 1980, the average top marginal income tax rate was 78 percent. From 1951 to 1963 it exceeded 90 percent — again, only on dollars in excess of a very high threshold. Even considering all deductions and tax credits, the very rich paid over half of their top incomes in taxes. Myth: A wealth tax is unconstitutional. Bad idea. And it’s likely unconstitutional. Sounds great, not constitutional, I don’t think. Rubbish. Most locales already impose an annual wealth tax on the value of peoples’ homes — the main source of household wealth for most people. It’s called the property tax. The rich hold most of their wealth in stocks and bonds, so why should these forms of wealth 12:05 escape taxation? Article I Section 8 of the Constitution gives “Congress [the] power to lay and collect taxes.” Myth: When taxes on the rich are cut, they invest more and everyone benefits, when taxes on the rich are increased, economic growth slows. The frightening thing about high marginal tax rates is that it leads us into a low-productivity economy. They’re gonna stop creating jobs. If you raise the interest rates, they’ll stop investing money. They’ll stop borrowing money and that has a trickle-down effect. Utter baloney. Trickle-down economics is a cruel joke. Donald Trump, George W. Bush, and Ronald Reagan all cut taxes on the rich, and nothing trickled down. There’s no evidence that higher taxes on the rich slows economic growth. To the contrary, when the top marginal tax rate has been high -- between 71 to 92 percent -- growth has averaged 4 percent a year. 13:00 But when top rate has been low -- between 28 and 39 percent -- growth has averaged only 2.1 percent. Myth: When you cut taxes on corporations, they invest more, and create more jobs. It will stimulate investment domestically. Stimulate the jobs that the economy needs. Wrong again. After Trump and the Republicans lowered the corporate tax rate in 2018, America’s largest corporations cut more jobs than they created. They used their tax savings largely to increase their stock prices by buying back their own shares of stock -- enriching executives and wealthy investors but providing no real benefit to the economy. Myth: The rich already pay more than their fair share in taxes. When she says the thing about “fair share”, you know the top 1% of earners pay 40% of income taxes. The top 1% already pay 37% of all federal income taxes. This is misleading, 14:00 because it focuses only on income taxes — leaving out the large and growing tax burden on lower-income Americans; payroll taxes, state and local sales taxes, and property taxes take bigger bites out of the pay of lower-income families than higher-income. Myth: The rich already pay capital gains taxes. The very very top pay capital gains tax. We already have a 20 to 30% tax on capital gains. Misleading. Rich families avoid paying capital gains taxes by passing their wealth on to their heirs. In fact, the largest share of big estates transferred from generation to generation are unrealized capital gains that have never been taxed. Myth: The estate tax is a death tax that hits millions of Americans. Does death trigger another grab from the government? It’s so un-American it just turns my stomach. 15:00 She wants another bite at the apple. And when you die, another bite at the apple — 40% worth. Baloney. The current estate tax, which only applies to assets in excess of 11 million dollars, or 22 million dollars for couples, affects fewer than 2,000 families. Myth: If taxes are raised on the wealthy, they’ll find ways to evade them. So very little money is going to be raised. Billionaires will go somewhere else. Multi-millionaires will go somewhere else. So you raise these taxes and people shift their investments to avoid higher taxes. More rubbish. For example, a 2 percent wealth tax, as proposed by Senator Elizabeth Warren, would raise around 2.75 trillion dollars over the next decade with very little tax evasion, according to research. A 70 percent tax on incomes over 10 million would raise close to 720 billion dollars over 10 years. Myth: The only reason to raise taxes on the wealthy is to collect revenue. No one really believes that it would either bring in more revenues... 16:07 It’s not just because you object the existence of rich people. You’re not trying to hurt them. You just want to pay for more stuff. No. Although these proposals would generate lots of revenue — and help us reduce the national debt while investing in schools, roads, and all the things we need — another major purpose is to reduce inequality, and thereby safeguard democracy against oligarchy. Myth: It’s unfair to raise taxes on the wealthy. It seems to me like it more a debate about punishing the rich, about punishing success. The most successful are not only paying their fair share, they’re paying the most. Pay your fair share — what are you talking about? Actually, it’s unfair not to raise taxes on the rich. For the last 40 years, most Americans have seen no growth in their incomes at all, while the incomes of a minority at the top have skyrocketed. We’re rapidly heading toward a society dominated by a handful of super-rich, many of whom have never worked a day in their lives. More than 17:09 60 percent of wealth in America is now inherited. Myth: They earned it. It’s their money. I think if people earn money they should be able to hold on to it. Be able to do with it as they see fit with their newfound, hard-earned cash. Hogwash. It’s their country, too. They couldn't maintain their fortunes without what America provides – national defense, police, laws, courts, political stability, and the Constitution. They couldn’t have got where they are without other things America provides — education, infrastructure, and a nation that respects private property. And to argue it’s “their money” also ignores a lot of other ways America has bestowed advantages on the rich — everything from bailing out Wall Street bankers when they get into trouble, to subsidizing 18:00 the research of Big Pharma. So the next time you hear one of these myths, know the truth. Now it’s time for specifics. If we want to make the rich pay their fair share, how do we actually do it? First, repeal the Trump tax cuts. It's no secret Trump's giant tax cut was a giant giveaway to the rich. 65% of its benefits go to the richest fifth. 83% to the richest 1% over a decade. In 2018, for the first time on record, the 400 richest Americans paid a lower effective tax rate than the bottom half. Repealing the Trump tax cuts' benefits to the wealthy and big corporations will raise an estimated $500 billion over a decade. Second, raise the tax rate on those at the top. In the 1950s, the highest tax rate 19:03 on the richest Americans was over 90%. Even after tax deductions and credits, they still paid over 40%. But since then, tax rates have dropped dramatically. Today, after Trump's tax cuts, the richest Americans pay less than 26%, including deductions and credits. And this rate applies only to dollars earned in excess of $523,601. Raising the marginal tax rate by just 1% on the richest Americans would bring in an estimated $123 billion over 10 years. Third, a wealth tax on the super-wealthy. Wealth is even more unequal than income. The richest 0.1% of Americans have almost as much wealth as the bottom 90% put together. Just during the pandemic, America's billionaires added $1.3 trillion 20:00 to their collective wealth. Elizabeth Warren's proposed wealth tax would charge 2% on wealth over $50 million and 3% on wealth over $1 billion. It would only apply to about 75,000 U.S. households, fewer than one-tenth of 1% of taxpayers. Under it, for example, Jeff Bezos would owe $5.7 billion out of his $185 billion fortune. That’s less than half of what he made in one day last year. The wealth tax would raise $2.75 trillion over a decade, enough to pay for universal childcare and free public college, with plenty leftover. Fourth, a transactions tax on trades of stock. A tiny one-tenth of 1% tax on financial transactions, just $1 per $1,000 traded 21:04 would raise $777 billion over a decade. That's enough to provide housing vouchers to all homeless people in America more than 12 times over. Fifth, end the stepped-up cost basis loophole. The heirs of the super-rich pay zero capital gains taxes on huge increases in the value of what they inherit because of a loophole called the stepped-up basis. At the time of death, the value of assets is stepped-up to their current market value. So a stock that was originally valued at say, $1 when purchased, but that's worth $1,000 when heirs receive it escapes $999 of capital gains tax. This loophole enables huge and growing concentrations of wealth to be passed from generation to generation without ever being taxed. Eliminating this loophole would raise $105 billion over a decade. 22:02 Six, close other loopholes for the super-rich. For example, one way the managers of real estate, venture capital, private equity and hedge funds reduce their taxes is the carried interest loophole, which allows them to treat their income as capital gains rather than ordinary wage income. That means they get taxed at the lower capital gains rate rather than the higher tax rate on incomes. Closing this loophole is estimated to raise $14 billion over a decade. Seven, increase IRS funding. Because the IRS has been so underfunded, millionaires are far less likely to be audited than they used to be. As a result, the IRS fails to collect a huge amount of taxes from the wealthy. Collecting all unpaid federal income taxes from the richest 1% would generate at least $1.75 trillion over the decade. 23:05 So fully fund the IRS. Together, these seven ways of taxing the rich would generate more than $6 trillion over 10 years, enough to tackle the great needs of the nation. As inequality has exploded, our unjust tax system has allowed the richest Americans to cheat their way out of paying their fair share. It's not radical to rein in this irresponsibility. It's radical to let it continue. One of the ideas in that last video may sound a bit wonky, but let’s dig a bit deeper into how the stepped-up basis loophole actually creates dynastic wealth. Hello, I’m the Angel of Death… and Tax Avoidance. I’m here to talk with you about a diabolical tax loophole that the super-rich use 24:03 so their children can dodge taxes. Now, ordinarily, if you buy $1,000 worth of stock and later sell it for $10,000 — congratulations! You've made money. Of course, you would need to pay capital gains taxes on your $9,000 profit. Or, alternatively, you could die. With the “Stepped-up Cost Basis” loophole, it doesn’t matter how much you bought that stock for. When you die, its value is “stepped up” to its current value at the time of your death. When your children inherit the asset, they can turn around and immediately sell it without paying taxes on the gains. Or, instead of selling it, they can borrow against it to fund their luxurious lifestyles, and still pass it on to their heirs, also tax-free. The loophole eliminates capital gains taxes on property, too. So while the ultra-wealthy can’t cheat death, they can USE death to cheat taxes. 25:03 This tax-dodging scheme is affectionately known as the And this is one way dynastic wealth grows over the generations. For example, it’s how Robber Baron Andrew Mellon’s fortune was eventually passed down to his grandson Tim, to help enable Tim to become a major political donor. By the way, the richest 1% of Americans own half of all individually-held stock owned by Americans. Closing this loophole for heirs of the ultra-wealthy would raise more than $100 billion dollars over the next decade — money that could be used for child care, elder care, to fight the climate crisis, or help pay down the national debt. And don't feel too bad for the children of billionaires. They’ll still have lots of money to ensure they’ll never have to work for a living. They’ll be in the lap of luxury until, well… 26:07 Of course, one of the biggest giveaways to the rich was the Trump Tax Scam, in his first term. The Trump tax cuts were a huge scam. Donald Trump’s biggest legislative achievement (if you want to even call it that) was the 2017 Tax Cuts and Jobs Act. The law permanently slashed corporate taxes and temporarily cut income taxes, mostly for rich individuals, through the year 2025. The results were worse than I could have imagined. Trump and his officials claimed the tax cuts would lead to corporations hiring more workers and would “very conservatively” lead to a $4,000 boost in household incomes. AT&T plans to increase U.S. capital spending $1 billion and provide $1,000 special bonus to more than 200,000 U.S. employees And that's because of what we did. What actually happened in the years since? In AT&T’s case, 27:05 the company saw its overall federal tax bill drop by 81%. It spent 31 times more on dividends and stock buybacks to enrich wealthy shareholders than it paid it in taxes. Meanwhile, it slashed over 40,000 jobs. That was par for the course with Trump’s tax cuts. Like AT&T, America’s biggest corporations didn’t use their tax savings to increase productivity or reward workers. Instead, they increased their stock buybacks and dividends. Many of them, including AT&T, even ended up paying their executives more in some years than what they paid Uncle Sam. Those executives (along with other high earners) then got to keep more of their earnings because Trump’s tax cuts for individuals were heavily skewed toward the rich. The lowest earners? They got squat. And many middle-income families saw their taxes go up. 28:06 And those supposed $4,000 raises, did you get one? The bottom line is that Trump’s tax law fueled a massive transfer of wealth into the hands of the rich and powerful. Corporate profits have skyrocketed. U.S. billionaire wealth has more than DOUBLED since 2018. The tax cuts have also added $2 trillion to the national debt so far, but that hasn’t stopped Trump and the so-called “party of fiscal responsibility” from doubling down on renewing them. If Trump renews the expiring tax cuts for individuals that primarily benefited the rich. This would cost $4.6 trillion over the next decade, more than double the cost of the original tax cuts. Trump has also threatened to lower the corporate tax rate even further from 21% to 15%, which would cost another $1 trillion. 29:04 It’s trickle-down economics on steroids. All of this would cause the federal deficit and debt to soar, which Republicans will then use as an excuse to cut spending on government programs the rest of us rely on. But the Democrats have their own tax plan. What would it do? Just the opposite. It would increase taxes on wealthy individuals with incomes in excess of $400,000 a year, while cutting taxes for lower-income Americans. It would make billionaires pay at least 25% of their incomes in taxes, still leaving them with plenty left over. It would raise the corporate income tax to 28%, which is about what it was in 1990. It would quadruple the tax on stock buybacks to get corporations to invest more of their earnings in workers’ wages and productivity, instead of windfalls for investors. So the real choice is between the Republicans’ plan 30:01 to make the rich much richer, and the Democrats’ plan to make the rich pay their fair share and provide what Americans need. Which do you want? We’ve talked about income and wealth taxes, but there’s another change we need to talk about in terms of how to the rich are taxed. And if we don’t do it, one of America’s most important and popular social programs is in danger. Here's the real reason Social Security is in danger that nobody's talking about. It's not just because too many boomers like me are retiring. It's because of inequality. Now, I don't want to alarm you. Social Security is still helping us oldies enjoy our golden years, mostly on the pickleball court, but only for so long. Social Security is one of the most popular and successful government programs ever created, 31:02 not only helping retirees, but it's also keeping 26 million people out of poverty. Yet here's the problem... It’s going to run out of money before you can ever receive it if the rich don't start paying their fair share. The trustees of Social Security — of which yours truly was once a member back when I had thicker hair — say the program will only be able to pay full benefits until 2033. After that, Social Security will only be able to dole out roughly 77% of benefits. Why? It's not the reason that many seem to think. “And we’re going to have more and more baby boomers who are going to be collecting Social Security.” Boomer retirees like me might be soaking up some sun, but we’re not soaking up all of the program’s funds. The Social Security trustees anticipated the boom in boomer retirements. This is why Social Security was amended back in 1983, to gradually increase the age for collecting full retirement benefits from age 65 to age 67. 32:06 That change is helping finance the boomers’ retirement. What did the trustees fail to anticipate? A much larger chunk of the nation’s total income is now going to the top compared to decades ago. But income subject to the Social Security payroll tax is capped. No dollar of earnings above the cap is taxed. The cap in 2023 is $160,200. So, as the rich have become far richer, more and more of the nation’s total income has escaped the Social Security payroll tax. For example, a CEO earning $20 million a year pays Social Security taxes on roughly 1% of their income, while a worker earning under the cap pays Social Security taxes on 100% of their income. As more of the nation's income has gone to the super rich, 33:01 logically, a larger share of the nation’s income goes untaxed for Social Security. This is why widening inequality has cost the Social Security Trust Fund an estimated $1.4 trillion since 1983. The solution is obvious. it’s time to scrap the cap, and make the rich pay more in Social Security taxes. One plan introduced in Congress would eliminate the cap on earnings over $250,000 and also subject investment income to Social Security taxes. It's estimated that this would extend the solvency of Social Security for the next 75 years Without raising taxes on 93% of American households. This is where you come in. Share this video, and help spread the word about the real threat to Social Security and what can be done about it. If we want to ensure Social Security's long term future, and that working people can retire with dignity, we must and that working people can retire with dignity, we must 34:07 Of course having a fairer tax code only matters if we have an IRS to enforce it. No wonder Republicans, and Trump, and Elon Musk, have been doing whatever they can to gut the IRS. You pay your taxes. Why shouldn't the wealthy? Well, Republicans are making it easier for the rich to cheat, while making it harder for you to get your taxes done, and slower to get your refund. Let me explain. Thanks to President Biden's Inflation Reduction Act, the IRS received an $80 billion budget boost after decades of being underfunded. That's helped the agency go after America's real freeloaders: the super rich. Since then, the IRS has increased its audits of the wealthiest taxpayers, which require more agency resources because of how complicated their returns are. So far, the IRS has collected over $500 million 35:05 from just 1600 delinquent millionaires who failed to pay what they owed. It also hit Microsoft with an additional $29 billion in back taxes. And remember, these aren't new taxes. These are taxes already owed that just haven't been paid. The IRS is finally making honest taxpayers out of the rich and powerful. It's about damn time. And this funding lets the IRS serve you better. Clearing a backlog of millions of unprocessed tax returns. Cutting the customer service wait time by 85%. And improving technology to get refund checks out faster. But Republicans aren't having it. They threatened a government shutdown to extort $20 billion in budget cuts to the IRS. They claim these cuts will reduce the deficit. Well, that's baloney. Every extra dollar spent auditing rich tax cheats 36:05 yields an estimated $12 in return. America lost a record $688 billion in unpaid taxes in 2021, disproportionately from the richest 1%. That's nearly half the size of last year's budget deficit. If Republicans truly cared about the deficit, they would fund the IRS, not gut it. But this isn't about the deficit. It's about protecting the wealthy and the powerful at the expense of everyone else. at the expense of everyone else. So what can we do about this? Spread the word, and tell your representatives to protect IRS funding. We should all be playing by the same rules. Don't you think? Finally, I want to leave you with one of the most comprehensive videos we’ve ever done America’s growing wealth gap and the danger it poses for the nation. We made this video three years ago. Since then, Elon Musk has added about a hundred billion dollars to his own personal wealth. 37:08 I bet that’s a little more than you have added to your own personal wealth in the last three years. Elon Musk's wealth has surpassed $200 billion. It would take the median U.S. worker OVER 4 MILLION YEARS to make that much. Wealth inequality is eating this country alive. We’re now in America’s second Gilded Age, just like the late 19th century when a handful of robber barons monopolized the economy kept wages down, and bribed lawmakers. While today’s robber barons take joy rides into space, the distance between their gargantuan wealth and the financial struggles of working Americans has never been clearer. During the first 19 months of the pandemic, U.S. billionaires added $2.1 TRILLION dollars to their collective wealth and that number continues to rise. And the rich have enough political power to cut their taxes to almost nothing — sometimes literally nothing. In fact, Jeff Bezos paid no federal income taxes in 2007 or in 2011. 38:10 By 2018, the 400 richest Americans paid a lower overall tax rate than almost anyone else. But we can't solve this problem unless we know how it was created in the first place. Let’s start with the basics. Wealth inequality in America is far larger than income inequality. 'Income' is what you earn each week or month or year. 'Wealth' refers to the sum total of your assets — your car, home, art — anything else you own that’s valuable. Valuable not only because there’s a market for it — a price other people are willing to pay to buy it — but because wealth itself grows. As the population expands and the nation becomes more productive, 39:02 the overall economy continues to expand. This expansion pushes up the values of stocks, bonds, rental property, homes, and most other assets. Of course recessions and occasional depressions can reduce the value of such assets. But over the long haul, the value of almost all wealth INCREASES. Next: personal wealth comes from two sources. The first source is the income you earn but don’t spend. That’s your savings. When you invest those savings in stocks, bonds, or real property or other assets, you create your personal wealth, which, as we’ve seen, grows over time. The second source of personal wealth is whatever is handed down to you from your parents, grandparents, and maybe even generations before them — in other words, what you INHERIT. 40:07 The wealth gap between the richest Americans and everyone else is staggering. In the 1970s, the wealthiest 1% owned about 20% of the nation’s total household wealth. Now, they own OVER 35%. Much of their gains over the last 40 years have come from a dramatic increase in the value of shares of stock. For example, if someone invested $1,000 in 1978 in a broad index of stocks — say, the S&P 500 — they would have $31,823 today, adjusted for inflation. Who's benefited from this surge? The richest 1%, who now own HALF of the entire stock market. But the typical worker’s wages have barely grown. Most Americans haven’t 41:05 earned nearly enough to save anything. Before the pandemic, when the economy appeared to be doing well, almost 80% were living paycheck to paycheck. So as income inequality has widened, the amount that the few high-earning households save — their wealth — has continued to grow. Their growing wealth has allowed them to pass on more and more wealth to their heirs. Take, for example, the Waltons — the family behind the Walmart empire — which has seven heirs on the Forbes billionaires list. Their children, and other rich millennials, will soon consolidate even more of the nation’s wealth. America is now on the cusp of the largest intergenerational transfer of wealth in history. As wealthy boomers pass on, somewhere between $30 to $70 TRILLION will go to their children over the next three decades. 42:07 These children will be able to live off of this wealth, and then leave the bulk of it — which will continue growing — to their own children … tax-free. After a few generations of this, almost all of America’s wealth could be in the hands of a few thousand families. Concentrated wealth is already endangering our democracy. Wealth doesn’t just beget more wealth — it begets more POWER. Dynastic wealth concentrates power into the hands of fewer and fewer people, who can choose what nonprofits and charities to support, and which politicians to bankroll. This gives an unelected elite enormous sway over both our economy and our democracy. We might come to resemble the kind of dynasties common to European aristocracies in the 43:05 seventeenth, eighteenth, and nineteenth centuries. Dynastic wealth makes a mockery of the idea that America is a meritocracy, where anyone can make it on the basis of their own efforts. It also runs counter to the basic economic ideas that people earn what they’re worth in the market, and that economic gains should go to those who deserve them. Finally, wealth concentration magnifies gender and race disparities because women and people of color tend to make less, save less, and inherit less. The typical single woman owns only 32 cents of wealth for every dollar of wealth owned by a man. The pandemic likely increased this gap. The racial wealth gap is even starker. The typical Black household owns just 13 cents of wealth for every dollar of wealth owned by the typical white household. 44:04 The pandemic likely increased this gap, too. In all these ways, dynastic wealth creates a self-perpetuating aristocracy that runs counter to the ideals we claim to live by. The last time America faced anything comparable to the concentration of wealth we face today was at the turn of the 20th century. That was when President Teddy Roosevelt warned that “a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power,” could destroy American democracy. Roosevelt’s answer then was to tax wealth. Congress enacted two kinds of wealth taxes. The first, in 1916, was the estate tax 45:02 — a tax on the wealth someone has accumulated during their lifetime, paid by the heirs who inherit that wealth. The second tax on wealth, enacted in 1922, was a capital gains tax — a tax on the increased value of those assets, paid when those assets are sold. But both of these wealth taxes have shrunk since then, or become so riddled with loopholes that they haven’t been able to prevent a new American aristocracy from emerging. The Trump Republican tax cut enabled individuals to exclude $11.18 million from their estate taxes. That means ONE COUPLE can pass on more than $22 million to their kids tax-free. Not to mention the very rich often find ways around this tax entirely. As Trump’s former White 46:01 House National Economic Council director Gary Cohn put it, “Only morons pay the estate tax.” What about capital gains on the soaring values of wealthy people’s stocks, bonds, mansions, and works of art? Here, the biggest loophole is something called the stepped-up basis. If the wealthy hold on to their assets until they die, their heirs inherit them without paying any capital gains taxes whatsoever. All the increased value of those assets is simply erased, for tax purposes. This loophole saves heirs an estimated $40 billion a year. This means that huge accumulations of wealth in the hands of a relatively few households can be passed from generation to generation untaxed — growing along the way — generating comfortable incomes for rich descendants who will never have to work a day of their lives. 47:02 That’s the dynastic class we’re creating right now. Why have these two wealth taxes eroded? Because, as America’s wealth has concentrated in fewer and fewer hands, the wealthy have more capacity to donate to political campaigns and public relations — and they’ve used that political power to reduce their taxes. It’s exactly what Teddy Roosevelt feared so many years ago. So what do we do? Follow the wisdom of Teddy Roosevelt and tax great accumulations of wealth. The ultra-rich have benefited from the American system — from laws that protect their wealth, and our economy that enabled them to build their fortunes in the first place. The majority of Americans, both Democrats and Republicans, believe the ultra-rich should pay higher taxes. 48:04 There are many ways to make them do so: Closing the stepped up basis loophole, raising the capital gains tax, and fully funding the Internal Revenue Service so it can properly audit the wealthiest taxpayers, for starters. Beyond those fixes, we need a new wealth tax: a tax of just 2% a year on wealth in excess of $1 million. That’s hardly a drop in the bucket for centi-billionaires like Jeff Bezos and Elon Musk, but it would generate plenty of revenue to invest in healthcare and education so that millions of Americans have a fair shot at making it. One of the most important things you as an individual can do is take the time to understand the realities of wealth inequality in America and how the system has become rigged in favor of those at the top — and demand your political representatives take action to unrig it. 49:06 Wealth inequality is worse than it has been in a century. We have to stop this vicious cycle — and demand an economy that works for the many, not one that concentrates more and more wealth in the hands of a privileged few. Thank you for watching along. I know that taking in so much information can be taxing. The staggering wealth gap that we’ve allowed to grow in this country, frankly, gives me a stomach ache. But I’m pretty sure eating the rich would give all of us an ever worse stomach ache. So let’s agree to just tax them instead. Please share this video with anyone who might be hungry for this information.

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