Congress should pay for infrastructure and other investments in a way that lifts up workers and reduces democracy-distorting wealth inequality.
In the coming weeks, lawmakers will debate how to pay for trillions of dollars of investments in public infrastructure and other urgent priorities such as combatting climate change, expanding childcare and rebooting the economy.
These plans should mostly be paid for by those who have reaped pandemic windfalls: the wealthiest 0.1 percent of households, those with wealth over $5 million.
At the global level, governments are considering revenue plans that would reduce the raging inequalities that have been accelerated by the pandemic.
UN Secretary-General Antonio Guterres urged governments to “consider a solidarity or wealth tax on those who have profited during the pandemic, to reduce extreme inequalities.” Argentina levied an emergency wealth tax that raised $2.4 billion for COVID-19 response. The International Monetary Fund and the World Bank have also advocated for wealth taxes to help cover the costs of COVID-19 relief.
Oxfam has called for a one-time 99 percent pandemic wealth windfall tax on the 2,690 global billionaires who have seen their combined wealth increase $5.5 trillion during the pandemic. This could cover the cost of vaccinating the world while also providing unemployment support for millions who have lost their jobs. Even after this tax, global billionaires would still be $55 billion richer than they were before the pandemic.
As our research with Americans for Tax Fairness has shown, the 708 U.S. billionaires have seen their combined wealth increase over $1.8 trillion since March 2020. The top seven billionaires now have combined wealth of over $1 trillion. Most of these wealth gains will not be subject to any taxation under our current system.
As the super-rich got richer, the most economically precarious were pushed to the curb. The bottom 40 percent of households with little in the way of financial reserves have emerged more precarious. Front-line workers, disproportionately women and people of color, have borne the brunt of COVID-19 infections and death. The resulting child care crisis will have lasting effects on women’s employment and the economy.
We should also tax the pandemic profiteering companies. A handful of global corporations — especially those in telemedicine, online retail and delivery, pharmaceuticals, gaming and amusements — have benefited financially from the shuttering of their Main Street competition.
These corporations have reaped windfalls, mostly passing on gains to their owners and top management rather than to the front-line workers who were in the viral line of fire. During the pandemic, the pay gap between corporate chief executives and typical workers widened to 351 to one, up from 299 to one in 2019.
This widening pay gap mirrors a longer-term trend of stagnant wages and booming CEO pay. Between 1978 and 2020, CEO pay skyrocketed 1,322 percent while average worker compensation grew 18 percent, according to the Economic Policy Institute.
Congress will debate the merits of using the reconciliation process to pass far-sighted spending programs along partisan lines. But the slim Democratic majority has already demonstrated the potential of acting boldly to solve problems. The American Rescue Plan, passed at the beginning of the year through the reconciliation process, reduced childhood poverty by 61 percent.
“When Republicans controlled the Senate, they used reconciliation to pass trillions of dollars in tax breaks to the top 1 percent and large corporations,” said Senator Bernie Sanders, as he introduced the Senate Budget Resolution on Aug. 9. “When Republicans controlled the Senate, they tried to use reconciliation to repeal the Affordable Care Act and throw 32 million Americans off of the health care they had. Today, with Democrats in control of the Senate, we will use reconciliation to benefit the working class, not the billionaire class.”
Democrats should press forward without Republican votes to make the urgently-needed investments that will create good jobs and boost the economy. These investments should be paid for by taxes on the super-wealthy and the global corporations that have reaped windfall profits during the pandemic.
President Biden’s proposal to crack down on tax evasion by the wealthy would raise an estimated $700 billion. Taxing income over $1 million from wealth at the same rates as income from wages would raise $370 billion. Raising the corporate tax rate from 21 percent to 28 percent would raise nearly $900 billion while curbing offshore corporate tax dodging would raise another $1 trillion.
This Labor Day, let’s get our priorities straight.
Chuck Collins is director of the Program on Inequality at the Institute for Policy Studies, where he co-edits Inequality.org. He is author of “The Wealth Hoarders: How Billionaires Pay Millions to Hide Trillions.”