Tax wealth as income
To the Editor:
There’s no better time than tax season to take a hard look at our absurd federal tax code — the single biggest reason the so-called “1%,” and the wealthy more broadly, have been pulling away from the rest of us for the past 50 years. Consider this: tech founders like Mark Zuckerberg famously take a $1 annual salary. They pay no income tax on that salary.
Some, in certain years, paid no income tax at all because they had no earned income — just mountains of wealth. And because wealth can be borrowed against tax-free, they can finance yachts, mansions and even business acquisitions. Elon Musk did exactly that when he purchased Twitter.
In 1960, the comprehensive tax rate (all taxes) on the 400 richest Americans was 56%. Today, it’s about 23%. Meanwhile, the bottom half of earners saw their comprehensive tax rate rise from 22% in 1960 to about 24% today. Corporate taxes tell the same story: the rate fell from 52% in 1960 to 21% now. So yes — the wealthy pay far less as a share of their income than the average wage earner. The old quip that a CEO pays a lower tax rate than his secretary is based in fact.
And the gap has widened in other ways. In 1960, the average CEO made about 20 times the wages of their workers. Today, it’s closer to 300 times. Inheritance and estate tax laws have also been dramatically weakened. These taxes have been successfully denigrated as “death taxes,” which frames them as something evil. Only five states still have inheritance taxes, and starting in 2026, the first $15 million of an estate will be exempt from federal estate tax — courtesy of Trump’s Big Beautiful Bill.
In simple terms, our tax code and estate laws allow the rich to keep getting richer and their heirs to inherit vast fortunes, while the rest of us remain stuck in neutral — or slide backward. Why did this happen? Partly because of the “Laffer Curve” craze of the 1970s, which claimed that cutting marginal tax rates would spur economic activity and even increase tax revenue. It certainly sounded great to those already doing well. Beginning in the 1980s, this theory was applied to tax policy — but the promised revenue boom never materialized. Instead, tax reforms changed how wealthy people earned, reported and sheltered income, reducing their taxable income and shifting the burden onto everyone else.
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Even Mitt Romney has called for reform. In his editorial “Tax the Rich, Like Me,” he focused on the looming Social Security Trust Fund cliff in 2034, but he also acknowledged the broader tax code fiasco. He knows the loopholes — or “caverns,” as he called them — because he’s used them. And he’s right that everyone will have to give something, but those with the most to give will have to pony up the most.
Sen. Elizabeth Warren has proposed taxing wealth in addition to income, which would raise significant revenue and reduce the deficit. Other proposals target inherited wealth. These reforms are essential if we want to narrow the widening gap between the wealthy and the working class. But overturning laws that benefit the ultrarich won’t be easy. In 2024, the billionaire class — totaling 813 individuals (per Forbes Magazine) — accounted for 19% of all federal political contributions. Small donors are increasingly drowned out by billionaire and megadonor money.
This is one reason I use the 1960s as a comparison. That era is often invoked by Trump as a time when America was “great.” But if you’re wealthy and expect to get even wealthier, I’d pick today’s tax code as far more generous than anything from the 1960s. If we truly want to make American taxes fairer again, we should look back to the principles that worked — and support candidates who are willing to fix a system that has drifted far from fairness.
Glenn Duerr,
Waynesville
