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 supportacross 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 article was produced by Economy for All, a project of the Independent Media Institute.