Yesterday, ProPublica published a database that included the personal tax information of several exceptionally wealthy Americans. It will not be linked here because it is a disgusting example of posting personal, possibly hacked information. The IRS better hope it was a hack or one of their own needs to go to jail. The laws governing the disclosure of tax information are unambiguous and have very few logical exceptions.
The exceptions do not cover dropping the tax information of billionaires to a left-wing organization to support President Biden’s tax plan. The fact this happened means either your tax information is not secure or partisans within the IRS are willing to risk arrest to provide it to media outlets when it suits their purposes. Neither one is acceptable.
However, President Biden’s social media intern responded to the leak without acknowledging it.
I’m working hard to find common ground with Republicans when it comes to the American Jobs Plan, but I refuse to raise taxes on Americans making under $400,000 a year to pay for it.
It’s long past time the wealthy and corporations pay their fair share.
— President Biden (@POTUS) June 8, 2021
Senator Elizabeth Warren actually linked the article in this tweet, a glaring breach of privacy by a sitting senator to advocate for her preferred policy:
These responses are also misleading, with dangerous implications for everyone who has investments with unrealized gains. This group would include anyone with real estate, a 401(k), or any investment in stocks or a business. If you believe Democrats will confine their thirst for income for only the wealthiest Americans long term, you haven’t looked at Biden’s spending plans.
First, the vast majority of the wealth for the individuals whose information was leaked is in investments. Under the current tax system, money invested is not taxed until an asset is sold and an increase in value is received. This tax is called a capital gains tax, which the Biden plan proposes to increase significantly. Federal tax is based on income, not investments with unrealized gains.
President Biden’s assertion needs to be clarified. Because in 2019, the top 1% of income earners paid about 1/3 of their income in federal tax. Biden was fact checked on a similar assertion on the campaign trail:
According to an analysis by the nonpartisan Tax Policy Center, the top 1% — those making over $783,300 ($2.4 million on average) — will pay about an average federal tax rate of 30.2% in 2019. That’s a higher rate than any other income category below it.
Biden did not specify what income group he was talking about. He said only that the top 1% pay a lower rate “than you do” before listing several middle-income jobs — “a teacher, a firefighter, a cop.”
But those in the middle 20% of earners — with an expanded cash income of $50,001 to $87,300 — will pay an average federal tax rate of 12.4%, according to the Tax Policy Center analysis. That’s less than half the effective tax rate paid by the top 1%.
What Warren is proposing is taxing unrealized gains. This gain could be equity in your home, the gains in your 401K, or other investments, and even the current value of things you own. As a multi-millionaire, her plan carefully exempts her own net worth. However, if successful, you can be assured the government would significantly lower the bar for participation to satisfy the beast that is our exploding debt. It is a horrible precedent.
This type of tax would require a bigger government, including a massive investment in the agency that just allowed the disclosure of personal tax information:
The legislation would invest $100 billion into IRS systems and personnel, ensure a 30% audit rate for the super wealthy, and impose a 40% exit tax on wealthy Americans who seek to renounce their citizenship to avoid a wealth tax.
With the concern this leak raises about the security of our personal financial information, Americans should be considering shrinking the IRS.
There are legitimate proposals for a flat tax, a simple calculation against total income. Americans would pay an amount of their income regardless of age or marital status and eliminate other deductions to manage behavior. This tax proposal usually excludes the first $50,000 in income and imposes a 10-12% tax on the remainder. A two-line tax return for everyone. It would contain total income and 10% of the total.
Even better would be abolishing the IRS altogether and using a consumption tax. Instead of taxing labor and investment, which is what income and capital gains taxes do, use a federal sales tax. This type of proposal is often called the Fair Tax and includes mechanisms for rebates to the indigent. It also eliminates some of the most apparent forms of double-taxation, such as the estate tax. Americans would receive their entire paycheck and pay a 23% sales tax on items they chose to buy, with specific exceptions.
No one should view this leak of IRS information as a win. I am old enough to remember when the left was suspicious of government and concentrations of power. Now they are the government and currently hold all the power. And they cheer when that power is used against the people they target. This behavior should concern every American.