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The Income-Defense Industry:  Alive, Kicking, and Growing Stronger!

Dear Commons Community,

Our country has seen the evils of the military-industrial complex and the education-industrial complex, the New York Times has a page-one article this morning, describing the income-defense industry, which consists of a high-priced phalanx of lawyers, estate planners, lobbyists and anti-tax activists who exploit and defend a dizzying array of tax maneuvers, virtually none of them available to taxpayers of more modest means.  The income-defense industry functions within both political parties and guards and funds it priorities well.  The article comments:

“In recent years, this apparatus has become one of the most powerful avenues of influence for wealthy Americans of all political stripes, … who give heavily to Republicans [and Democrats]…

All are among a small group providing much of the early cash for the 2016 presidential campaign.

Operating largely out of public view — in tax court, through arcane legislative provisions and in private negotiations with the Internal Revenue Service — the wealthy have used their influence to steadily whittle away at the government’s ability to tax them. The effect has been to create a kind of private tax system, catering to only several thousand Americans.

The impact on their own fortunes has been stark. Two decades ago, when Bill Clinton was elected president, the 400 highest-earning taxpayers in America paid nearly 27 percent of their income in federal taxes, according to I.R.S. data. By 2012, when President Obama was re-elected, that figure had fallen to less than 17 percent, which is just slightly more than the typical family making $100,000 annually, when payroll taxes are included for both groups.

The ultra-wealthy “literally pay millions of dollars for these services,” said Jeffrey A. Winters, a political scientist at Northwestern University who studies economic elites, “and save in the tens or hundreds of millions in taxes.”

Some of the biggest current tax battles are being waged by some of the most generous supporters of 2016 candidates. They include the families of the hedge fund investors Robert Mercer, who gives to Republicans, and James Simons, who gives to Democrats; as well as the options trader Jeffrey Yass, a libertarian-leaning donor to Republicans.”

The article goes on to give a number of examples of wealthy Americans gaming the system to their benefit and concludes:

“For the ultra-wealthy, “our tax code is like a leaky barrel,” said J. Todd Metcalf, the Democrats’ chief tax counsel on the Senate Finance Committee. ”Unless you plug every hole or get a new barrel, it’s going to leak out.”

Thank you to the New York Times for giving this issue such prominence.  It is eating away at all of our country’s democratic values and sense of fair play.

Tony

 

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