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Fair Taxation (Federal)

April 11, 2024: Montana's 5 Billionaires Have Grown $2.4 Billion, or 15%, richer since 2017 Tax Overhaul – But Those Gains May Never Be Taxed

Montana’s 5 billionaires have grown $2.4 billion, or 15%, richer since enactment in 2017 tax law that was heavily slanted towards the rich, according to Forbes data analyzed by Americans for Tax Fairness (ATF). But in what may come as a shock to people in Montana who’ve just finished filing their taxes, under current law, billionaires who’ve accumulated these wealth gains may never be taxed. 

Nationwide, America’s billionaires were collectively nearly twice as rich on April 1 of this year as they were when the 2017 tax law was enacted a little over six years ago: their collective fortune doubled from $2.9 trillion to $5.8 trillion. Montana billionaires were altogether worth roughly $18.6 billion on April 1. 


“In Montana and across the country this Tax Day, hard-working Americans know in their gut that the tax code isn’t fair,” said David Kass, ATF’s executive director. “The untaxed explosion of billionaire wealth is a prime indicator of a rigged system. President Biden and congressional Democrats want to start more effectively taxing billionaires and other unimaginably wealthy Americans, while Donald Trump and Republicans want to give them more tax cuts. The contrast in priorities couldn’t be more clear.”


Because of loopholes in current law, billionaires often pay little or no federal income tax. An expose by ProPublica based on IRS data revealed that Elon Musk, Jeff Bezos and other top billionaires paid zero federal income tax in several recent years. It determined that the top 25 billionaires paid just a 3.4% tax rate between 2014 to 2018 when the growth in their wealth is counted as income. By this measure, Denny Washington paid a tax rate of only 5.7% over roughly the same period.


Under current rules, increases in asset values (“capital gains”) are only taxed when the asset is sold. But billionaires and other super-wealthy people don’t need to sell to benefit: they can use their rising fortunes to secure low-interest loans and live luxuriously tax-free. And when those gains are inherited by the next generation, thanks to another loophole, they simply disappear for tax purposes. 


President Biden and the chief tax writer in the U.S. Senate, Ron Wyden (D-OR), have both put forth legislation to annually tax the wealth gains of the nation’s very wealthiest households. The president’s plan would raise $503 billion in tax revenue over 10 years, while the proposal from Wyden, the chairman of the Senate Finance Committee, would raise $557 billion. 


If that revenue was distributed to the states in accordance with recent historical levels of federal grants, Montana could gain every year for 10 years about $239 million–from the Biden plan–or $265 million, from the Wyden proposal. This is based on budget data from the National Association of State Budget Officers. Between 2021 and 2023, federal grant funds made up an average of 50% of Montana’s state budget.


Federal funding to states helps pay for numerous programs and services: healthcare (Medicaid and CHIP); childcare; food and nutrition (SNAP, WIC); education (Head Start, Title I and IDEA); housing; transportation (highways, airports, and mass transit); public safety and much more. These funds represent nearly one-third of state budgets on average and nearly one-quarter of state and local budgets combined. Additional funds generated by a billionaires income tax could be used to lower costs to the state’s working families for all these vital services.


That $239 million or $265 million a year (depending on the plan adopted) in federal grants would add about 2.4% or 2.6% to Montana's budget, respectively, based on an average of the state’s budgets between 2021 and 2023. 


Among the expiring provisions that would mostly or exclusively benefit the very wealthy, including billionaires, if they were permanently extended:

  • A cut in the tax rate charged on the highest income households (in 2024, over $730,000 per couple), from 39.6% to 37%;

  • An enfeebled estate tax that allows inheritance of huge family fortunes (in 2024, over $27 million per couple and slated to rise each year) to go completely untaxed. If this provision is allowed to expire on schedule, the estate-tax exemption would revert to a still quite generous but somewhat more reasonable estimated $14.5 million per couple

  • A weakened Alternative Minimum Tax, which is meant to prevent the highest-income households from exploiting loopholes and special breaks to whittle down their tax bills. 

  • A special rule that allows non-corporate businesses to subtract 20% of their profits before figuring their taxes. In 2019, over half of this tax cut went to business owners in households with over $800,000 in annual income


President Biden and Democrats want to allow tax cuts for those households making over $400,000 a year to expire on schedule. Moreover, the president and his party in Congress have already raised taxes on the biggest corporations and on wealthy investors and cracked down on wealthy tax cheats. They have proposed further reforms that would result in the rich and corporations paying more in taxes, not less: 

  • Boosting the corporate tax rate from 21% to 28%, halfway back to where it was before the 2017 tax law. (This reform alone would raise $1.35 trillion over 10 years)

  • Increasing a wealthy investors’ tax from 3.8% to 5%. ($797 billion)

  • Cracking down on the offshoring of corporate profits. ($715 billion)

  • Ending the nearly half-off tax discount on investment income over $1 million. ($289 billion)

  • Expanding restrictions on excessive corporate pay for top executives. ($272 billion)


We are calling on the members of Montana's congressional delegation to take a stand to support ending tax cuts that mostly benefit the wealthy and that will increase deficits by almost $4 trillion over 10 years, thereby endangering the funding of Medicaid, Medicare, and other critical services.


Taxing billionaires and millionaires on their wealth the same way working Americans are taxed on their wages would raise billions to invest in programs that serve average people, keep communities safer and increase opportunities to succeed in today’s economy. Every member of the Montana delegation should endorse a resolution calling for billionaires to pay their fair share.

Source: Americans for Tax Fairness

June 2023: The familiar theme from Montana's supermajority is now playing out at the federal level: More tax breaks for the wealthy and large corporations

Republican House bill: American Families & Jobs Act is none of the above. It features more tax cuts for the wealthy and large corporations and pays for those tax cuts by gutting some of the climate change portions of the Inflation Reduction Act passed in 2022.

Background: During last month’s budget fight, House Republicans threatened to crash the economy and forced cuts to vital services because of a claimed concern about federal debt. Now that that fight is over, House Republicans have immediately turned to pushing costly tax cuts for the rich. This week, they’re opening the battle with a markup on legislation to renew cuts and reverse increases in corporate taxes from the 2017 Trump-GOP tax law.


This is straight out of the playbook Republicans have been using for decades:

  1. Cut taxes for the wealthy and corporations, which blow up the deficit

  2. Blame the deficit on programs and services for working families

  3. Demand harmful cuts to programs for working families

  4. Repeat


The 2017 Trump-GOP tax scam was heavily skewed to the wealthy and corporations, and Republicans are now working to make them permanent. The package coming to the floor next week is the opening salvo in that battle.


Many of the corporate tax cuts in the package are egregious giveaways to firms that need them least. Hugely profitable billion-dollar companies like Google, Apple, Intel, Microsoft, and Boeing already receive billions of dollars in federal tax subsidies for research and experimentation (R&E) through the permanent research tax credit. Now they’re asking for hundreds of billions more.


The legislation only covers two years, but if the changes are made permanent—as the GOP has made clear it wants—these tax benefits for business would cost over $1 trillion. And the legislation is heavily slanted towards the rich, including a temporary boost to the standard deduction that mostly benefits high-income households. Next year the richest 1% of families would get an average tax cut of over $16,000—the poorest fifth would get only $40. Foreign investors would walk away with almost $24 billion in U.S. tax savings.


To the extent that any of the GOP package is offset in the short-term, it's paid for by repealing part of the Inflation Reduction Act's investments in green energy. Thus far, the only tax increases we have seen House Republicans support are those that worsen climate change and hurt families.

Check out these other resources for more information: 




Source: Americans for Tax Fairness

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