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Tax Policy in 2016
A Tax System that Levels the Playing Field and Grows
It’s time for a wholesale overhaul of the tax code that rejects trickle down
economics. Trickle-down policies have prioritized huge tax breaks for corporations
and the wealthiest at the expense of the rest of us while increasing inequality and
holding America’s growth back.
o The consequences of trickle-down are real—while pre-tax incomes of the
middle class grew by less than 10 percent since this failed experiment
began, those of the top 1 percent nearly tripled.
o Even the IMF and S&P have found that extreme inequality can be a drag on
Rewriting the tax code to promote inclusive growth and improve the lives of
America’s families will help level the playing field and improve economic
efficiency. We can do both.
o There is no correlation between lower tax rates and increases in
growth or investment despite what we have been told for the last 40
As Nobel Laureate Joseph Stiglitz argues, we need a tax system that rejects
trickle down, holds the wealthy and corporations accountable for harmful
practices, ends corporate welfare and restructures corporate taxes,
incentivizes positive economic investments in workers and communities,
and ensures those at the top pay their fair share. We need to reinvest
revenue to improve the lives of America’s families and communities.
Today’s tax code is rigged in favor of the wealthy and corporations.
o Capitol gains, which are taxed at roughly half the rate of labor, offer a clear
example of how the tax system is rigged in favor of the wealthy. 87 percent
of the benefit of reduced capital gains tax goes to the top 10 percent, with
68 percent going to the top 1 percent alone.
o In 1952, corporations contributed over 30 percent of U.S. tax revenue;
today that figure is down to just 10.8 percent. The current tax code
allows for systemic tax avoidance and reduced incentives to invest in the
The tax code should be rewritten to encourage productive economic activity
like long-term investment in workers and research and development and
discourage risky and shortsighted behavior like excessive financial risk-taking,
short-term trading, polluting, and corporate stock buybacks. Currently, corporations
and individuals are allowed to profit off these activities while passing true costs on
to America’s families.
In 2016 more and more Americans believe the deck is stacked against them. As a
result there is broad public support for rewriting our tax policies. In a national poll of
900 voters, Roosevelt found that 72% of the public believes “increasing taxes
Tax Policy in 2016
on the richest 1 percent to fund investments that will grow the economy in the
long term like in public education, scientific research, and infrastructure” would
produce a better economy. 72% of Americans also believe a general increase
in taxes “on top earners so that they pay their fair share” would produce a better
Increasing tax rates on the wealthiest Americans and big corporations to
level the playing field isn’t just good economics, it’s good politics and it’s
time for policy makers to act.
Far too many of the 2016 presidential candidates have proposed plans to
continue trickle down with big tax cuts for the wealthiest Americans.
Tax Cuts Under
Donald Trump,
Percent Change
in Income
Tax Cuts Under
Ted Cruz,
Percent Change
in Income
Tax Cuts Under
Marco Rubio,
Percent Change
in Income
0 to 20% avg.
income $13,803
$128, 1%
$46, .4%
$251, 1.9%
20% to 40% avg.
income $34,516
$969, 3.1%
$588, 1.9%
$450, 1.4%
Top 1% Avg.
Income $2.3
$275,257, 17.5%
$407,708, 26%
$162,646, 10.4%
Top .1% Avg.
Income $10.5
$1,994,104, 29%
$932,841, 13.6%
All figures from the Tax Policy Center.
Tax Policy in 2016
Specific Tax Policy Suggestions Offered By the Roosevelt
Institute and Joseph Stiglitz
Raise top tax rates and capitol gains taxes, which predominately benefit the
wealthiest Americans. A 5% increase in the tax rate of the top 1% would raise
between $1-1.5 trillion over ten years. With this revenue we could make all public
college education free, fund universal pre-K, and still have money left over.
Tax policy should be geared to maximize earnings for the broadest swath of
End loopholes that overwhelming benefit the wealthy like the estate tax. In 2013
65% of the savings form the estate tax went to the top 20% of the population and
21% went to the top 1%.
Tax excessive financial risk to promote more productive bank behavior like lending
to small businesses and protect against another financial crash.
Institute a financial transactions tax to discourage speculative short-term trading,
combat volatility in the market and raise revenue.
Tax carbon emissions to discourage pollution, which disproportionally effects low
income Americans, and encourage more sustainable alternatives.
Only allow corporations to write off interest payments on debt for productive
investments like a new factory, not stock buybacks or CEO bonuses.
Reduce taxes on middle and low-income Americans and small businesses that will
invest the money in consumer goods and wages and increase economic
Rewrite corporate taxes so multinational corporations are taxed according to the
amount of business they conduct within the U.S. This sort of reform would not just
prevent inversions and other tax avoidance but would realign incentives so
corporations invest in America.
Crack down on “pass-through” entities like S-Corporations, which are taxed
through an individual’s income tax instead of the corporate tax system and have
substantially reduced corporate tax receipts and increased inequality.
Cut corporate welfare for large, profitable corporations, like those in the agriculture
and fossil fuel industries, which no longer need government support.
Stop selling public lands like mineral deposits and fisheries at below market value.