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It’s easy to find yourself grumbling at the thought of taxes, especially when you have to spend another weekend wrestling with your tax software as April 15 approaches.
Republicans have a ready response to the displeasure so many of us feel at this time of year: Taxes are terrible, the Internal Revenue Service is a force of oppression that must be curtailed, and anything that looks like a tax cut (no matter who actually benefits) is an unalloyed good.
Unfortunately, for decades Democrats have lived in fear of anti-tax sentiment rather than trying to change it, and accepted too many Republican premises. But what if they changed their approach to the issue? They could reap enormous political benefit, and get us a fairer and healthier fiscal system to boot.
The new Dem proposals are nothing to be excited about
With the 2028 presidential election on the horizon, some influential Democrats are rolling out new tax reform proposals, and it’s safe to assume that anyone actually running for the Oval Office will have to have one.
First out of the gate are Sens. Cory Booker and Chris Van Hollen, who released plans last month. Booker’s would increase the standard deduction to $75,000 for couples, meaning no one would pay income tax on anything up to that amount (though they would still pay payroll taxes, which fund Social Security and Medicare). The Child Tax Credit and Earned Income Tax Credit would be increased, and it would all be paid for by “raising the corporate tax rate, strengthening the corporate tax rules, increasing taxes on stock buybacks, tightening limits on executive compensation deductions, and other measures to return fairness to our tax system.”
Van Hollen’s plan differs in some details, but adopts a similar approach. It eliminates income taxes on anyone making below the median income ($46,000 a year for an individual; $92,000 for married couples) and pays for it with a series of surtaxes on high incomes. This could be the playbook for Democrats in the near future: Increase taxes on the wealthy, cut taxes for people with below-average incomes.
Sound complicated? That’s exactly the problem.
There’s no doubt that the wealthy pay far too little in taxes, and they pay much less now than they used to, especially after four enormous tax cut laws passed under George W. Bush and Donald Trump.
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Rich people have benefited massively from the ever-expanding complexity of our tax system, because the more complicated it gets, the easier it is for them to exploit it. Unlike the rest of us, they have teams of tax lawyers and accountants, complex payment schemes and offshore accounts, and a thousand ways to shield their money. In 2021, ProPublica used confidential IRS data to calculate that over a five-year period, Warren Buffett paid an effective tax rate of 0.1 percent, Jeff Bezos paid 0.98 percent, Michael Bloomberg paid 1.3 percent, and Elon Musk paid 3.27 percent. In some years they managed to pay nothing at all.
With anger at inequality growing more intense all the time, milking the rich sounds great to almost anyone who isn’t rich. That’s nothing new — “Republicans want to cut taxes for the wealthy” has been one of the most consistently potent messages in American politics for decades. That’s not only because it’s always true, but because it gets to an extraordinarily powerful value held by people across the political spectrum: fairness.
Polls consistently show that the idea that corporations and rich people aren’t paying their fair share is the top complaint people have about the tax system. But fairness doesn’t necessarily demand a tax cut for the middle and lower classes, especially given that most of them pay relatively little in income taxes already (two-thirds of Americans pay more in payroll taxes than federal income taxes).
Instead, Democrats should consider more fundamental tax reform, in order to shift not just the tax burden but how people think about the system, the government, and themselves.
We are taxpayers
“Taxes are what we pay for civilized society,” wrote Supreme Court justice Oliver Wendell Holmes in 1927 — a view liberals hold, but Democrats don’t spend a lot of time trying to promote. But in a better world, that’s exactly what the average person would believe.
They’d want the system to be fair, but they’d also feel that paying taxes is patriotic, and their own contributions help make everything we value about our nation possible. This idea is hardly novel; we often use “taxpayer” as a synonym for “citizen,” to indicate people who have a stake in the system and whose wishes should be respected.
This is not how conservatives think about taxes, least of all Donald Trump. He memorably responded to Hillary Clinton’s accusation that he pays no taxes with “that makes me smart,” as though only a sucker would contribute to pay for schools, parks, roads, health care, the legal system, the military, and anything else you might find valuable about government.
Republicans want the tax system to be as inefficient, complicated, and frustrating as possible — not only so the wealthy can exploit it, but so ordinary people will hate it. It’s no mystery why they fought to cut the IRS budget for years and make villains out of its workers. After Democrats gave the agency a huge cash infusion in the Inflation Reduction Act under Joe Biden, Republicans sicced DOGE on it, firing thousands of employees, degrading its customer service capabilities, and delaying much-needed modernization to its systems. The Trump administration also killed Direct File, the free and simple tax-filing program that had just gotten off the ground but was already garnering raves from the people who used it.
Partly as a result of the right’s decades-long effort to keep taxes low, we rank near the bottom among highly developed economies in tax revenues as a proportion of GDP. Most of our peer countries have decided that raising more taxes and using them to fund a more robust system of social supports — universal health coverage, generous family leave, free or low-cost college, higher-quality infrastructure — is a bargain that makes for a better society.
And it’s one most liberals would prefer, even if they differ on the details. So what should Democrats be proposing to move us in that direction?
Simplify, simplify, simplify
The answer lies in a simple principle: Simple and fair.
Democratic tax proposals should not only embody specific value judgments, they should be as simple as possible, easy to both communicate and understand. For instance: Why not insist that all income be taxed the same, regardless of what form it came in? Why should investment income, which is captured mostly by the wealthy and involves no labor, be taxed at a lower rate than wage income, the money you get from working? “We want to incentivize investment” (the most common rationale for the special treatment given to capital gains) is unpersuasive, since don’t we also want to incentivize work? And while we’re at it, treat inheritances like ordinary income too.
Treating all income the same would be a radical reorientation of the American tax system, and it would likely take years of advocacy before circumstances would align to make it possible to pass it into law. But that debate could be its own political end. Make Republicans defend the current system that almost everyone finds so unfair. Draw attention to the absurdity of all the loopholes and carveouts, most of which were designed by and for the rich.
Democrats should also bring back Direct File as soon as they have the power, then quickly scale it up so anyone who wants to can use it. According to the National Taxpayers Union, the average 1040 filer spends 13 hours and $290 filing their taxes, an absurd burden imposed on individuals and the entire economy. In many countries, the government does your taxes for you, and your only job is to double-check that all the information is correct. There’s no reason — other than the lobbying power of the tax preparation software companies and the GOP’s desire to make doing your taxes as unpleasant as possible — that we couldn’t do that here too.
Unfortunately, the first impulse of wonkish Democrats is often to try to achieve fairness by increasing, not decreasing, the complexity of the system. Intimidated by the political and policy challenges of fundamental reform, they suggest adding new tweaks here and there, aimed at people they want to help, while not trying to change the basic way the system works. The motives may not be bad, but the effect is to layer complexity upon complexity, enhancing the kludginess of the system.
Most of the time, the solutions Republicans offer are much simpler and easier for the public to understand — and far easier to implement. Distributing foreign aid to enhance health and well-being for the poor and oppressed around the world is complicated; “feeding USAID into the wood chipper,” as Elon Musk exulted, is easy. Reducing crime, as Democratic mayors have successfully done in places like Boston and Baltimore, is complicated; being “tough on crime” is easy. Educating children is hard; shutting down the Department of Education is easy.
But sometimes, the most progressive solution to a policy challenge is the simpler one. If you have the courage to choose it.
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