An Inequality Tale of Two Capital Cities

Donald Trump’s predecessor, Joe Biden, had actually made some serious moves to enhance that IRS capacity, hiring — before he left office — thousands of new tax staffers. But those new hires, notes a ProPublica analysis, have now started going through Elon Musk’s “DOGE” meat-grinder.

Team Trump’s ultimate goal at the tax agency? To use layoffs, attrition, and buyouts to cut the overall IRS workforce “by as much as half,” the Associated Press reports. A reduction in force that severe, charges former IRS commissioner John Koskinen, would render the IRS “dysfunctional.”

The prime target of the ongoing IRS cutbacks: the agency’s Large Business and International office, the IRS division that specializes in auditing America’s highest-income individuals and the companies they run.

On average, researchers have concluded over recent years, every dollar the IRS spends auditing America’s richest ends up returning as much as $12 in new tax revenue. The current gutting of the agency’s most skilled staffers, tax analysts have told ProPublica, “will mean corporations and wealthy individuals face far less scrutiny when they file their tax returns, leading to more risk-taking and less money flowing into the U.S. treasury.”

Moves to “hamstring the IRS,” sums up former IRS commissioner Koskinen, amount to “just a tax cut for tax cheats.”

Donald Trump, agrees the Institute on Taxation and Economic Policy’s Amy Hanauer, “is waging economic war on the vast majority of Americans, pushing to further slash taxes on the wealthiest and corporations, while sapping the public services that keep our communities strong.”

Public services like Social Security. Elon Musk has lately taken to deriding America’s most beloved federal program as a “Ponzi scheme,” and the Social Security Administration’s new leadership team, suitably inspired, has just announced plans to trim some 7,000 jobs from an agency “already at a 50-year staffing low.”

A vicious economic squeeze on America’s seniors. A massive tax-time giveaway for America’s richest. How can we start reversing those sorts of inequality-inducing dynamics? The veteran retirement analyst Teresa Ghilarducci has one fascinating suggestion.

Any individual’s annual earnings over $176,100 will this year, Ghilarducci points out, face not a dime of Social Security tax. A CEO making millions of dollars a year will pay no more in Social Security tax than a civil engineer making a mere $176,100.

If lawmakers removed that arbitrary $176,100 Social Security tax cap and subjected more categories of income — like capital gains — to Social Security tax, Ghilarducci reflects, we could ensure Social Security’s viability for decades to come and even make giant strides to totally ending poverty among all Social Security recipients.

And if we had just merely eliminated the Social Security tax cap on annual earnings in 2023, the most recent stats show, America’s 229 top earners would have paid more into Social Security that year than the 77 percent of American workers who took home under $57,000.

We could also apply Ghilarducci’s zesty tax-the-rich spirit to the broader global economy, as the inspiration behind France’s recent tax-the-rich moves, the economist Gabriel Zucman, has just observed in a piece that cleverly suggests “tariffs for oligarchs.’

The fortunes of our super rich, Zucman reminds us, “depend on access to global markets,” a reality that could leave these rich vulnerable at tax time. Nations subject to Trump’s new tariffs, he goes on to explain, could retaliate by taking an imaginative approach to taxing Corporate America’s super rich.

“In other words,” Zucman notes, “if Tesla wants to sell cars in Canada and Mexico, Elon Musk — Tesla’s primary shareholder — should be required to pay taxes in those jurisdictions.”

Taking that approach “could trigger a virtuous cycle.” The super rich would soon find relocating either their firms or their fortunes to low-tax jurisdictions a pointless endeavor. Any savings they might reap from such moves would get offset by the higher taxes they would owe in nations with major markets.

The current economic “race to the bottom,” Zucman quips, could essentially become “a race to the top” that “neutralizes tax competition, fights inequality, and protects our planet.”

Lawmakers in France have just shown they’re willing to start racing in that top-oriented direction. May their inspiration spread.