Connecticut has some of the worst economic inequality in America. In both 2021 and 2022, various sources cited it as first or second based on different indicators of inequality. This economic inequality in turn is extremely toxic for the functioning of a society: when too many face profound lack, while the ultra few enjoy unfettered profits, civic discourse and possibly even collapse are the end results.
The creation of a middle class is one of the greatest inventions in human history, and it’s certainly a product of capitalism and democracy. But a middle class is also extremely challenging to maintain, and it always requires effective regulations to prevent corporate overreach, fair tax practices to prevent the lucky few from concentrating all the wealth, and a constant stream of accountable and dedicated public servants willing to defend it.
Kieran recognizes just how powerful a middle class can be, and how essential a role it plays in the making of the American dream. If we want the American economy, American democracy, and the American people to survive, we need to start fighting for better economic fairness today.
Just last year in Connecticut, the luckiest, richest 478 residents each “earned” on average $40 million. Meanwhile, the bottom 883,552 residents averaged only $21,000 last year, below the minimum wage if working full-time. To make it worse, both groups paid an equivalent amount of taxes last year, because the lucky 478 weren’t paying their fair share. That top decile paid an average effective tax rate of only 7.3%, compared to a whopping 39.9% paid by the bottom decile.
Kieran sees that folks in Connecticut are struggling to get by, while the top 0.1% cheats the system and fails to pay their fair share. We need more accountable and dedicated public servants in Connecticut, willing to defend the working and middle classes again, and Kieran is ready to be one such champion.
Progressive taxation
The best system for combating inequality is a progressive tax structure, like America enjoyed during the first half of the twentieth century. Progressive tax structures are designed to shift the burden of higher taxes from the poor to the rich, so that those working in our stores and restaurants and manufacturing centers pay less - say, only a measly 7.3% - while those fortunate enough to earn $40 million last year pay vastly more - say, 39.9%.
Most tax codes are currently set up as progressive systems, but with a few glaring deficiencies. Kieran recognizes the power of the system when it works, but also the profound need for reform as it is right now.
Closing the loopholes
Tax code in America is notoriously complicated and extremely loophole ridden. To Kieran, this is an obvious problem: simple tax codes are fair and unbiased. Complex tax codes simply add reasons for the rich to hold onto their money. A progressive tax structure is very simple and can be codified in a single table. Elaborate tax structures, granting tax breaks for an endless series of pointless reasons, granting the rich and super rich increasingly esoteric reasons not to pay their fair share, well, those become massive and super complicated - just like the American tax code.
We need to close down these loopholes, these unfair and unnecessary exemptions, in order to bring the effective tax rate on our highest earners up from 7.3% to the stated 37% presently set in the tax code.
The Millionaire’s tax
One obvious and seemingly excellent solution for increasing economic fairness is the so-called “Millionaire’s tax”. Such a tax was implemented in Massachusetts last year, charging an additional 4% on all earnings over $1 million. In the first nine months of the fiscal year, it raised $1.8 billion for things like schools and roads!
Best of all, there was no exodus of Massachusetts millionaires attempting to leave the state. Instead, folks who lived there chose to stay and contribute back to their communities. Kieran believes that most people will choose to do what is right, and so long as you apply the tax code fairly, the best-off among us will be willing to contribute their share.
Ending the Capital Gains loophole
Capital gains are profits made from passive investments like stocks and bonds; most stocks and bonds, and therefore most capital gains, are owned by the super-rich, who own an endlessly increasing portion of these kinds of assets in America and across the world.
Meanwhile, the capital gains tax in America is only 6.99%. This is absurdly low: in Connecticut, workers who didn’t even make $12,000 last year, light-years below the poverty line, were still charged a 10% tax rate. What this means, essentially, is that America has decided that money “earned” from investments is more valuable, more important, than money made working.
The super rich, who get to own more and more assets, pay less than 7% when they make money; average workers, who have been gradually forced out of the stock market by rising cost of living, pay upwards of 30% on the money they made through blood, sweat, and tears.
Kieran recognizes the powerful role the stock market plays in maintaining a healthy middle class, but also the need for a more equitable division of those assets. By charging too low a tax rate on these assets, the ultra-rich continue to cheat the system with no penalties.
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