On the eve of Labor Day weekend, Americans for Tax Fairness (ATF) has issued a paper on the many ways the tax code fails to honor employees and instead privileges the big corporations and wealthy individuals they work for. 

“On Labor Day—a time set aside to honor the working people of America—the privilege our tax system offers big bosses, wealthy investors and corporations over rank-and-file employees is particularly galling,” said David Kass, Americans for Tax Fairness executive director. “Due to decades of billionaire lobbying and failed trickle-down policies, our current tax system values wealth over work, giving a lower tax rate to those who make money off of investments than those who make their livings through paychecks. The 2017 GOP-Trump tax law cut corporate taxes to further enrich CEOs and shareholders, with little or no benefit trickling down to factory floors, middle-management suites or restaurant kitchens. 

“Our current tax code still encourages corporations to hide profits and ship jobs offshore, and huge family fortunes snowball down the generations essentially untaxed. All the lost tax revenue threatens funding of Social Security, Medicare and other public services working families have earned and deserve. We’ve seen positive changes in recent years, through big policies like the Inflation Reduction Act. This Labor Day, let’s unite to build on this momentum and double down on tax reforms that invest in workers, raise taxes on the rich and profitable corporations, and build an economy that works for all of us.”

Some key takeaways from ATF’s paper: 

1. Wage income is generally taxed at twice or more the rate charged the biggest forms of investment income, capital gains and dividends.  

• A cashier making $35,000 a year pays about $2,200 in federal income tax and $2,700 in employee-side federal payroll taxes for an effective rate of 14%. An investor living off $35,000 in long-term capital gains or dividends would pay $0 in taxes. 

2. Because of the 2017 Trump-GOP tax law which lowered the corporate tax rate from 35% to 21% – for the first time in nearly a century, corporations now pay on average a lower effective income-tax rate than the typical American family.
3. While wealthy corporate owners reap billions from the Trump-GOP tax law, hardworking union members of those corporations can no longer deduct the cost of union dues. Paying to restore that deduction would only require a 0.1% increase in the corporate tax rate.
4. The tax code actually encourages job offshoring and profit shifting because the foreign profits of U.S. corporations are taxed at around half the rate of their domestic earnings and is otherwise riddled with numerous loopholes that incentivize moving production overseas.