BAKERSFIELD, Calif. (KERO) — With Monday being tax day, some in the Central Valley are coming together to call for policy change where the wealthiest people pay their fair share of taxes. They hoping to bring awareness to the growing economic gap by pushing for a tighter taxing system for wealthier corporations.
But how viable is it?
In the United States, we have a progressive tax system, meaning the more income you have, the more taxes you pay. But once you throw in deductions, tax credits, and a long list of other tax laws and loopholes, it can become complicated.
The latest data from the White House shows that between 2010 and 2018, the wealthiest 400 billion families paid an average of 8.2 percent of their income tax. The average working-class American pays about 1/3rd or 30 percent of their income in taxes. But because tax is based on income, some of the most wealthy people and corporations are reporting no income, and therefore don’t pay taxes.
Using some of those laws, some of the wealthiest people in the country have found ways around paying income taxes, which is why many including those in the Central Valley are pushing for tax reform.
It’s a source of frustration for Tasha Hall with the group Unrig Our Economy Central Valley. She held a press conference Monday calling for change.
"If me, as a working American, can pay my taxes, millionaires and billionaires should not have loopholes where they can not pay their fair share of taxes."
A local financial advisor with Moneywise, Dave Anderson, points to a report from ProPublica last year that showed some of the most well-known billionaires, including Amazon founder Jeff Bezos took advantage of those loopholes.
"The problem is many of the ultra-wealthy have been able to eliminate their income, in some cases billionaires have paid no income taxes based on how they receive their income," explained Anderson. "All of his wealth is locked up in his stocks. So how does he provide for his lifestyle? Well, he goes out and he gets loans. Loans that are not taxable, loans that are backed by the assets that he owns."
"Those that understand the system, they can really decide where their income is coming from, whether to realize gains or not and so it is tricky for a government to kinda figure out about this."
Anderson says the answer to whether billionaires are taxed fairly depends on who you ask. There are a lot of disagreements on what actually can be done and if it is constitutional to target only a select few.
But when it comes to income taxes, income is what can complicate things.
Anderson adds the solution is not as simple as raising taxes because not all income is treated equally. For example, some found ways to have no income, others have their money in assets that do not get taxed, while some have their money in capital gains, which is when you make money off selling an asset like a stock, and can be taxed depending on income.
"They have their earnings. They have right offs and things like that. They may show no earnings in which case they are not taxed. Which is why Amazon may pay less in taxes than you and I do," added Aaron Hedge, chair and professor of economics at California State University Bakersfield.
"Being in the Central Valley there are a lot of farms and a lot of people that have been able to become very wealthy off of their farms, and so we want to make a statement that all of the contributors to the wealth of the Central Valley should also be contributing to our tax base.
Erica Cap, another member of Unrig Our Economy Central Valley, is talking about major ag corporations in the region, and also others who are using those loopholes to avoid paying what she calls their fair share.
Some people have proposed getting rid of an income tax and implementing a consumption tax.
"If there is a consumption tax, those of us who consume less would pay less in taxes than those who consume more," said Hedge.
Hegde adds the argument to this is that the wealthier contribute to the economy by investing. Another idea he says is a flat tax but that would usually hurt low-income people.
In recent years, there have been multiple attempts to change the tax situation, but all have failed in Congress.
"With income inequality continuing to rise that is not a good scenario to be in," continued Anderson. "So we should all, regardless of what side of the aisle you are on, should be for doing something about that."
The Central Valley group also says they hope more people get involved and call on their representatives to push for a change.
