Fergie Taylor-Gonzalez
Prof. Christine Taylor
English 111-98V
Nov 17th, 2020
Process Essay 3
In recent discussions of the American Taxation System, a controversial issue has been
whether it is fair or not to all Americans. On the one hand, some argue that we all get taxed
properly and fairly based solely on our income. From this perspective, the fact that the wealthiest
pay less money than those whose earnings are either wages or salary, is fine since big
corporations have greater expenses than people that do not own a business. Hence, they get to
pay less. On the other hand, however, others argue that it is not fair how the richest in our
country, which are 10% of the US population and own almost 70% of the country’s wealth
(Buchholz and Richter), pay fewer and sometimes zero taxes. In the words of Joseph E. Stiglitz,
one of this view’s main proponents, “what should shock and outrage us is that as the top 1
percent has grown extremely rich, the effective tax rates they pay have markedly decreased.”
(287). According to this view, if our tax system were purely progressive, meaning that those who
make more money pay more taxes than those who do not, then that 1 percent that has gotten
richer would have an increase in their tax rate instead of decrease. In sum, the issue is whether
we are being taxed fairly or those that have power get away without paying taxes or paying less
because of their position and wealth. My own view is that there needs to be a change in how our
tax system is taxing us. Our Taxation System should remain neutral instead of favoring the
wealthiest. It looks like the American Tax System has been developed to benefit big
corporations, and the wealthy to preserve their power, leaving the working class to bear the
burden. The politicians, lobbyists and corporate America work all together so that all ends
benefit from each other with the only goal of getting richer and more powerful.
At first, I asked myself why do we pay taxes? When scrolling through the internet, I
found that one of the reasons we pay taxes is because the government funds social programs like
Social Security and Medicare. To fund these programs, the government take the money they
need from our paychecks every payroll. This is called the income tax. The other main taxes we
pay are property tax, and sales tax. In the last years, studies have shown that more taxpayers are
complaining about the unfairness of how we are being taxed. Although, we are compliant, and
we still pay them. As Stiglitz states, “about 6 in 10 of us believe that the tax system is unfair”
(287). One of the reasons people see it as unfair is because the wealthiest and big corporations
pay less money than the working class. Stiglitz gives an example of how the 400 richest people
in the United States pay less than 20 percent of their average income which is over $200 million,
when mere millionaires pay 25 percent of their income and those whose annual income is
$200,000 to $500,000 pay about the same percent (287). In any way, that example shows that our
tax system is progressive. It shows that something is wrong because the richest are paying less
money.
Amazon, which is one of the richest companies in the world, paid zero dollars in their
2018 federal income tax, even when they had a $11.3 billion profit. To make things even worse,
they had a $129 million tax rebate issued (Davis). The question is how this company, that makes
billions of dollars a year, was able to get away without paying nothing and getting millions of
dollars returned for the second year in a row? The answer is that this happened thanks to the new
tax bill signed by President Trump, which we should keep in mind that before being the
President of the United States, he was and still is a businessman. The 2017 tax bill mainly
benefited only big corporations, like Amazon, because it lowered the corporate tax rate from 35
percent to 21 percent. This idea means that these corporations would still pay taxes, but it would
be less money than they paid before. Although the corporate-tax rate was recently lowered in
2017, from 2002 to 2012, General Motors’ corporate-tax rate averaged less than 2 percent
(Stiglitz 290). Just like General Motors, they are many companies that pay a very low corporatetax rate and not the one tax rate that is mandatory.
So, how is that Amazon pay nothing? Well, what this company did and probably keeps
doing is that they invested on themselves over the year so that they could show they did not have
any profits so this investment could be presented as losses. By reporting losses, they are eligible
for a cash return. They also invest in research so they can apply for a tax credit (Davis). One
thing I give them credit for, it is that they are very smart people that know how to hack the
system to their benefit.
Some people would say that these companies should not be paying higher tax rates or any
taxes at all, since they provide jobs to the members of our society and help with the economy of
our country. Moreover, some could claim that these corporations could go bankruptcy and leave
many people without jobs because corporations cannot afford paying for payrolls, high taxes,
insurances, any expenses related to the company, etc. So, companies going bankruptcy due to
high corporate-tax rates would be worse than having them not paying taxes or paying only a
small tax rate. If that were the case though, these corporations would easily get rich, and those
who run the company would get rich as well. So, if those that are making millions of dollars in
profit are not paying taxes, then the burden of keeping our country’s economy from falling
would be placed on the working class, on those who live paycheck by paycheck. Those who
struggle to feed their families with the minimum wage, which currently is $7.25 (Amadeo) and
have to pay for rent too, clothe their families, etc. Is that fair for them? I do not think so, and this
issue is what is happening in our country. A lot of powerful and rich people pay little or no
money on federal taxes, so that money that they are not paying we must pay it. As Stiglitz states
how “some of the wealthy have been enormously successful in getting special treatment, shifting
an ever greater share of the burden of financing the country’s expenditures- defense, education,
social programs- onto others” (289-290). That is what we are going through in our country.
In the United States of America, citizens, green card holders, TPS holders, and illegal
aliens who have an ITIN number file a tax return if their income is more than $10,000 when
filing single. The minimum for married couples filing jointly is $25,000. Based on this, we all
must pay taxes but there are some smart people that get away without paying a single penny and
instead get money back. On my 2019 federal tax income, I paid $2,322 that otherwise it would
have been $3,870 if I were not enrolled in college, meanwhile President Trump did not paid
taxes for 11 years out of 18 and then paid only $750 in 2016 and the same amount in 2017 too
(Scott). How a person who is making the minimum wage paid thousands of dollars more than a
man that had enough money and power to become the President of the United States of America?
That is what makes our taxation system unfair. There are thousands of hundreds of people like
me paying for school, rent, car insurance, food, clothes, health insurance, etc. and still pay more
taxes than millionaires like Donald Trump (Scott). Once again, our tax system is far from being
progressive and fair.
In the need to find a solution to this problem, some have proposed to switch to a flat tax
rate, which means that everyone would pay the same tax rate. No matter the amount of money
we make, that tax rate will not go up or down. This idea would benefit with a simpler way of
filing taxes, would simplify the tax code, will ensure that every taxpayer pay taxes. Although,
some argue that middle- and lower-class people would have a higher burden if a flat tax rate
were to be switched to, but we are already bearing that burden. The difference with this flat tax
rate is that we would all pay taxes; no more millionaires and corporate companies would get
away without paying zero taxes. To make it somehow fair, there could be an exception from
paying this flat tax rate for people or families whose income is below the poverty line.
In conclusion, an entire change needs to be done in our taxation system. It needs to be
modified so every member of our society pays their fair share, no more millionaires avoiding
taxes or paying small amounts of money whereas the working class is struggling because the
money that is left after being taxed is not enough. Keeping in mind too, that besides the income
tax, we pay sales taxes in almost everything. This only maximizes the burden that we already
have. More than that, our law makers need to stop dealing with lobbyists whose only interest is
to benefit the big corporations they work for. The working class is what makes our country great
and powerful, then we should be treated as we deserve. We should all be able to have our
American dream come true, not only those who already have the money and power.
Works Cited
Amadeo, Kimberly. “6 Pros and 6 Cons of Raising the Minimum Wage.” The Balance,
2020, www.thebalance.com/us-minimum-wage-what-it-is-history-and-who-mustcomply-3306209.
Buchholz, Katharina, and Felix Richter. “Infographic: The Top 10 Percent Own 70
Percent of U.S. Wealth.” Statista Infographics, 14 Oct. 2019,
www.statista.com/chart/19635/wealth-distribution-percentiles-in-the-us/.
Davis, Andrew. How Amazon Paid $0 Federal Income Tax in 2018. CNBC, 2019.
https://www.youtube.com/watch?v=qNg55JDMDHM
Scott, Michelle P. “What President Trump's Taxes Tell Us About US Tax Law.”
Investopedia, Investopedia, 13 Oct. 2020, www.investopedia.com/what-trump-staxes-reveal-about-us-tax-law-5080039.
Stiglitz, Joseph E. “A Tax System Stacked against the 99 Percent”. They Say / I Say: The
Moves that Matter in Academic Writing, edited by Gerald Graff, Cathy Birkenstein,
and Russel Durst, 4th ed., W. W. Norton & Company, Inc., 2018, pp. 286 - 294