The Triumph of Injustice | Emmanuel Saez

Summary of: The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay
By: Emmanuel Saez

Introduction

Dive into the world of tax injustice as economists Emmanuel Saez and Gabriel Zucman reveal astonishing insights into the United States’ taxation system in their book ‘The Triumph of Injustice’. Discover how the rich are dodging taxes and accumulating wealth, leading to increased inequality. The book highlights the dire need for a more effective and progressive tax system to ensure free market capitalism’s survival. Key topics include the collapse of the US minimum wage, the rise of payroll taxes, and the tax avoidance strategies employed by the wealthy. Get ready to rethink your views on capitalism, inequality, and taxation with this eye-opening read.

Unlearning the Lesson

According to the professors of economics at the University of California, Berkeley, Emmanuel Saez and Gabriel Zucman, America needs a more effective, more progressive tax system to maintain free market capitalism. The rich getting richer due to insufficient taxes contradicts this economic model. Their book provides eye-opening data that challenges readers to rethink their views on capitalism, inequality, and taxation. David Leonhardt of The New York Times hailed it as the most crucial government policy book he’s read in a long time, while The Guardian found it to be a bracing and brave formulation of a radical new approach to public funding.

Wealth Inequality in the US

The authors of the book explain that extreme inequality in the US is reflected in tax policies, and it harms the community. The share of total US income going to the bottom 50% has decreased from 20% to 12% since 1980 while the top 1% doubled theirs to 20%. Furthermore, the minimum wage in the US has collapsed in real value, and a worker receiving only the federal minimum wage collects one-fifth of the average US adult’s income. Saez and Zucman point out that states tend to tax more of the poor’s consumption than the rich’s. Also, US life expectancy is two years less than comparable wealthy countries. The authors use Warren Buffet, who pays a lower marginal tax rate on his earnings than his secretary, to illustrate that unfettered markets lead to wealth concentration that threatens democratic and meritocratic ideals. The book highlights how the economy works better when rent-seeking is discouraged.

The Importance of Corporate Taxes

The wealthiest individuals earn the majority of their income from owning assets, businesses, and shares in companies. Corporate taxes serve as a minimum tax on the affluent since the rich leave most of their yearly financial gains to be reinvested within companies. According to Saez and Zucman, such taxes are crucial as they remove tax revenues from the wealth accumulation system, which is essential. In all capitalist societies, the rich derive most of their income from shares and the ownership of corporations, which gives them economic and social power.

America’s Broken Tax System

Saez and Zucman’s book exposes the loopholes in America’s tax system that enable the rich to pay less in taxes, contributing to the increasing wealth gap. The top 0.001% only pays 25% in taxes, while the middle class is taxed at around 25% to 30%. The authors argue that corporate taxes have significantly decreased since post-World War II decades, leading to less revenue from the wealthy. Additionally, the authors criticize the political culture and funding cuts that contribute to tax dodging. US multinationals also book profits in low-tax countries, further avoiding their obligation to pay taxes.

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