Establishment Democrats have long whined that working people pay a higher rate of combined income and payroll taxes than billionaires. They’re not wrong.

Income from labor is taxed three times (payroll taxes, income taxes, and inflation) while income from capital is taxed only once (capital gains). In America today, capital gains tax is capped at 20%, but labor’s floor is 15.3% with a payroll tax, plus the 3-8% inflation tax, both of which start at dollar one. Add the income tax, which tops out at 39%, and labor is generally taxed at twice the rate of capital. The billionaire who relies upon investments and capital gains for income generally doesn’t pay income taxes or payroll taxes on his gains. And if the billionaire is a real estate baron, then he benefits from the inflation that makes his mortgage debt easier to pay.

The Democratic Party’s solution? “Tax the rich,” as if that would put more of the workers’ own money back in their pockets. Cutting working people’s payroll taxes that go to Social Security and Medicare is actually their declared “third rail of politics,” nominally because those taxes go directly into the Social Security and Medicare entitlements (they don’t). Their stated solution is to keep the oppressive payroll and income taxes upon workers forever, and instead also saddle their billionaire donors as well with higher taxes. Working people will get no relief.

It’s like saying to a drowning man three miles from shore, “I know it’s hard on you out there far beyond the beach shore, but I’m going to even the playing field by putting all the other people out there and let them drown too.”

No working person who looks critically at Democratic press releases or tweets takes their proposals seriously. Bernie Sanders can complain all he wants that Elon Musk has too much money, but he and all of his fellow Democrats voted to gift Musk $1.5 billion with the $7,500 per Tesla federal subsidy in Barack Obama’s American Recovery and Reinvestment Act of 2009. He gets to meet the man responsible for making Elon the richest man in the world every time he wakes up in the morning and looks at his bathroom mirror. It’s no surprise working people abandoned the Democratic Party en masse over the past dozen years.

The problem is much broader than just the Democratic leadership, though. There’s a uniparty in Washington, and it is composed of Democrats, most Republicans, and even a few beltway (regime) libertarians. This has become obvious since 2016 when the poor cut ranks with Democrats and voted for a change with Donald Trump, never looking back. (Trump only offered them a few crumbs of a tax cut, but the Democrats didn’t even offer them crumbs.) The hate, derision, and ridicule directed at the “stupid” and “uneducated” working people voting against the Democrats by the elites has been an ongoing media theme. Together, this Uniparty establishment has a deep hatred and distrust of working people that comprise the middle class and working poor.

Traditional “conservatives” and regime libertarians say the way to help working people is to cut taxes across the board, but those proposals always include (at most) tiny cuts for the working class and massive tax cuts for billionaires when put out in detail. And they rarely propose to cut spending, so their proposals would boost deficits and inflation, both of which are paid by working people through more debt and inflation.

The Cato Institute, a regime “libertarian” group inside the Washington DC beltway, spends most of its time focused on federal budgeting, fretting about whether top-level income taxes for the wealthiest are on the wrong side of the Laffer Curve (see here and here). Not surprisingly, more than half of their donations come from just five anonymous billionaire donors ($32.925 million total in 2023), according to its IRS filings. The Cato Institute used to be called the Charles Koch Foundation, after the billionaire who helped found the organization.

Of course, there’s absolutely nothing wrong with finding a few billionaire donors who are willing to support you year after year. But these billionaires know what they are funding, and they are getting return for their investments. And if Cato tried to buck the establishment, its income would dry up. Cato knows its core audience, and it’s not working people.

Like the Democrats, Cato doesn’t even offer the working classes any crumbs. Cato’s institutional slogan may as well be, “The poors just aren’t paying enough in taxes.”

“The Cato Institute is putting forth this tax plan,” Cato’s Adam N. Michel wrote in the organization’s 2024 annual tax proposal “that pairs massively pro-growth tax cuts with the elimination of $1.4 trillion worth of annual tax loopholes, corporate welfare, and other special-interest tax subsidies. The plan would reduce the top income tax rate to 25 percent, the capital gains rate to 15 percent, and the corporate rate to 12 percent; enact full expensing for all investments; and repeal the estate tax, alternative minimum tax, and net investment income tax.”

Michel’s plan is literally the socialist caricature of a capitalist pig proposal. To him, “pro-growth” and “increase economic efficiency” means re-adjusting the tax burden from the rich to the working poor and middle classes:

“Congress has also consistently reduced the number of individual taxpayers through policies such as the child tax credit, the earned income tax credit, the standard deduction, and personal exemptions. By pushing millions of lower-income Americans off the income tax rolls, the [income] tax code has become less equally distributed and more dependent on a narrower segment of upper-income taxpayers for a growing share of the federal tax burden.”

The working poor pay the inflation tax and the billionaire real estate developer benefits from it when his mortgages get easier to pay. The working poor pay more than one-out-of-seven dollars they make to the FICA payroll tax, and neither the billionaire real estate developer nor the billionaire stock market investor pays a penny toward it. But Michel is laser-focused on cutting the billionaire investors’ capital gains tax from 20% to 15%, lower than the poor man’s payroll tax rate of 15.3%, while at the same time eliminating the working poor’s tiny exemptions from income taxes. To Michel, working people are the loopholes government needs to exploit on behalf of billionaires.

Michel claimed in his tax proposal that “A low tax rate on the wrong tax base can have outsized adverse economic effects.” But the reality is that if the goal is economic growth and new jobs, older, bigger companies owned by billionaires are not the place to invest, and never have been. Most new jobs are created by start-up companies, and these are by definition on average smaller than older, more established companies.

If the only goal was to put more money in the hands of investors who create economic growth and jobs, putting more money in the hands of billionaires wouldn’t be the economically efficient means of doing it. Intuitively, increasing the profits of the owners of Lockheed Martin and Boeing by billions of dollars, firms that have already maximized their market share, won’t create lots of new jobs. But a $1,000 tax cut for a bunch of middle class people who are thinking of starting up a website or a podcast just might.

Cato’s literal goal is to raise taxes on the working poor so that billionaires can get some tax relief. And while billionaires should get relief, it shouldn’t come at the punishment of the poor. Moreover, the “flat tax on wage income” he proposes is really a punitive tax on wage income, as capital gains would be taxed at half that rate. Michel’s mantra of “tax code simplification” seems to find voice in the unspoken sentiment: Don’t you know that it’ll be simpler if the poor paid more taxes?

The Cato paper is primarily a case of ever-lowering expectations of results from the Washington DC swamp. I should stress that not every policy recommendation in Michel’s proposal is bad. But the fundamental proposal is one of burden-shifting income taxes from the wealthy to the working poor and middle class. This is not a “let’s cut the overall tax burden proposal,” let alone a “let’s abolish income and payroll taxes” proposal.

The uniparty defends to the death the Federal Reserve Bank’s deliberate policy of forever-inflation that oppresses the poor and middle classes worst of all. The Federal Reserve Bank is not just responsible for the inflation tax against the working poor, they have also robbed the non-existent Social Security and Medicare “trust funds” of their nominal paper value by spiking inflation and suppressing interest rates, thus devaluing the trust funds that are now expiring.

The uniparty claims to care about the “trust funds,” but in reality never has. It was Democratic President Lyndon Johnson who robbed the Social Security Trust Fund in the first place, back in 1968, and neither Democrats nor Republicans have uttered a word of protest about it since. Nor have they complained about how the Federal Reserve Bank’s suppression of interest rates has robbed $1 trillion in purchasing power from the trust funds. They are actually bought-and-paid-for by the same wealthy interests who benefit from the financial rape of the working classes.

The Fed has lowered the purchasing power of working people’s wages and checking accounts by increasing inflation, and their interest rate suppression blew up housing prices, making a down payments twice as difficult, tanked their 401ks in the 2008 financial crash as a result of the mania created around interest rate suppression, and working people will see their Social Security program go insolvent as a result of real negative T-bill yields. But, from its own perspective, at least the Federal Reserve was able to get the important stuff done by bailing out the banks and Wall Street speculators and the use of inflation to pay off real estate speculators’ mortgages.

The conservatives and regime libertarians try to sell us on the propaganda line that “None of your problems are because someone else is a billionaire.” But the reality is more complex. Many average Americans’ problems are indeed a result of some people being billionaires when the state acts as a back-stop bailout for billionaires with the tax dollars of impoverished working people. America today is a plutocracy, a robber baron regime, and has been for decades. Here’s just a short, and very incomplete, list of bailouts of billionaire investors—the so-called “Greenspan put”—over the past fifty years:

• 1979: Chrysler bailout ($1.5 billion in taxpayer loans)
• 1984: Continental Illinois National Bank and Trust Company bailout ($2 billion from the FDIC, $1.3 billion never recovered)
• 1986-89: Savings & Loan bailout ($123.8 billion in losses to taxpayers)
• 1989-94: Latin American debt crisis bailout ($61 billion forgiven in partnership between Federal Reserve Bank, FDIC, International Monetary Fund and some private write-downs of loans)
• 1994: Mexico Bailout ($20 billion U.S. loan)
• 1997: The East Asian Crisis and bailout ($120 billion, indirectly through the U.S.-taxpayer-financed International Monetary Fund and other bilateral sources)
• 1998: Long-Term Capital Management bailout ($3.6 billion in nominally private bailout strong-armed by the Federal Reserve Bank)
• 1998: Russian Crisis ($21.1 billion from U.S.-taxpayer-financed IMF and World Bank, plus more funding from Bank of Japan)
• 2001: Airline industry bailout ($15 billion in loans and grants)
• 2008-09: Financial crisis ($700 billion from TARP program plus secret $7.7 trillion Federal Reserve Bank loan program)
• 2009: Chrysler and General Motors bailouts ($80 billion, $10 billion lost, not counting losses from more than $16 billion in Canadian government funds)
• 2009-present: Quantitative Easing and Student Loan and mortgage-backed securities purchases ($2.75 trillion in mortgage-backed securities plus $1.5 trillion in student loans)
• 2009: Obamacare (many trillions of dollars¹As journalist Matt Taibbi explained in his indispensable book Griftopia, “Obamacare had been designed as a coldly cynical political deal: massive giveaways to Big Pharma in the form of monster subsidies, and an especially lucrative handout to big insurance in the form of an individual mandate granting a few already-wealthy companies 25-30 million new customers who would be forced to buy their products at artificially inflated, federally protected prices.”)
• 2020-21: COVID bailouts ($2.2 trillion with Trump’s CARES Act, plus another $1.9 trillion from Biden’s American Rescue Plan Act)
• Ongoing bailouts and subsidy: Export-Import Bank of the United States (the “Bank of Boeing” for its massive subsidy of that one company), the USDA Market Promotion Program, manifold federal energy subsidies, and on and on.

All of these bailouts happened with the tax dollars of middle class and working poor people, and help to explain why the economic growth of people below the median income level has largely stalled since the early 1970s.

Working people need a fair shake, and America needs to end the plundering of them by Washington now, while there is still a middle class left to save. And while working people may eventually find a billionaire to support them, the only way they’ll liberate themselves from the uniparty plutocracy will be through their own awakening and their own organizing efforts.