The American sense of a rigged or broken economic system has been erupting across the political spectrum. Encampments that occupied Wall Street shouted “Banks got bailed out! We got sold out!” A few years later, a thunk of tiki-torch bros wailed “Jews will not replace us!” And before charging the capitol, the January 6 horde bellowed “Drain The Swamp.” 

Connecting the January 6 insurrection to Reagan-era tax cuts might have once been a stretch of red string for the conspiracy boards. When we witnessed the precarity of democracy, however, even the mainstream began tracking the economic failures upstream to their sources. Wealth inequality is in the zeitgeist now in a way that it hasn’t been for nearly a hundred years. Whether it’s the chicken or the egg, American politics has become the pointed finger aiming our resentment. The left arrives in a “Tax The Rich” ballgown. The right leans into the othering of America First isolationism and anti-immigration agendas, and of course, Jewish space lasers. As we descend into election season, many a book deal will be made to pundit-splain how we got here, and daily edgelord hashtags will come and go. Instead, these three books, already on the shelves, have the most to offer: POVERTY, BY AMERICA (Matthew Desmond), THE SYSTEM: Who Rigged It, How We Fix It (Robert Reich), and THE TRIUMPH OF INJUSTICE: How the Rich Dodge Taxes and How to Make Them Pay (Emmanuel Saez and Gabriel Zucman). 

The rise of tent cities across the country is a prime example of what America’s economic landscape has been doing to its literal landscape. Journalist Matthew Desmond won the Pulitzer in 2017 for “EVICTION”, a wrecking portrait of the 3+ million Americans made homeless every year because they can’t make rent. The problem summed up simply: “Families have watched their income stagnate or even fall while their housing costs have soared.”

This spring Desmond followed up with a new best seller, “POVERTY, BY AMERICA” which asks how can the richest country in history have so much poverty?

“This is who we are: the richest country on earth, with more poverty than any other advanced democracy. If America’s poor founded a country, that country would have a bigger population than Australia or Venezuela. Almost one in nine Americans–including one in eight children–live in poverty.”

If EVICTION was a portrait of poor Americans in one of the bleakest moments of their lives, POVERTY is a broad look at the policy decisions behind their lived reality. 

“Follow the money, all of it, and you can see how a trend toward private opulence and public squalor has come to define not simply a handful of communities, but the whole nation.”

America budgets an increasing amount on anti-poverty spending, however, many states come up with creative ways not to spend anti-poverty budgets on the poor. “Nationwide, for every dollar budgeted for TANF (Temporary Assistance for Needy Families) in 2020, poor families directly received just 22 cents.” In Pennsylvania, TANF funds were diverted to anti-abortion crisis pregnancy centers. Mississippi was flagged for $77 million in misused funds, including more than a million dollars to NFL quarterback Brett Favre for some motivational speeches. 

Despite those backslides, some anti-poverty initiatives have worked. Desmond is emphatic that we need to celebrate those successes, because when we’re not vocal about our gains, we tend to lose them. The Expanded Child Tax credit that rolled out in response to COVID-19 was one of the biggest successes since the Great Society initiatives of the 1960s. It lifted 3+ million kids out of poverty, literally cutting child poverty in half. Yet when the pandemic panic was over, America asked those same kids if they remembered their bootstraps. 

“The American government gives the most help to those who need it least. This is the true nature of our welfare state, and it has far-reaching implications, not only for our bank accounts and poverty levels, but also for our psychology and civic spirit.”

Poverty is not just bad for the poor, but for all of us, according to Desmond, who says he hopes to make every reader a poverty abolitionist. He frames the problem as a moral one, insisting that poverty isn’t some sad accident, it is the result of policy decisions. What makes his prolonged gaze at class injustice bearable is Desmond’s conviction that poverty is a solvable problem—we need only muster the collective will to change the policies that cause it. His sights are not set on sweeping changes for a progressive tax code or wealth tax, but even simple adjustments in the IRS toward having the 1% pay the taxes they already owe. 

“Simply collecting unpaid federal income taxes from the top 1% of households would bring in some $175 billion a year. We could just about fill the entire poverty gap in America if the richest among us simply paid all the taxes they owed.” 

The influence of the 1% on American politics is massive, but it’s worth remembering that Trump was not carried over the threshold of the Republican primary by high-income earners (they were pursuing a third Bush). Instead it was the poor and middle income rural Americans rallying against the complacency of Washington elites. Or as Robert Reich puts it in his latest book, THE SYSTEM: Who Rigged It, How We Fix It:  

“However much the oligarchy may want Americans to believe that racism was responsible for Trump, in fact it was anti-establishment fury.”

It’s easy to love a book when its raison d’être is the take down of a banker. As the story goes, Reich leveled some criticism against JP Morgan CEO and prominent Democratic Party donor Jamie Dimon. After receiving a furious phonecall from Dimon, Reich responded with a 224 page bestseller putting him in his place.

“Starting around 1980, a third American oligarch emerged. Between 1980 and 2019, the share of the nation’s total household income going to the richest 1 percent more than doubled, while the earnings of the bottom 90 percent barely rose. CEO pay increased 940 percent but the typical workers pay increased 12 percent.”

Reich has played a role in the Ford, Carter, Clinton, and Obama administrations where a lot of the system’s regressive structure was decided. He had a front row seat when Clinton and Obama both held the Senate and Congress, but still pursued free-trade agreements which caused job loss for the American working class. 

“The problem is not excessive greed. If you took the greed out of Wall Street, all you’d have left is pavement. The problem is the Street’s excessive power. How else can you explain why the Street was bailed out with no strings attached?” 

Reich has been railing against the CEO-worker pay ratio since the early 80s, back when it was 30 to 1. Since then, the pay ratio has climbed closer to 400 to 1. He’s become one of the loudest opponents with appearances from the Daily Show to his own Netflix show Saving Capitalism. In his latest public outreach, Reich threw up an entire semester’s worth of his UC Berkeley class lectures on youtube. He’s been teaching an undergrad class for a number of years called “Wealth And Poverty”. He even suggests that wealth inequality might not be such a huge problem if there was more mobility between the two. When people have more opportunity to move up and move down depending on the value they add to the economy, they don’t tend to see the system as unjust, but “the United States compared to most other countries, has become relatively rigid in terms of class, wealth, income.”

Just down the hall from Reich at UCB, though much deeper in the wonky weeds, are a pair of lefty, French, economics professors, Emmanuel Saez and Gabriel Zucman. Their book THE TRIUMPH OF INJUSTICE: How the Rich Dodge Taxes and How to Make Them Pay is a manual for making the American tax code great again. Like Reich and Desmond, their denunciation of wealth disparity begins with those the economy isn’t working for:

“The striking fact about the American economy is not that the middle class is vanishing, it’s how little income the working class makes.” 

“Let’s start with the working class–the 122 million adults in the lower half of the income pyramid. For them, the average income is $18,500 (before taxes and transfers) in 2019.”

They trace our current chasm of wealth inequality back to Reagan’s 1986 Tax Reform Act. Most Dems, including Joe Biden, enthusiastically voted for it, and pioneered the lowest top marginal income tax rate in the industrial world: 28% (down from 50%). For context, the top tax rate until 1963 was 90%.

“Since 1980, the top 1% and the bottom 90% have exchanged their slices of the total wealth pie: what the bottom 90% has lost, the top 1% has gained.”

As if the wealthy were not getting enough help, it was also in the 80s that IRS audits plummeted. If this sounds familiar, it’s because W Bush similarly gutted the IRS, and most recently, the IRS bolstering provision is what the GOP tore out of Biden’s $Trillion infrastructure bill. 

“In 1975, the IRS audited 65% of the 29,000 largest estate tax returns filed in 1974. By 2018, only 8.6% of the 34,000 estate tax returns filed in 2017 were examined.”

As we cycle through the annual threat of government shutdowns, it’s difficult to square the handwringing over the national debt by the same people crippling the IRS. The IRS is literally the only agency that makes the country money. Audits of the top 0.1% of earners raise six dollars for every dollar spent; it’s a better rate of return for the government than any stock on the market. 

Unsurprisingly, the Reagan era ushered in an array of creative tax avoidance. “The iconic product of the Reagan era—the iPod of tax dodging, if you will—came to be known as the tax shelter.” The explosion of foreign shell companies facilitated endless amounts of profit shifting (for example, where companies create ‘intangible products’ like logos and patents which they sell to themselves at arbitrary prices in order to project losses at home and shift gains to tax havens). 

“From 1982 to 1986, fictitious losses reported by the investors in tax shelters exceeded the total profits made by real partnerships through the country.” 

Over time these problems have been compounded by the tax-dodging industry, also known as the ‘Big Four’ accounting firms. Deloitte, Ernst & Young, KPMG, PWC have always been one step ahead of a heavily lobbied legislature slow to close the kinds of loopholes that still allow Google to hide billions in Bermuda (as Apple does in Ireland, Facebook does in the Cayman Islands, etc). 

“Manufacturing products that do nothing but slash taxes owed is not very different from selling burglary tools.” 

These are known tax scams that governments tolerate with a shareholder’s best-we-can-do shrug. Saez and Zucman, however, propose a defensive tax plan that would involve an international minimum effective tax rate of 25%—a collection plan called the ‘Tax Collectors of Last Resort’. Importantly, the US and EU are about half of the world’s consumption, and about half of multinational companies are in the US and the EU. If they jointly adopted this Tax Collector of Last Resort policy, then 75% of the world’s profits could be taxed. 

Saez and Zucman are quick to insist that formulating more optimal tax rates will do NOTHING until we create an effective mechanism to curb tax avoidance. With an ineffectual IRS, they propose the development of an agency called the PUBLIC PROTECTION BUREAU. It should have two broad missions, to: (1) enforce the Economic Substance Doctrine, which is a set of provisions already in place that make illegal any transaction that has no other purpose than a reduction of tax liability; and (2) monitor foreign tax practices, instructing the treasury to sanction tax-haven countries who are siphoning off the US tax base.

“Extreme wealth, like carbon emissions, imposes a negative externality on the rest of us. The point of taxing carbon is not to raise revenue, but to reduce carbon emissions. The same goes for high tax rates on the very highest incomes.” 

Wealth is power. Extreme concentrations of wealth metastasize extreme concentrations of undemocratic political power that stifle competition, influence policy, and shape ideology. The aim of reducing the income of the ultra-wealthy is not to generate income for the government so much as to disrupt privilege, impede rent extraction, and protect democracy. When wealth is taxed appropriately, it can disincentivize CEO-to-worker pay differentials, spiking the price of patented drugs, blocking climate action, or even election denialism. 

“In the end, the most striking indictment of market fundamentalism emerges from what has happened to life expectancy in the United States.” —Saez & Zucman

 “It is no great feat for an economy to create a large number of very-low-wage jobs. Slavery, after all, was a full employment system.” —Reich

“What do we deny workers when we deny them living wages so that we may enjoy more wealth and cheap goods? Happiness, health—life itself.” —Desmond

One of the most basic markers of a country’s progress is life expectancy. Not only is it dropping in America, but the range can vary up to 20 years depending on one’s zip code. Analysis tracking social ills upstream to economic policy is now so widespread that our tax code, once the stuff of the driest academia, is center stage in the national discourse. Whether it’s Reich’s condemnation of a system producing wage slavery or Desmond’s more positive spin on a higher minimum wage as an antidepressant and sleep aid, these three books are talking to each other with the fervor of citizen sleuths. The driving lesson in all of them is that the consequences of our economic policies unfold across decades; that in a democracy, tolerating tax dodging and poverty is a choice we’re collectively making. We can make other choices.

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