Closing Tax Loopholes

Let's be clear: we are not proponents of higher taxes. People who work hard should be incentivized to make more money and keep the majority of what they earn. We never want to return to a place in American history where the top bracket carried a 91% rate, as it did from the mid-1950s all the way through the early 1960s (you can see the full history in the IRS historical tax rate tables). The current bracket structure is in a reasonable place—people are incentivized to work harder and earn more if they choose to—and we don't intend to change how the brackets are set.

But here's the problem: the brackets don't mean much when the wealthiest Americans and the largest corporations exploit every loophole in the book to pay effective rates far below what ordinary working people pay. The CBO's data on the distribution of household income shows the gap in effective rates across income groups is staggering. Consider the examples:

• Warren Buffett famously revealed in 2011 that his effective tax rate was 17.4%—while his secretary paid 35.8%. As Buffett himself put it: "She works just as hard as I do and she pays twice the rate I pay."
• Jeff Bezos paid $0 in federal income tax in both 2007 and 2011. Over the period from 2006 to 2018, his true tax rate was roughly 1.1% on a wealth increase of $127 billion.
• Elon Musk paid just $65,000 in federal income tax in 2017 and $0 in 2018. Over five years (2014–2018), his effective rate was 3.27%.
• Teresa Heinz Kerry paid an effective rate of just 12.3% in 2003, largely thanks to tax-free municipal bond income.
• Amazon received tax rebates in 2017 and 2018—paying a negative effective tax rate—despite billions in profits. In 2019, they paid just 1.2% on $13.9 billion in pre-tax income.

Meanwhile, a teacher, a plumber, or a small business owner earning a fraction of what these individuals and corporations make is paying 20–25% or more. That's not a tax system—it's a tax suggestion for the ultra-wealthy.

We need to start closing these loopholes—not to punish success, but to pay down the debt that decades of overspending have created and to make the system a little more fair for everyone. Buying financial assets is a great path to building wealth, and the returns on those investments should be incentive enough. We shouldn't have to further sweeten the deal with bonus depreciation, accelerated depreciation, and a maze of write-offs that only the wealthiest can navigate.

And if it works? If closing loopholes genuinely starts reducing the debt? Then in a few years, we could have a real conversation about lowering the effective rates on the brackets themselves. But that's earned, not promised—and it's at least a few years away.

The tax code doesn't have to be as complicated as it is. As Albert Einstein is widely credited with saying: "The hardest thing in the world to understand is the income tax." If one of the greatest minds in human history couldn't make sense of it, maybe that's a sign we should simplify it.