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Taxes

Published: 2025-03-31 16:16:09 5 min read
NARSS : The Current Tax System is Unfair To The Middle Class and Lower

# Taxes are the lifeblood of modern governments, funding public services, infrastructure, and social programs.

Yet, beneath the surface of this seemingly straightforward system lies a labyrinth of complexities loopholes, regressive structures, and corporate evasion that disproportionately burden ordinary citizens while enabling the wealthy to sidestep their fair share.

From ancient civilizations demanding tributes to today’s globalized tax havens, taxation has always been a battleground of power, inequality, and economic justice.

While taxation is essential for societal functioning, the current system is riddled with inequities, favoring the wealthy through loopholes, offshore accounts, and regressive policies ultimately exacerbating economic disparity and undermining public trust.

On paper, progressive taxation where higher earners pay a larger percentage appears equitable.

However, reality tells a different story.

The U.

S.

federal income tax is progressive, yet studies reveal that the top 1% evade an estimated annually through offshore accounts and complex deductions (Zucman, 2019).

Meanwhile, sales and payroll taxes levied uniformly disproportionately impact low-income households, who spend a higher share of earnings on essentials.

In contrast, corporations exploit legal gray areas.

A 2021 report by the found that 55 Fortune 500 companies paid despite billions in profits, thanks to loopholes like accelerated depreciation and stock option deductions.

Amazon, for instance, reported $35 billion in U.

S.

income from 2018–2021 but received a (ITEP, 2022).

Tax havens jurisdictions like the Cayman Islands and Luxembourg enable corporations and billionaires to hide wealth.

The and leaks exposed how elites funnel trillions offshore, depriving nations of vital revenue.

Economist Gabriel Zucman estimates that $7.

6 trillion is hidden in tax havens, costing governments in lost taxes (Zucman, 2020).

Even legal strategies, like the Double Irish with a Dutch Sandwich, allow firms like Apple and Google to shift profits to low-tax jurisdictions.

The OECD’s, implemented in 2024, aims to curb this, but critics argue enforcement remains weak, leaving loopholes intact.

While the wealthy exploit tax avoidance, middle-class families face shrinking disposable income.

In the U.

S., payroll taxes (Social Security and Medicare) cap at $168,600 (2024), meaning high earners stop contributing beyond this threshold a that benefits top earners.

Meanwhile, inflation and stagnant wages erode purchasing power, yet tax brackets rarely adjust proportionally.

The Basics Of Paying Payroll Tax

Corporate lobbying ensures favorable tax laws.

The slashed corporate rates from 35% to 21%, promising economic growth.

Instead, companies spent, enriching shareholders rather than workers (S&P Global, 2019).

Research by shows that since the 1980s, tax cuts for the rich have trickled down but instead widened inequality.

Proponents of low corporate taxes argue they spur investment.

The claims lower rates attract businesses, yet data shows job growth under TCJA lagged behind pre-2017 trends (EPI, 2020).

Others assert that simplifying the tax code flattening rates would reduce evasion, but critics warn this would further burden lower earners.

The tax system, as it stands, is a rigged game.

While essential for public goods, its structural biases favor the wealthy, deepen inequality, and erode trust in governance.

Solutions like closing loopholes, enforcing global minimum taxes, and shifting toward wealth taxes (as proposed by Elizabeth Warren and Bernie Sanders) could restore balance.

Without reform, the cycle of evasion and disparity will persist leaving ordinary citizens to foot the bill while the powerful continue to play by different rules.

- Zucman, G.

(2019).

University of Chicago Press.

- ITEP.

(2022).

- Saez, E., & Piketty, T.

(2014).

Harvard University Press.

- OECD.

(2024)