- It's been said that the only things certain in life are death and taxes, but today's guest says that for some, taxes might not be on that list anymore with societal implications for us all.

She's Amy Hanauer, this week on "Story in the Public Square."

(bright upbeat music) (bright upbeat music continues) Hello and welcome to "Story in the Public Square," where storytelling meets public affairs.

I'm Jim Ludes from the Pell Center at Salve Regina University.

And my guest this week is Amy Hanauer, an experienced nonprofit executive who currently serves as executive director of the Institute on Taxation and Economic Policy, or ITEP.

Amy, thank you so much for being here.

- Thanks so much for having me.

- You know, I mentioned, you know, you've had a great career in advocacy and in the world of think tanks.

Do you want to tell us a little bit about what the Institute on Taxation and Economic Policy does?

- Yes!

So we are a nonprofit nonpartisan policy research institute and we like to say that we make the spreadsheets that power the movement for tax justice.

So we have a micro-simulation model that enables us to tell you for any tax change anywhere in the country who will pay more and who will pay less by income and by race as well.

So it's a really powerful tool and we've got partners all over the country that help turn our analysis and data into actual public policy.

- You know, we were talking a little bit before, a couple days ago, about this interview and, you know, tax policy is not something that a lot of people think about on a daily basis, but it's something that we all feel on a daily basis.

Why is tax policy so important?

- Yeah!

I mean, it is the biggest tool that we have to make sure that people have a shot at a reasonable life, to address inequality, and to raise resources for the things that all of us need.

And so tax policies can increase equity, they can improve the quality of your schools and your healthcare, or they can do a lot less for those things and they can increase inequity.

And we've got policies that push in both directions at the federal, state, and local level in the US.

- You know, in every place that I have ever seen a tax debate, a discussion about the policy around taxes, it's generally focused on the money that comes out of individuals' pockets rather than on how that money might actually be spent to advance society.

- Right.

- Why is that narrative so sticky?

- Yeah!

I mean, I think that whenever you're thinking about tax policy, you have to realize that there are moneyed interests that have a huge incentive to keep us focused on, you know: Is this... Are we paying too much?

Or are the rich people paying too much?

Or they want to keep us focused on, like, what we're paying and have us think that something that might affect a middle-class family is a problem.

When in fact, what we should be thinking about is we've just had the first trillionaire be, you know, be created in this country, we've got billionaires in this country.

And then we've got schools that are underfunded, we've got people who don't have healthcare, we've got people who don't have housing, and we've got communities that aren't as strong as they could be.

So there's a mismatch there and tax policy is like a core solution to that mismatch.

- You know, when I think about sort of whether it's a Democratic administration or Republican administration, I think the last time that I can think of a conscious effort to raise taxes was in the first Bush administration.

When President Bush, you know?

And he paid a political price for it, right?

At the height of the Gulf, First Gulf War, the Republicans in the House and Senate, along with Democrats, voted to increase some taxes.

Ever since then, the debate that I've noticed has been about: Whose taxes are we going to cut?

Not whether or not taxes need to be adjusted on any sort of scale.

- Yeah, I mean, in some ways I think you're right.

Definitely that is too much of the debate.

I mean, there were... President Clinton did raise rates and raise more revenue and of course had, you know, presided over a very strong economy in many, many ways.

And President Obama raised a very small tax to pay for the Affordable Care Act, or Obamacare.

And then President Biden did put in place a minimum tax on corporations.

So there were some small efforts.

But you're right!

Often the debate at the federal level is about cutting taxes for the wealthy moneyed interests that, you know, have a lot of sway in our federal government under both parties.

- You know, and am I right in thinking that since income taxes, since federal income taxes, became a feature of American public life are we at historic lows in terms of what those rates have looked like?

- The rates are low and I think what's even more problematic is that the what we're actually collecting, particularly from corporations, is really, really, really low.

So my organization recently put out a report finding it that 88 profitable corporations, highly profitable corporations, paid zero taxes in 2025.

So that gives you a sense.

I mean, if Tesla's paying zero taxes, if Citibank is paying zero taxes, do we really have a tax code that's working for the American people?

And I would argue that no, we need to close a lot of the loopholes that enable these corporations to avoid paying taxes.

- So some of the numbers that you mentioned in that report were staggering.

$105 billion in profits among those 88 companies.

They would've paid something like $22.1 billion in taxes if they had had to pay taxes just at a regular corporate tax rate.

But they also received $4.7 billion in tax rebates.

How are these corporations able to reap such a windfall from the federal government?

- I mean, a lot of it is by hiding profits overseas.

And a lot of it is, it's primarily by taking advantage of legal tax breaks that are there for the taking that they are permitted to use.

But we also have a very disempowered IRS, and the Trump administration has made clear that it does not want the IRS to focus on enforcing taxes on corporations.

Rather, they've, well, they've really cut the IRS's enforcement capacity completely, and then they've directed it to enforce that capacity toward lower income families who might have, you know, made a mistake in filing for an earned income tax credit, rather than toward the corporations and very wealthy individuals that are getting away with so much.

- You know, Amy, at the very start of this interview, you mentioned a term tax justice, and the thought went through my head, "I ought to ask you exactly what that means."

But just as we're having this conversation about these billion dollar corporations not paying taxes, sort of the definition of tax justice, or at least injustice, begins to become a little bit self-evident.

But what is tax justice?

And what is the prospect of there being any reform or progress on addressing some of these really exceptional cases?

- Yeah!

I mean, from my perspective, tax justice is that we are raising enough resources to fund the needs that the American people want funded.

And we're doing it in ways that raise those resources from those most able to pay.

Corporations benefit tremendously from a strong public sector.

They need highly educated workers to hire.

They need the kind of research that comes out of good research universities.

They need infrastructure to get their products out to market.

They need a stable financial system.

And yet, you know, yet you have these huge profitable corporations paying zero or paying very low rates.

So I think tax justice is making sure that those who are most able to pay and who are benefiting the most from what our society offers are in fact paying their fair share.

- You know, so you mentioned I know that ITEP maintains a website that lets individuals see not just the companies that are paying zero, but companies that are largely avoiding taxes overall.

That's at ITEP.org/corporate-tax- Avoidance - I need to tell my staff to simplify the links, but iTEP.org should get you to a lot of that.

- Yeah, and so if folks go there, what are they going to see?

- Well, I mean, so what you would see is, is a lot about corporate taxation because we are big believers that the corporate tax is just not doing its job right now, and that we can close a lot of loopholes.

I won't get into all of the technicalities, but we can close a lot of loopholes and raise a lot more resources for the American people.

You'll also see we have a big belief that we should be taxing income from wealth at at least the same rate as we tax income from work.

And a lot of people don't realize this, but right now, if you earn the exact same amount just by watching your stock portfolio grow, you pay a lower rate than if someone earned that exact same amount getting up every day and getting out of the house and going and doing a job that matters.

So we think that those things should be equalized.

And so there are a bunch of loopholes for capital gains that we think should be closed.

- Yeah!

- So they'd see some of that kind of thing about the federal level.

- So, and what's sort of striking to me in all of this is that we're not accusing anybody of breaking any laws in having this conversation, right?

These are provisions in tax law that let companies and individuals pay taxes in this manner.

So this is a choice that we've made as a society.

One of the things that's remarkable though, and you mentioned this, in the last couple of weeks, the world has minted its first trillionaire in Elon Musk with the IPO for SpaceX.

- Right.

- Did the American tax system ever, was it designed for a universe within which a trillionaire would exist and would be taxed like you and me?

- Yeah!

I mean, it is really problematic.

And I am a person, despite the fact that I work with numbers every day, a number like a trillion is sort of hard for me to wrap my brain around.

Think about a millionaire, think about someone who's earning a million dollars a year.

You may know someone in your community who earns that much.

They would have to work for a million years to be earning a trillion dollars.

So that gives you a sense of just how colossal that number is.

And no, I don't think our tax system is designed for that.

But, you know, part of how he was able to do that is Tesla was paying zero income taxes.

And, as you say, they weren't necessarily doing anything illegal.

I will say there are every year companies do put out a report of uncertain tax benefits to their shareholders.

And these are things that they are admitting that an empowered IRS with adequate capacity might find problematic.

And so there are, you know, there are things that people do that sort of stretch the law, and we don't have an empowered IRS that's able to deal with that.

So I do think that the cuts that the Trump administration has made to the IRS and the way that they've redeployed the IRS contributes.

But you're right.

I mean, if you want to blame anyone, blame Congress and blame, you know, this administration because they're the ones that have put in place this tax regime.

- You know, is, you know, the implications.

So Elon Musk is one example, right?

We've talked on this show and others have talked about sort of a new gilded age with this class of billionaires, and now a trillionaire, who have just a level of wealth that is really it's not unprecedented American history, but it's exceptional in American history.

Do... Societally, have you given any thought to what that kind of concentration of wealth in so few hands actually means for us as a nation, as a people, as a society?

- Yeah, and I said a little bit about this earlier, but I think that we... I don't think anybody would argue that, like, most people have everything that they need in this country.

College is unattainable for working class kids.

Young people have to go into enormous debt to afford a higher education.

Lots of young families can't afford childcare and have sort of precarity around their childcare arrangements.

We've got housing crises in a lot of our cities, and we've got this climate crisis that's really going under-addressed that, you know, we could clearly make huge strides forward if we would invest in green technology.

And yet you've got one person having this amount of wealth that they could never spend.

And so I think that from that perspective, just sort of what we have to spend, it is very problematic.

I'll say one more thing, Jim, if it's okay, which is just that I think it's also very problematic for our democracy, because it means that moneyed interests have more and more and more influence over our democracy.

They control these enormous tech platforms that shape people's views, that shape the news that comes in front of people, and they really play a huge role in elections.

And I don't think that that's good for any of us.

- Yeah, I think President Kennedy was paraphrasing the Gospel of Luke when he said that, "From those who much is given, much is required."

Is there any prospect of higher taxes being paid at the national level?

And then I'm going to ask you about what's happened in the states, but let's start at the national level first.

- Right!

Well, I was going to go straight to the states because with this administration and this current Congress, I think that they've shown that it's unlikely.

And frankly, this Supreme Court is also not necessarily a friend of adequate taxation.

So we've really got a lot of challenges right now at the federal level.

That said, I think you're right.

I mean, I think most of the American people did not think that this was what they were voting for.

There was a lot of discussion of populism, of working on prices, bringing down prices during the last electoral cycle.

And I think that that was primarily what people thought they were voting for.

And poll after poll after poll for decades, but increasingly in recent months and years, indicates that people want to see the wealthy taxed and they want to see corporations taxed.

They want that kind of investment back in the American people.

- So until I was getting ready for this interview, I don't think that I thought of the Supreme Court as actually having much of a role to play on this, but you, you educated me a little bit.

What is the role that the court plays, or can play potentially, in efforts to raise taxes on the ultra wealthy?

- Yeah!

Well, there are a lot of people who would like to see a wealth tax, and we're among them.

We think that, you know, the kind of riches that someone like Elon Musk now has do require a wealth tax to really take it on.

And there are a lot of great proposals out there to tax wealth.

But at the federal level, we have primarily only ever taxed income.

And so that is a challenge.

And this Supreme Court, many of the current justices have indicated that they would be likely to rule against a wealth tax.

Now, that doesn't mean that they will, and it certainly doesn't mean that we shouldn't try to do it.

I should say that there are some viable wealth tax proposals at the state level.

And, of course, all of us who own homes are, and even those of us who rent homes, do pay a kind of wealth tax every year because property taxes are a tax on wealth.

They're just a tax on the kind of wealth that most regular Americans have.

So it's only this sort of higher levels of wealth that the very wealthy people have that we refuse to tax.

- So when we're talking about wealth tax, how's that different from the income tax that I pay, that most people pay every year?

- Yeah!

So the income tax is on incoming income that, you know, new income that has come into your possession in that year.

And a wealth tax would be on the principle, on what you already own.

So Elon Musk just became a trillionaire.

It doesn't mean that he earns a trillion dollars every year, it means that he has a trillion dollars.

- So let me argue this point a little bit.

So I think the counterpoint might be that, look, the companies and the individuals who have this, have these kind of resources and are paying the taxes they're paying aren't doing anything illegally.

We made that point.

And in fact, they're just taking advantage of the system that is as it exists.

And I think I've even heard the current President of the United States make that claim about his own tax returns.

Isn't a tax policy though that rewards investment and innovation in the long-run best for the American people and best for the American economy because that's what's going to spur economic growth?

- So you can have plenty of rewarding of innovation and still have a better tax, a better set of tax policies than we have.

And that's another cue to kind of go to the state level, because we can look to the states to find that.

And most of the most vital economies in this country are in states where we have relatively higher taxation.

So, you know?

And you can also look to American history to see this too.

Our highest tax rates were during sort of the middle of the 20th century, and that was arguably the time when we saw the fastest growth, and particularly the fastest growth in shared prosperity where, you know, you saw all households kind of rising together.

So, you know, you can get into an argument about a point at which you might be stifling innovation, but I don't think we're anywhere near that point anytime soon.

(Jim laughs) - Well, all right.

So let's go to the states because you've told me that there is some really important innovation taking place in a number of states.

What are you seeing?

- Yeah!

And so if people go to ITEP.org, I would really encourage them to look at our state, the state policy section of our webpage, because that's where a lot of our work gets done.

And we've got amazing partners all over the country kind of turning the research into reality.

So four states this year passed taxes on income over a million dollars a year.

Rhode Island, Maine, Hawaii, and Washington.

This is an amazing change.

It's going to raise incredible resources in those states that can be used for education, for childcare, for healthcare, and for other needs that those states have.

And so, you know, that was a huge win.

And I think that there are a lot of other states that are paying close attention and would like to follow suit.

- You know, so I know in Massachusetts a few years ago when they passed a millionaire's tax, I think is what they were calling it, there was this, there was a counterpoint.

People said, "People are going to flee the states that pass these laws."

- Right.

- "Businesses are going to flee these states."

Is there any evidence that that's happened?

- Not only has it not happened, it just couldn't be more false.

There are kind of high profile examples that people like to talk about, but the fact is that if you raise taxes on very high incomes, you're going to raise a lot more resources for your state.

And when you look at the evidence and the Center on Budget and Policy Priorities has done some of the best research on this, you find that the wealthiest people are actually less likely to move than lower income families because people move in search of better jobs and because of family needs and sometimes for weather.

But they're not going to move from a place that they built a business.

And the reason that they are so much more likely to have built those businesses in states that have a more reasonable tax regime is because they need educated workers.

As I said earlier, they need infrastructure, they need research.

And you're going to find all of those things are much higher quality in states that have a reasonable tax base in place.

- You know, this feels so much like the fulcrum of American politics.

On the one hand, if we have a debate about healthcare or education or national defense, somebody's going to say, "Hey, we've got a $40 trillion national debt right now.

We can't afford it."

But I rarely hear that argument when we're talking about cutting taxes.

Why is that not a two-way street?

- And I think it's because, again, there are moneyed interests that hold a lot of sway in our politics, and they hold a lot of sway in our media.

And I think that they want to steer the debate away from the real solution, which is look to the trillionaires, look to the billionaires, look to the mega millionaires, and look to the corporations, and say, "You know, you all ought to be putting in your fair share."

But I think that the debate about the debt and about spending is often just steered by some of those people who have a real a lot that they think that they could lose.

- [Jim] So you and a colleague by the name of Steve Wamhoff, I hope I'm pronouncing that right, just had an article in the "Democracy Journal" that makes some specific recommendations about ways to address some of these issues.

One of the things that you think that the United States needs to do is reinstate the global minimum tax.

- [Amy] Yes!

- This is around corporate taxes.

What are you talking about there?

- Yeah!

So the Biden administration negotiated with all of the countries of the world, all of the OECD countries, to have in place a global minimum corporate tax so that corporations could not continue to hide their profits overseas in the Cayman Islands or in Ireland, or in these other places that have become tax havens.

And that was something that, you know, I think all of the countries of the world realized was in all of our collective interests.

And so the Biden administration negotiated that, and other countries started moving forward on it.

But when the Trump administration came in, they... Well, it didn't fully get through under the Biden administration, mostly because Joe Manchin did not want to support it, and we ended up leaving it sort of not fully resolved when the Trump administration came in, and they have really moved to weaken that system.

But the reason that system is so important is just that corporations are hiding their profits overseas.

And what we're finding with the global minimum tax that other countries are starting to put in place is that other countries are going to be getting the profits from American corporations because they're going to have to pay their taxes somewhere.

And that will be to the benefit of the German people, the French people, and it will be to the deficit of the American people who are refusing to put this in place.

- Interesting.

One of the other recommendations you make is to reform the way pass-through businesses operate.

- Yes!

- What is a pass-through business?

- So pass-through businesses were set up as a way of having small businesses bypass the corporate income tax and kind of organize themselves a little differently.

But over time, more and more and more American corporations have organized themselves as pass-through businesses so that something like the Trump Enterprises is a pass-through business.

And the problem with pass-through businesses is that they don't have to disclose nearly as much as a corporation has to disclose, and they're able to really get away with not paying taxes.

And that's how the Trump administration, or that's how Trump's enterprises have been able to get away with paying so little.

And, you know, you've mentioned frequently throughout this interview that most of what is done is legal, and that's true as far as it goes.

But pass-through businesses are one of the main ways that profits are hidden in ways that may not be fully legal if they were fully disclosed.

And that's why we need not only to get rid of the pass-through loophole for large businesses, but also have an IRS that can look into it.

- Yeah, we've got about a minute left here, Amy, but one of the other recommendations that you make is that we need to raise the corporate tax rate.

Do you have a number in mind?

- Well, you know, we've cut the corporate tax rate, so we could just go back to what it was.

And one of the things that I think Elizabeth Warren may soon have a bill that will just raise the rate for the largest corporations.

So I think that's a good idea.

But if I can leave you with one thought, it's that we are winning in lots of places in this country.

You know, I mentioned the four places that recently passed millionaire taxes, but all over the country, we see really innovative people wanting to do a better job of taxing huge properties, taxing high incomes, and using it to make cities and states and communities that work for all of us.

- Amy Hanauer, the work of ITEP's important.

Folks can check it out at ITEP.org.

Thank you for being with us.

But that is all the time we have this week.

If you want to know more about "Story in the Public Square," you can find us on social media or visit salve.edu/pellcenter where you can always catch up on previous episodes.

And I want to thank you for spending some time with us this week.

I'm Jim Ludes, asking you to join me again next time for more "Story in the Public Square."

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