When Republicans swept federal elections in 2016, they bemoaned the complexity of the tax system and vowed to simplify it. Ten years and two tax bills later, it’s obvious that didn’t happen — at least not for Americans left shouldering the cost of costly loopholes and carveouts for favored groups.

And while most headline federal tax rates (individual, corporate, estate) have been declining for 70 years, this can’t continue forever. The current tax regime in the US is not just unsustainable, but patently unfair. What’s more shocking, virtually nobody seems in a rush to fix the problem. Rather, they’re making it worse.

Requiem for a dependable tax base: The US tax code has come to rely on a payer of last resort — and it’s not large estates or corporations. A massive share of it is actually W-2 workers, who have wages reported and withheld automatically. They dominate federal receipts, helping the government afford tax breaks for lobbying groups, retirees, and capital interests (like the ultrawealthy). Of course, it’s an increasingly high-risk strategy to put the budget on the backs of well-compensated workers, especially in the age of AI.

• Workers fund ~33% of federal revenue through payroll taxes, while wage income underpins about 53% of federal income tax receipts.
• W-2 earners drive consumer spending, investment, and government revenue, yet face mounting job market pressure with few tax breaks of their own.

Favoring carveouts for select groups over broad tax fairness leaves the tax base increasingly fragile and raises the risk of a painful future correction.

When Slopulism Becomes Bipartisan

You’re going to hear the term “slopulism” a lot more this political cycle — policies keep becoming more granular and stupid, and it’s because the electorate will vote for anybody who says the right words. Not all of these policies are as harmless as they sound, and they don’t achieve the ambitious goal of achieving fairness:

• The so-called “Working Families Tax Cuts” afford huge tax breaks to seniors, pass-through entities (QBI deduction), and special interest groups through “No Taxes on Tips or Overtime” — costing the federal government billions in revenue.
• Democrats are engaged in mutually assured destruction, with the State of New York recently exempting taxes on tips — a carveout which obviously benefits special interests and preferences certain kinds of work.

The problem with “fair”: Contrary to popular belief, there’s nothing wrong with taxes, but placing a disproportionate share of tax demands on workers — and even moralizing different kinds of work and groups of people — is unfair. It treats millions of Americans as “second-class citizens” as they pay for civil society to function. It’s also optional. We can elect officials who understand that othering the problem of unfairness for the majority of people is a non-starter — and it’s an increasingly bipartisan matter.