Populist taxes to match Trump's populist rhetoric

 The original personal exemption from the income tax was $3,000 in 1913. The equivalent of that in September 2025 is $97,440.

For married filing jointly the personal exemption was $4,000 in 1913. The equivalent of that in September 2025 is $129,920. 

This personal exemption, which Trump eliminated in 2018, should be reinstated, and indexed to inflation in this way from here on out, and this income should be entirely federal-tax-free, except of course for Social Security taxes, Medicare taxes, and state and local taxes.

About 83% of individual wage earners made $97k or less in 2023.

That's what actual populist taxation would look like.

Remember, the roughly top 20% would not pay taxes on their first $97k either, so they would be just like everybody else in respect of basic income. If they can't live on that, then neither can we.

Standard deductions and/or itemized deductions for the top 20% are for the debates over the rates they should pay progressively, and should be a moot point for the majority because the majority wouldn't be paying federal taxes anyway. 

Corporate income taxes and capital gains taxes muddy these waters, but those taxes were originally placed on Wall Street fat cats at a time when farmers all across this land faced punitive taxes on property which the Wall Streeters did not. Corporate income and capital gains taxes were meant to address that inequity.

The income tax was subsequently added, on the rich obviously, in part because those other taxes didn't really work to address the inequity. But now we have this Rube Goldberg machine of taxation which Trump has merely tweaked again but is not fundamentally reformed.

The fact is that today we still have horrible tax inequity where some income is more equal than others, with much lower tax rates on capital gains held more than one year.

This overwhelmingly benefits the top 20% by wealth, who own about 90% of the stock market's value*. The owners of this wealth routinely take their income from this source, not from W-2 income, but they are taxed at much lower long term capital gains tax rates of 0%, 15%, and 20%.

* the top 20% of households as measured by income own about 87% of directly-held equities

-- Michael Hiltzik, here 

Let's compare a person's taxes on next year's income of $97,000 under the Big Ugly Bill's ordinary income tax rates versus the capital gains tax rates.

Starting in 2026, a single filer will get a standard deduction of $16,100. If he makes $97,000 next year in ordinary income, his taxable income will be $80,900 and his federal income tax will be $12,510 ($5,800 plus 22% of the amount over $50,400). The effective tax rate is 12.89% on $97,000.

The same filer without W-2 income but with $97,000 of long term capital gains income instead comes out way ahead. His taxable income is the same because his standard deduction is the same: $80,900. However, on the first $49,450 of taxable income he pays 0% capital gains tax because he held it longer than one year. The remaining $31,450 is taxed at just 15%, which is $4,717.50. The effective tax rate is 4.86%, not 12.89%! That's 62% lower.

If we treated all income from every source the same way and taxed accordingly, the playing field would be more level.

If the people are taxed at ordinary income tax rates, arguably all entities should be. Corporations are people, they tell us, so there should be no story ever again about a profitable company escaping federal taxation in this country.

But Tesla and Meta, for example, paid no tax in 2023. About 25% of companies don't on average. 

As for individuals, the data about how many escape taxation is harder to come by, but an estimated 90,000 households making $200k or more in 2022 escaped taxation legally, and about 3,200 individuals making $1 million or more paid no federal tax.

There is nothing populist about a system which treats the income of rich people worthy of a privilege the income of the rest of us is not. 

Privatizing The US Postal Service Is A Bad Idea On Mail Fraud And Privacy Grounds

Michael Hiltzik for The LA Times does a pretty good job of presenting the reasons why we shouldn't privatize the US Postal Service, but unfortunately misses an important one: mail fraud statutes come in real handy for felony convictions and long prison sentences for some of society's worst actors.

He draws this comparison on privacy:

Law enforcement can't open your mail without a judge's say-so, and any private individual who tries could face a long sojourn as an involuntary guest of the feds.

But laws governing the sanctity of your email are in their infancy. Actually, that's a gross overstatement: They're positively fetal. Government agencies may not need any warrant at all to read some of your emails. Google, Yahoo, Microsoft and anyone else whose system carries your email can read your messages at whim, with no consequences.

Read his full argument here.

Liberal Bizarro World Bait and Switch Tax Math

Just when I thought the headline "Payroll tax cuts rob the poor to feed the rich" meant that I was going to read a fine story by a liberal lamenting how the richest Americans, everyone making about $106,800 a year and "to infinity and beyond," don't pay Social Security taxes on all their income, I was met with this instead, that the present and proposed cuts in the payroll tax do nothing but finance the extension of the Bush tax cuts which, evidently, benefit only the rich:

Specifically, I'm talking about a new proposal to rob from Social Security to fund a continuing tax break for people who don't need Social Security — the wealthy. ...

It started back in December, when President Obama capitulated to the GOP on a budget deal by cutting the payroll tax, which funds Social Security. Advocates for the program pointed out then the shortcomings of this approach: It was targeted inefficiently and unfairly, skewing to the upper middle class and hurting lower-income families in comparison with the Making Work Pay tax credit it replaced.

Nevermind that the ten year Bush tax cut regime is responsible for the sorry state of affairs in which we presently find ourselves, with over 45 percent of the population paying nothing in federal income taxes, and a sizeable minority actually enjoying a negative tax rate whereby they receive government welfare through the tax code.

Nevermind that the latter is specifically designed as a subsidy to offset the regressivity of Social Security taxes on the poorest wage earners.

And nevermind that the future solvency of Social Security isn't really front and center in the author's mind, either.

What is Michael Hiltzik's greatest fear?

[O]nce you've cut a tax, it's ever harder to restore it.

You mean like abolishing the Bush tax cuts and thereby raising taxes on the poor by 50 percent?

I'll say.

Or how about this one?

In 2008, the top 14 million tax returns had AGIs totaling $3.8 trillion. If a liberal were really serious, he'd be advocating taxing all this income to make not just Social Security solvent, but Medicare, too. At 6.2 percent, we're talking an extra $236 billion of foregone tax revenue annually.

As tax loss expenditures go, it's the largest one I know of, by a long shot. But try getting people to focus on that one instead of my measly mortgage interest deduction, a tax loss expenditure of $88 billion.

Liberals are so caring.