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This Labor Day was beautiful. We joined the Montague-to-Whitehall bridge walk, then marched in the West Michigan Labor Day Parade in Muskegon, where we visited with workers from union to union. It was good to stand with the people who are the backbone of the middle class--the workers whose organizing won the 40-hour workweek, living wages, and benefits over the past century.
Labor Day is supposed to honor the people whose work keeps this country running. Let's think about that for a moment. If we truly honored working people, our tax code would not punish paychecks while rewarding wealth; it would value labor, organizing, and shared prosperity as much as stock portfolios and corporate profits. Instead, it sends a different message: work is taxed as it is earned, while wealth gets special treatment. Every paycheck is taxed as it comes in, while billionaires can watch stocks and other assets soar without owing income taxes on those gains until they sell, if they ever do.
First, the tax code treats income from work more harshly than income from wealth. Wall Street, giant corporations, and billionaires spend millions on high-priced lobbyists to protect that advantage, and the results are written directly into law. The average marginal income and payroll tax rate on labor income is 27.6%, compared with just 21.8% on capital gains--a tax break tilted heavily toward the richest 1%.
Second, the code makes it harder for workers to organize while still rewarding the companies that fight them. Union members lost the ability to deduct their union dues from federal income taxes, while corporations can still deduct expenses tied to anti-union campaigns. Employers spend at least $400 million a year fighting workers trying to form unions and bargain for better wages and benefits.
Third, corporate tax breaks deepen the imbalance. After the 2017 Trump-GOP tax law slashed the corporate tax rate from 35% to 21% corporations began paying, on average, a lower effective income-tax rate than the average American family for the first time in nearly a century. For every $100 Congress spends on corporate tax cuts, the bottom 80% of households receive only about $10, while foreign investors get $40 and the richest 1% get another $17.
Finally, the ultra-wealthy benefit from one of the biggest advantages of all. Much of their economic income comes from the rising value of stocks, real estate, and other investments--gains that can go untaxed for years while billionaires borrow against their fortunes to finance lavish lifestyles.
Taken together, these choices reveal a system built to protect concentrated wealth instead of the people whose labor creates it. Billionaires and corporations have armies of lobbyists fighting to protect every loophole and tax break they have bought in Washington. Workers and working families are fighting for something fairer: a tax system that values work as much as wealth.
That is why labor unions and consumer groups are fighting to change the rules: to tax wealth more like work, end giveaways that reward corporations for moving jobs and profits offshore, stop taxpayer subsidies for union busting, and demand that millionaires, billionaires, and giant corporations pay their fair share.
Wall Street will keep spending whatever it takes to defend a tax code that works for Wall Street. Our strength is grassroots power: labor unions, workers, and allies exposing who benefits from these giveaways and organizing for a tax system that works for working people. If we want change that benefits workers, we cannot sit on our laurels. We have to work for it, just like those who came before us did.
For many of us Labor Day wasn't just an extra-long weekend, it was a reflection of where we were, where we are, and where we can be as fair to workers as we are to the entities for whom they work. We chose to celebrate Labor Day by investing in the fight for workers.
About the author: Kathy Pelleran-Mahoney is a writer and advocate residing in Montague with her husband, Ken, after retiring from a five-decade career in public service.