Becoming a Millionaire Just Got a Million Times Harder
Capitalism, for better or worse, is a race to the top where the starting gun only goes off once. As much as we may like to think that our economic circumstances are determined by our talent and hard work alone, there are hundreds of years of history that play a role in influencing the path our professional lives take. There’s a reason white guys like me are more likely to become millionaires than those in any other group. And while our government has, albeit tentatively, attempted to level the playing field through a number of economic policies, if you’re not lucky enough to be born rich, it’s getting harder and harder to make it yourself. Economic mobility in America has been shrinking for years, but with the passage of last year’s Republican tax bill, things are about to get much, much worse.
Last year, with the passage of the Tax Cuts and Jobs Act, corporations and millionaires were given a significantly larger piece of the tax cut pie than small businesses and the middle class. Stock prices for big corporations like Amazon, Walmart, and others grew by $437 billion. In addition, the average millionaire will save about $69,660 in taxes this year. On the other side of the economic spectrum, someone who earns between $50,000-$75,000 will save just $870. This disparity is clearly unfair, but it gets worse when you consider the impact these tax cuts are going to have on the free market.
Let’s say I, a millionaire, and Bob, a middle class taxpayer, both decide to open our own businesses and sell furniture. With my tax savings, I could sell a higher quality product, hire more staff to make the shopping experience smoother, and pay for more advertising. Bob, with just $870, would not have this flexibility, even with a generous small business loan.
To an extent, these advantages are inevitable, but previous administrations wisely acknowledged this and saw fit to introduce antitrust legislation and different tax filing statuses based on size and revenue. Even at the state level, policies are in place to ease the burden of small businesses when the minimum wage goes up or paid leave legislation is introduced. As they should - we want the best, smartest people succeeding in our economy, not just those who have the most money to throw at their problems. But now, with the new Republican tax code, our government is making it easier for big businesses to get bigger, and harder for the little guys to get ahead.
In a couple years, my business could be in the red, but with my tax savings I could keep it afloat until it turned profitable. That’s a luxury Bob wouldn’t have. If I were really ruthless, I could even intentionally run in the red and offer significantly lower prices than Bob just to push him out of the market.
For small business owners aspiring to expand, the competition that myself and other millionaire business owners present doesn’t just make achieving your goals tough, it makes it nearly impossible. So, even if you think the tax cuts are helping you, I can guarantee those of us in a higher tax bracket are being aided twice as much. That’s just the reality of the Republican tax cut strategy, which insists millionaires like me are the ones who really need tax relief.
In order to promote competition and have a robust economy, we need a better tax code that helps small businesses thrive and communities win. Last year’s tax bill did the exact opposite, and now Republicans in Congress are considering more of the same with their “Tax Reform 2.0” plan. They can’t be allowed to further entrench wealth inequality at the expense of the working class and entrepreneurs who are just starting out. We need to make American great again for small business owners, and that starts with a tax code that works for the middle class, not millionaires.
Stephen Prince is founder and president of Card Marketing Services Inc. and Vice-Chair of the Patriotic Millionaires, a coalition of high-net worth Americans concerned about the destabilizing concentration of wealth and power in the U.S.