GOP Congress Has Made It Easier For Their Rich Friends To Evade Paying Taxes

The following is part of an article by economist Paul Krugman: 

Much of the rise of the modern American oligarchy has been driven by deliberate policy rather than technological or market forces. And that deliberate policy has been the decades-long dismantling of the system of progressive taxation — a system that had ended the Gilded Age, the last period of great inequality. Starting in the 1970s, right-wing politicians pushed through large reductions in effective tax rates on the wealthy. And in the 2010s, Republican-controlled congresses stripped the IRS of resources to enforce the tax code. These two changes set the stage for the reemergence of immense fortunes, with vast social and political consequences.

What exactly does a “reduction in effective tax rates” mean? Much of that change was implemented through reductions in the statutory rates. For example, the top federal tax bracket on individual incomes was more than 90% in the 1950s, versus 37% now. Large corporations paid a tax rate of 52% on their profits in the 1950s, which is now down to 21%. Large estates paid a 77% tax rate until 1976; now the rate is only 40%, and that only applies to the value in excess of $15 million.

However, beyond these reductions in statutory rates, tax avoidance and tax evasion have grown significantly. “Avoidance” and “evasion” may sound like synonyms, but they are not: avoidance involves exploiting loopholes in the tax code in ways that are legal, even if they shouldn’t be, while evasion involves breaking the law.

And tax evasion is now a very big concern. Reasonable estimates of the “tax gap” — taxes that individuals and businesses are legally obliged to pay, but don’t — are startlingly large — $600 billion a year or more – approximately 40% of the current budget deficit. Furthermore, much of this tax gap is surely accounted for by tax evasion by high-income Americans. So tax evasion is a significant contributor to both the rise of American oligarchy and the high federal debt.

Thus it is startling to realize that, except for a brief attempt to reduce the tax gap by the Biden administration, the U.S. government has over time reduced its efforts to ensure that the wealthy pay the taxes they owe. It’s clear that the purposeful reduction in the enforcement of the tax code for the wealthy is both a symptom as a well as a cause of America’s rising oligarchy. It is a key factor in America’s downward spiral into oligarchy, which is currently ravaging our politics and our democratic institutions.

The Anti-Vax Agenda Is Being Driven By A Minority Of Right-Wing Republicans

 

From the website of Paul Krugman.

The U.S. Health Insurance System Is Already Mostly Socialized

 It may surprise many right-wingers who profess to hate "socialized medicine", but the U.S. health insurance system is already mostly socialized. Economist Paul Krugman explains:

A system under which the government would pay almost all medical expenses. Isn’t that socialism?

Well, if that is the criterion then much of U.S. healthcare is already socialist. In fact, the government’s role is so large that U.S. healthcare is better described as partially privatized socialism than as anything resembling a free market.

Let’s start with the raw numbers on health insurance, which pays the bulk of Americans’ medical expenses. Americans receive health insurance either from private companies or from public programs, overwhelmingly Medicare and Medicaid.

While a majority of Americans with health insurance get it from private companies, well over 100 million of us are covered by government programs instead. And these government programs pay more total dollars for medical bills than the private insurers do.

Why do government programs that cover a minority of the population account for a majority of health insurers’ outlays? Mainly because Medicare covers seniors, and we’re expensive. Also, while Medicaid covers many younger Americans, disabled and elderly beneficiaries account for most of its spending.

Even by the raw numbers, then, U.S. health insurance looks as much public as private. But that understates the government’s role: Private health insurance in the U.S. is both highly regulated and heavily subsidized.

This is obviously true for the insurance coverage purchased by tens of millions of Americans through the exchanges established by the Affordable Care Act. But employment-based health insurance, which covers 161 million Americans, is far more of a government creation than most people realize. For employment-based insurance exists largely because of huge implicit government subsidies that come with major strings attached.

Here’s how that works. If your employer pays you $10,000, that’s taxable income. But if your employer pays $10,000 toward a company health insurance plan that meets certain criteria, it isn’t taxable. That’s a huge effective subsidy, running at more than $300 billion a year. Take that subsidy into account, along with the more than $100 billion per year spent subsidizing policies purchased under the ACA, as well as the outlays on Medicare and Medicaid, and net effect is that the government pays for more than two-thirds of Americans’ health insurance.

Granted, there are strings attached. Roughly speaking, employment-based health plans can’t discriminate based on medical history — that is, they can’t deny coverage to employees with pre-existing conditions — and they also can’t offer the plans only to highly compensated employees — a health plan that is only for the C-suite is considered taxable income.

So given the restrictions of the federal tax code, employer-based health insurance is a lot like Obamacare, which also prohibits discrimination based on medical history and provides subsidies to make insurance affordable to lower-paid workers. The fact is that virtually all of private healthcare insurance is already well under some form of government control through regulation and tax subsidies. . . .

 If Medicare is socialism, then the whole U.S. health insurance system, with the government paying most of the bills and placing conditions on private insurers, is almost equally socialist. If you insist on calling any program the government pays for and regulates socialist, then U.S. healthcare would best be described as a partially privatized form of socialism.

And one must ask, what is the point of the part that is privatized? Do private insurers add anything positive? Or are they simply parasites, skimming off money that could have been paying for care?

The case for viewing insurers as parasites is strong. Many Medicare benefits are now delivered via Medicare Advantage, that is, plans paid for by the government but run through insurance companies. MedPAC, an independent advisory commission, estimates that last year Medicare Advantage plans were overpaid by $84 billion, thanks to practices such as “upcoding,” in which patients’ health problems are overstated to get larger sums from Medicare.

Assessing the waste from employer-based insurance is harder, but most evidencesuggests that private insurers have substantially higher administrative costs than Medicare does. Furthermore, the complexity of private insurance, with multiple payers all trying to deny care when they can, is a huge burden both on providers — doctors, nurses, and hospitals — and on patients.

What do private insurers offer to compensate for these costs? One must go through intellectual contortions to avoid the conclusion that they are, in fact, parasites.

Which brings me to El-Sayed. In supporting Medicare for All, he’s basically calling for an end to the partial, parasitic privatization of a healthcare system that is already hugely dependent on public funding. When one looks at it that way, it’s not at all a radical proposal. . . .

 The political calculus may very well have shifted since the 2000s, as Americans are fed up with a system of unaffordable premiums, rampant claim denials, and byzantine claim administration. Moreover, funding healthcare insurance through taxation would allow for a much more progressive distribution of the cost. That is, compared to the present system, middle-income households would pay less as high-income households would pay more. And the U.S. would stop wasting large sums on pointless administrative costs.

So let’s be clear: El-Sayed’s healthcare platform is perfectly reasonable on the merits of cost, fairness and health efficacy. And with private insurers never more hated, while millions of Americans are losing their health insurance, 2026 may be its time.

The U.S. And Iran Are Fighting A War - And China Is Winning

 

The following insightful post is by Nobel Prize-winning economist Paul Krugman:

Make America Great Again? Hah. Donald Trump has weakened us with astonishing speed. Under his “leadership” America’s influence, reputation and credibility have peeled away like the liner in the Reflecting Pool.

The disintegration of U.S. power was well underway before Trump started his war on Iran, but the pace of decline has accelerated sharply since the magnitude of our defeat started becoming apparent.

And when future historians write about this tale of self-immolation, they may well do so in Mandarin.

China hasn’t been a direct combatant in the third Gulf war, and its support for Iran has, until recently, been discreet. (China is now reportedly preparing to send Iran advanced munitions — Phillips O’Brien suggests that it is “going in for the kill.”) But China has clearly relished our humiliation. And both the way the war has played out and China’s role have drastically shifted the global balance of power in China’s favor.

China has been a serious geopolitical rival to the United States for some time. China’s manufacturing sector overtook the US in 2010, and the gap has continued to grow (I’ll explain the line labeled “US+EU” shortly):

And China’s role as the workshop of the world inevitably gives it a great deal of geopolitical influence.

However, there were a number of factors that, two years ago, arguably still gave an America a power advantage despite China’s economic weight and manufacturing prowess. These factors included:

· America still led the world in science and cutting-edge technology.

· The U.S. military appeared to have vastly better weapons and leadership than any other nation’s.

· The dollar’s dominant role in international transactions gave the United States enormous financial clout, including the ability to cut other nations out of the global payments system.

· Above all, the U.S. wasn’t alone. We were the leader of history’s most successful alliance system, nations bound together not just by mutual interests but by shared democratic values.

Yet Trump and his lackeys have quickly squandered all of these advantages.

A great deal has been written about the Trump administration’s attack on science, which is a topic largely separate from the Iran war. As one recent discussion put it, Trump officials

have orchestrated a series of attacks on scientists and their laboratories, implemented through funding cuts, grant interruptions, and immigration restrictions. Scientists are gravitating to Canada, Europe, and China, and we are rapidly losing the depth of our innovative and essential scientific community.

The undermining of other U.S. sources of strength was also underway before the Iran war, but the war has accelerated the downward spiral.

Even before the bombing of Iran began, some observers worried about the state of the U.S. military. Had U.S. military leaders adapted to the new world — revealed by the war in Ukraine — of cheap, ubiquitous drones? How much damage had the pro-testosterone, anti-intellectual leadership of Pete Hegseth already done? Now we know the answers to these questions, and America’s military reputation has nose-dived.

Oh, and as a December 2025 report from the Center for Strategic and International Studies points out, a Chinese supply chain underpins “the architecture of modern drone warfare.”

America’s dollar-linked financial power has also sharply declined. True, as I wrote a month ago, “The dollar’s role as the dominant currency for ordinary business is not under threat.” However, the war has demonstrated that, thanks in large part to China’s underlying economic power, America’s ability to weaponize the dollar has been greatly reduced:

Iran was able to continue selling oil (until the U.S. temporarily imposed a military blockade) and buying essential imports, despite U.S. financial sanctions, by taking payment in yuan and using those yuan to buy Chinese goods. Ships that paid Iran for safe passage through the Strait of Hormuz also paid in yuan (or in cryptocurrency, whose only real use case remains criminal activity.) The details are complicated, but using yuan essentially allows those designated by the U.S. government as rogue actors to fly under our financial radar.

Finally, the war has really put the nail in the coffin of the U.S.-centered alliance system.

America’s alliances have been a fundamental source of global strength since World War II. The line labeled “US+EU” in the chart on manufacturing value added is an indication of how much these alliances used to strengthen us: It shows that even now the US and the democracies of the European Union combined produce more manufactured goods than China, a lead that would be larger if I included the UK, Japan, Canada, etc.

But Trump began torpedoing our alliances on day one. Discussions of the Trump tariffs, even critical ones, don’t emphasize enough the fact that every one of these tariffs broke international agreements made by the United States in the past. So Trumpian tariff policy, by itself, was an announcement to the world that agreements with the U.S. government are worthless. Add to this the demands that Canada become the 51^st state, that Denmark hand over Greenland, and so on, and America had thoroughly lost the trust of its former friends even before the Iran war.

Then came the war. And in the past five months the U.S. has shown itself both erratic and ineffectual. Trump launched a war that, in addition to creating death and destruction, cut off much of the world’s oil supply without so much as consulting other nations. Once the war began, America proved both incapable of imposing its will on Iran and unable either to open the Strait of Hormuz or to protect regional allies.

So now the world neither trusts nor fears us. The chart at the top of this post, drawn from the Pew survey of global attitudes, shows views of the US and China in multiple countries. Even many of our oldest allies, the nations that helped us win World War II and the Cold War, now have a more favorable opinion of China than they do of us.

Let’s be clear: The end of U.S. leadership and China’s growing geopolitical ascendancy are bad things. China is a corrupt autocracy, with little respect for human rights and none at all for democratic values.

But people around the world have concluded that the Chinese are serious people, and that we are not. So America lost the war — and China won.

Climate Change Is Happening - And Trump Is Making It Worse For The U.S.

 

From economic Paul Krugman. For more you can go here.