Imagine a nurse in Queens, New York, wrapping up a night shift at a hospital. Her scrubs are wrinkled, her badge is still fastened to a lanyard, and she stops at a deli on her way home for coffee because she most likely cannot afford to stay. Her annual salary is $75,000. When you take into account what New York takes, what the federal government takes, and what’s left over after paying for groceries, rent, and student loans, it sounds like a genuine salary.
Recently, Jeff Bezos, who possesses more foreign reserves than the majority of nations, shared his thoughts on her predicament. The approximately $12,000 she presently sends to Washington annually is something he wants her to preserve. about $1,000 a month. He contends that she needs it more than the federal government does and that the most direct way to assist individuals like her is to eliminate federal income taxes for the lowest 50% of American workers.
The Jeff Bezos tax proposal, which would have completely eliminated federal income taxes for the poorest 50% of Americans, was met with the type of thud that only a populist millionaire can deliver. In many quarters, the initial response was mistrust: what does a man with a net worth of more than $200 billion have to gain by suggesting tax breaks for Americans in the working class? It is not irrational to be skeptical.
However, Bezos does not create the fundamental arithmetic from which he operates. According to data from the Tax Foundation, the bottom half of taxpayers contribute roughly 3% of all federal income tax revenue. Eliminating that payment completely would return real money to those that are truly struggling while costing the federal government relatively nothing in absolute terms.
After credits and deductions are taken into account, many lower-income households already pay little to no federal income tax, which is a difficulty that always arises. According to data from the Tax Policy Center, about 70% of households that now pay no income tax make less than $75,000. Therefore, some of the individuals Bezos describes as beneficiaries are already essentially exempt from the federal income tax system.
Although the Queens nurse making precisely $75,000 is a real case, she might be closer to the upper end of his suggested bracket than the average one. The practical gain may be more limited than the proposal suggests, especially among those with incomes between $50,000 and $75,000 who nevertheless have to pay actual federal taxes.
Then there is the question of where the money comes from instead, which Bezos has blatantly refused to address in detail. Senator Bernie Sanders and others who contend that taxing accumulated wealth is precisely the mechanism for funding expanded Medicare, universal childcare, and direct support programs have sharply criticized his stance on wealth taxes, claiming that doubling his own taxes would not directly assist a working family. There has been no conclusion to the argument for years.
Even though the proposal itself has clear flaws, it is noteworthy to see Bezos enter the situation with a particular plan rather than a general statement of concern. Depending on how you interpret his goals, the change from “should billionaires pay more” to “what would actually help regular people faster” is either a true reframing or a diversion.
Despite its shortcomings, there is a sense that this idea will be more difficult to reject than the typical billionaire weighs in on inequality. It is more sticky than a nebulous argument about economic growth because of its specificity—a defined profession, a designated town, and a particular monthly monetary amount. Whether any form of this concept survives interaction with Congress, where the revenue question becomes inevitable, is still up for debate. However, the discussion it has sparked about who the tax code truly burdens and who it spares is likely long needed.
