The rise of the (tax) resistance

Make Me Smart April 15, 2024 Transcript

Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.

Kimberly Adams 

No, no. Rouge is indeed a term that at one point in time was used for makeup.

Kai Ryssdal 

What is it now?

Kimberly Adams

Blush.

Kai Ryssdal

Blush. All right. Okay.

Kimberly Adams 

Maybe bronzer perhaps depending on what you’re doing.

Kai Ryssdal

Charlton, save me.

Kimberly Adams

I was very entertained by that. Thank you. I needed that.

Kai Ryssdal 

Clearly you were. Yes.

Kimberly Adams

I needed that. I appreciate it.

Kai Ryssdal

Clearly you were. Hey everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart, where we make today make sense.

Kimberly Adams 

And I’m Kimberly Adams. Thank you everyone for joining us on this Monday, April the 15th. Happy Tax Day, I guess.

Kai Ryssdal 

Yes. Happy Tax Day. Although that is not why I’m cranky today. I’m just cranky outright. Anyway, we’re going to do some news and some smiles, and you get to go first.

Kimberly Adams 

I mean, there’s, you know, war.

Kai Ryssdal 

Yeah, well there’s that. There’s the general state of the world.

Kimberly Adams 

Negative opinions on things. So anyhow, because it’s Tax Day, I wanted to highlight two tax related stories. The first one is kind of tied to the war and the ongoing conflict in the Middle East because it occurred to me. To be honest, specifically thinking about Reema, our colleague who’s done quite a bit of reporting on just the devastating emotional impact the ongoing conflict in Gaza has had on her and her family, in particular. And one of the narratives that comes up a lot in this is that many of the weapons being used in this conflict are paid for and provided by the United States, similar to the weapons used to shoot down the Iranian drones and missiles this weekend. And those are paid for by our tax dollars, as is everything else the government does. And it is a reminder that regardless of how you feel about what the United States government does with your money, you still have to pay taxes. And that, so there was a story, an opinion piece in Government Executive, which is this sort of wonky news outlet that focuses on you know, things related to federal agencies, but also in The Conversation by Michele Frank talking about how there are two different types of objections to paying taxes. There are the group called tax deniers, people who deny that the government actually has a right to levy income taxes. And these people are supposedly legally and morally opposed to filing tax returns and paying taxes due to their mistaken belief that taxes are unconstitutional or otherwise invalid. Then you have tax protesters. “Unlike tax deniers, tax protesters do not deny the government’s right to levy taxes. Rather, they refuse to pay some or all of their taxes in order to protest government-funded policies and programs that are inconsistent with their moral and ethical beliefs. Tax objectors date back to the American Revolution when Quakers refused to pay taxes to the colonial government for military purposes. In the 1960s, public figures such as Joan Baez and Gloria Steinem withheld payment of their federal income taxes to protest the government’s participation in the Vietnam War.” There’s another example of a suffragette who actually had her. In 1909, sorry, a suffragette, who actually had her property seized because she refused to pay taxes saying that no taxation without representation because women couldn’t vote. So, there is a long history of this. And yet, the courts have consistently upheld consistently that no matter how you feel about it, you’ve got to pay your taxes, which I think is interesting because correct me if I’m wrong, but you can have a conscientious objection to serving in the military. Right?

Kai Ryssdal 

Yeah, but you still have to do some kind of service, right. You don’t get to go, “I’m a conscientious objector, so I get a pass.” You do have to do some type of service. That is correct.

Kimberly Adams 

Yeah. And I wonder, like, what the equivalent of that would be when it comes to taxes, you know? So, anyhow, I thought that was very interesting. It was just on my mind, especially given all the news this weekend. And then there was extremely fascinating special report in Politico, which I would encourage folks to go read about the 401(k) industry, and how 401 k’s and the tax benefits of funding retirement this way has bipartisan support but has a lot of evidence to show it benefits the wealthy much more so than a lot of other people. The benefits are nowhere near equally accessible or equally distributed. And there’s a huge lobbying and industry influence that keeps the system up and running the way it is, and it costs so much money. So, the headline is, “‘The 401(k) industry owns Congress’: How lawmakers quietly passed a $300 billion windfall to the wealthy.” And if you go down into the article a bit. Let’s see. “The burgeoning financial services industry, for whom tax-advantaged retirement savings has transformed the $7 trillion retirement market in 1995 to a $38.4 trillion behemoth in 2023. Meanwhile, according to one estimate by the Joint Committee on Taxation — which is used by lawmakers to evaluate tax proposals and assess the immediate loss to the government’s bottom line — the cost of retirement tax expenditures to the government is expected to nearly double in just four years from $369 billion dollars in 2023 to $659 billion in 2027. The statistics fly in the face of rhetoric from advocates in both parties. Republicans celebrate the private-sector nature of tax-advantaged savings, in which workers make their own investment decisions, while Democrats hail the economic boost and enhanced retirement security for American families.” Anyhow, there’s a ton of detail in the story about how it doesn’t necessarily help as many people as we think it does. And it’s a benefit that mostly accrues to wealthier Americans that is effectively expanding the deficit. And yeah, that’s it. It’s wild.

Kai Ryssdal 

I feel like how fill in the blank industry owns Congress could be like a multi-part series.

Kimberly Adams 

For sure. Defense. Health care.

Kai Ryssdal

Right. Right. Exactly. Exactly.

Kimberly Adams

I mean, although. Although, the National Association of Realtors had quite a bit of influence, and nevertheless, look at them now. All right, what’s your news?

Kai Ryssdal 

So, mine, I just want to make people aware of a new phrase that’s starting to burble around in the financial and economic press that maybe people who don’t follow this as closely as you and I and the rest of our colleagues in Marketplace do, might not have heard about yet. We’ve all heard about soft landing, right? The Fed is going to be able to engineer a soft landing, that is to say get inflation under control without crashing the economy and things are going to be hunky dory. Here’s another one that’s entering the conversation. It’s been, you know, a couple of weeks now, maybe a month or two, it’s called the “no landing” scenario. Part of which is the Federal Reserve not cutting interest rates, but instead raising interest rates. And I raised that because of a piece in Bloomberg today pointing out that strategist and analyst at UBS, one of the big Wall Street firms doing, you know, stock analysis and market analysis, is now saying that not only is the Fed not going to cut rates as much as they thought it was going to cut rates. It’s only going to kind of a half a percentage point instead of the almost 3% edge points that that UBS had been estimating. They figure the Fed might actually raise interest rates next, and at some point this year might raise interest rates to six and a half percent from the 5.3-ish percent where they are now. Now, is that definitely going to happen? No. Is it increasingly a part of the conversation? Yes, because despite the Feds best efforts, unemployment, the labor market is still very strong, the economy is growing at 3.4% annualized over the fourth quarter of last year. So, the dynamics are really challenging for the Fed. And it’s not entirely certain that they’re going to cut rates anytime soon. And that kind of puts the soft-landing scenario in a little bit of jeopardy, and so start picking up on people when they say “no landing.” That’s what that means. The Feds’ going to raise interest rates, not lower them, because the economy is still too strong.

Kimberly Adams 

I mean, those retail sales numbers this morning were right in line with that idea.

Kai Ryssdal

Yep. Absolutely.

Kimberly Adams

Way stronger than a lot of folks expected and probably than the Fed wanted.

Kai Ryssdal

Absolutely.

Kimberly Adams

All right.

Kai Ryssdal

All right.

Kimberly Adams

I guess we should go to the smile section.

Kai Ryssdal 

I don’t have one because I’m cranky for reasons I haven’t quite figured out yet. What do you have?

Kimberly Adams 

It was a bad weekend, you know, like the escalation of the conflict and the regional now conflict in the Middle East is really disheartening, and I don’t think we have to pretend to not notice it or that it wasn’t a complete disaster of a weekend. Could have been a lot worse, for sure. Definitely could have been a lot worse, but it is what it is. So instead of a smile, I do have something I thought was interesting in The Guardian and reported a variety of other places. There’s a meeting happening at the London Royal Society of cosmologists who are taking another look at the universe. James Webb Space Telescope, along with a lot of other research is really kind of up ending a lot of settled science when it comes to how we think of the universe. So, I’ll just read this opening from The Guardian. “If you zoomed out on the universe, well beyond the level of planets, stars or galaxies, you would eventually see a vast, evenly speckled expanse with no notable features. At least, that has been the conventional view. The principle that everything looks the same everywhere is a fundamental pillar of the standard model of cosmology, which aims to explain the big bang and how the universe has evolved in the 13.7 billion years since. But this week a meeting of some of the world’s leading cosmologists will convene at London’s Royal Society to ask the question: what if this basic assumption is wrong? This meeting comes after a number of high-profile astronomical observations have challenged the conventional view.” I think this is very fascinating. You know, as came up, I think a bit when Sarah McCammon was talking about the exvangelicals. I was very much raised in the environment of the biblical explanation of the origins of the universe, and the whole, everything created in seven days, humans existing at the same time as dinosaurs, and all of these things. So, I have had multiple learnings of my understanding of the universe over the course of my life. And so, it’s very interesting to me, this opportunity that perhaps we’re going to learn some more about the way that things operate. And I’m excited, I’m interested, and I can’t wait to hear what they come up with.

Kai Ryssdal 

That’d be cool. It’d be a very, I’d have to like pay attention to that conference, right? Because it dishes very, like the biggest of all possible big picture conferences. Right? That’d be crazy.

Kimberly Adams 

Yeah. I mean, a lot of times, I will pay attention to this stuff and listen to physicists and, you know, cosmologists and all these people and half the things they say I don’t understand. And I have to like, go back and re-listen and re-listen and get people to break it down for me. But when I can get a little snippet of understanding, it really feels good. Like, I remember when the James Webb Space Telescope, we got the first photos and one of the scientists we talked to talked about looking at the universe as if you were doing a core sample and drilling down and looking at the layers of the soil in the bedrock and seeing different time periods based on how deep you go. That that is how the James Webb Space Telescope was taking pictures back in time. And I was like, I get it. I get that. That was exciting.

Kai Ryssdal

Very cool. Super cool.

Kimberly Adams

Yeah. Yeah. All right. Well, that’s it. That’s all we got today. Join us tomorrow for our weekly deep dive. We’re going to talk about the debate over how life with smartphones and social media is affecting us, especially young people, and we’ll get into what researchers do know and what they don’t know. There’s a lot of sorts of common wisdom I think people already have about it and we’ll see what the research actually says. So, stay tuned for that. We’re going to have that convo.

Kai Ryssdal 

Charlton Thorp, right on the button. Make Me Smart is produced by Courtney Bergsieker. Today’s program was engineered by the aforementioned, Charlton Thorp. Ellen Rolfes writes our newsletter. Our intern is Thalia Menchaca.

Kimberly Adams 

Marissa Cabrera is our senior producer. Bridget Bodnar is the director of podcasts. And Francesca Levy is the executive director of Digital.

Kai Ryssdal

There we have it.

Kimberly Adams

You know along with 401(k), the mortgage interest deduction. That’s another big one.

Kai Ryssdal 

Oh yeah, right. Totally. Totally. Totally, totally. Yeah.