A populist undercurrent running through President Biden’s State of the Union address and stirred by turbulent conditions in the global economy is resonating with Americans.
It’s the feeling that people are “being ripped off,” as Biden put it, by an economy that isn’t “fair” — a word that appeared nine times in Biden’s prepared remarks.
From pesky fees levied by big retail banks to deep, structural imbalances in the US tax system that favor wealthy people and big corporations, Biden’s speech met an enduring frustration in American business life: how the deck of big corporations and Institutions versus ordinary taxpayers and consumers.
“If we – the poorer, the middle class – pay taxes, then big corporations should do the same. This is correct. So I think the President [said] something that is true. We need more taxes to be paid by the big corporations and then that money can go back to the poorer people to help the people,” said Jean-Michel Dossous, a New York City cab driver who reports on the State of the Union on his Phone traced The Hill.
Biden has consistently returned to the notion of economic fairness, announcing numerous initiatives to lower prices after a year of high inflation that has weighed on American wallets and that tax authorities such as Congress and the President have limited powers to act .
“Big Pharma has been unfairly charging people hundreds of dollars [for insulin] — and make record profits,” Biden said during his speech on Tuesday, praising the $35 insulin price cap for seniors who receive Medicare, which was passed last year as part of Democrats’ inflation-control legislation. Price caps have only been used minimally in the government’s fight against high prices, which is primarily the responsibility of the Federal Reserve.
He also touted his government’s efforts to crack down on so-called “junk fees,” expensive fines levied by banks, financial firms and other businesses for reasons such as late payments, insufficient funds or attempting to cancel a service.
“I know how unfair it feels when a company overcharges you and gets away with it,” he said of bank overdraft fees, a business practice he wanted Congress to curb with new legislation.
The Biden administration also announced last week efforts to cap banks’ overdraft fees to $8 through a new rule to be enacted by the Consumer Financial Protection Bureau (CFPB).
Tatiana Nazario, an administrative assistant at the public library in Newark, N.J., told The Hill she “absolutely” feels like she’s being ripped off by big banks and that she knows people who are getting into a cycle of debt as a result are overdraft fees.
While some big banks have already scrapped overdraft fees, banking lobbyists and sector advocates call these penalties a useful and popular way for consumers to smooth spending.
“If you get an overdraft fee and it stays in your account for a few days, they will overdraw you over and over again until you pay them. If you’re already broke and waiting for that direct deposit to happen, you won’t have much left by the time it happens,” Nazario said in an interview.
“People are living off payday loans and now they are promoting these apps … where to get payday loans instead of finding better solutions for us,” she added.
The CFPB describes payday loans as short-term, high-cost loans for small amounts of money and warns that people’s “ability to repay the loan … is generally not taken into account by a payday loan.”
Of all the mentions of economic injustice in Biden’s State of the Union, perhaps the point he pounded most insistently was injustice in tax legislation.
“I think many of you at home would agree that our current tax system is simply unfair. The idea that 55 of America’s largest companies made $40 billion in profits and paid no federal income taxes in 2020? It’s just not fair,” Biden said.
Steve Taylor, adjunct English professor at City University of New York, said he felt the same way, arguing that rich people and businesses should pay more.
“I think they should pay their fair share. You get away with murder. These guys don’t pay taxes. I mean come on i pay taxes What’s the median for working people, about 25 percent? light up. What’s going on?” he said in an interview.
Critics of corporate tax hikes argue that large corporations still pay billions in other types of taxes outside of taxed income.
According to various opinion polls, the views of Taylor and Jean-Michel Doussos on the tax system are held by a majority of Americans.
Fifty-two percent of Americans believe the government “should redistribute wealth to the rich through high taxes,” according to one such poll published by Gallup last August, while 47 percent believe the opposite. Before the 2008 financial crisis, these preferences were broadly reversed, with more Americans disagreeing than agreeing with the idea of redistributing the wealth of the rich through taxes.
A 2020 Reuters/Ipsos poll found that nearly two-thirds of respondents believed that “the very wealthy should contribute an additional proportion of their total wealth to support public programs each year.” Support for this position was stronger among Democrats at 77 percent, but it was also supported by 53 percent of Republicans.
The difference between taxing workers and wages and taxing profits and corporations has been called a “two-tier tax system” by other members of the Biden administration, including Treasury Secretary Janet Yellen.
“At the heart of the problem lies a discrepancy in the way types of income are reported to the IRS: Opaque sources of income often avoid verification, while wages and federal benefits tend to be almost fully complied with.” This two-tier tax system is unfair and drains resources from the country to fund core priorities,” she said in 2021.
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Tom Ankner, a librarian in Newark, New Jersey, said he appreciated hearing the message during Biden’s speech that the economy could treat people more fairly.
“I liked the fact that he took that line,” Ankner told The Hill. “Because I would like that [to see changes]. That’s the direction I’d like to see the country take.”
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