On Thursday, entrepreneur and self-described one percenter Nick Hanauer warned Congress that rich people like him aren’t the engines of the economy. In a testimony before the Senate Banking Committee, he explained why, in fact, middle-class workers are the economy’s real job creators:

In the same way that it’s a fact that the sun, not earth is the center of the solar system, it’s also a fact that the middle class, not rich business people like me are the center of America’s economy. […]

As an entrepreneur and investor, I have started or helped start, dozens of businesses and initially hired lots of people. But if no one could have afforded to buy what we had to sell, my businesses would all would have failed and all those jobs would have evaporated.

He described what he calls a “virtuous cycle” in which middle class consumers have money to buy goods, which increases demand and therefore hiring. The rich, on the other hand, don’t fuel the economy with their consumption in the same way. “I earn 1,000 times the median wage, but I do not buy 1,000 times as much stuff,” he noted.

But the country’s policies pretend otherwise. He included facts that display how skewed America’s policy priorities really are:

• Corporate profits and unemployment are simultaneously at 50-year highs.
• The share of income for the richest 1 percent has tripled since 1980 while their taxes have only risen by 50 percent.
• The rich enjoy a 15-20 percent tax rate on capital gains, dividends, and carried interest while the top marginal rate on middle class Americans is 39 percent.

He concludes, “Tax the wealthy and corporations – as we once did in this country – and invest that money in the middle class-as we once did in this country.”

Facts back up his proposal that taxing the rest and investing the revenues can spur economic growth. The years following the Bush tax cuts were the worst for job creation since record keeping began. Meanwhile, job growth in the post-war period has been stronger when the top income tax rate is higher.

Yet wages just fell to an all-time low. Corporate profits, on the other hand, have outpaced wages by 20 percent since 2008.

In an interview Sunday on Fox News, Senator Ted Cruz (R-TX) offered a simple solution to the political storm around the extra scrutiny paid to conservative nonprofits by the Cincinnati office of the Internal Revenue Service: Abolish the IRS.

Cruz’s modest proposal is to eliminate the agency and replace the tax code it enforces with a flat tax, “where the average American can fill out our taxes on a postcard.” The flaws with a flat tax are well known, especially so soon after a presidential election that featured flat tax proposals from nearly every Republican candidate. The primary flaw is that a flat tax is steeply regressive. It would raise rates for low- and middle-income Americans, while providing the wealthy with a tax cut.

But beyond the standard issue of fairness, Cruz’s specific proposal is incoherent. The problem is with his very next sentence after the familiar line about shrinking the tax return down to postcard size: “Put down how much you earned, put down a deduction for charitable contributions, for home mortgage, and how much you owe.”

Cruz suggests maintaining charitable deductions – in effect, a statutory diversion of public dollars to groups designated to be fulfilling a charitable purpose. This would require some legal definition of what qualifies a group to receive such subsidy, and then some process to assure that those groups that claim to meet such definition are in fact in compliance with it. It is difficult to imagine how a system of charitable deductions could exist without the agents and bureaucracy Cruz proposes to abolish, at least without opening the door to vast waste, fraud, and abuse.

Cruz is only the latest of many Republicans to allege a clear and Watergate-like connection between President Obama and the Cincinnati IRS office’s actions, despite an Inspector General’s report finding no such conspiracy. The IG’s report states that the IRS used “inappropriate criteria to identify organizations applying for tax-exempt status,” and that every staffer it interviewed attributed the origination of those criteria to “first-line management” in the agency’s “Determinations Unit,” not to political officials or the office of the president. The IG’s report includes multiple recommendations for how agents and bureaucrats can establish and enforce the appropriate criteria upon which tax-deductible charitable giving depend.

Gov. Sam Brownback (R) will soon sign what he calls the “fabulous package” of sales tax hikes and income tax cuts passed by the Republican-dominated legislature over the weekend. The sales tax rate increase will apply to food as well as other purchases, making it even more targeted at the lower end of the income scale than a similarly regressive North Carolina proposal that would at least exempt groceries and prescription drugs.

The bill continues a trend whereby Brownback and fellow conservatives have shifted the tax burden in the state towards sales and property taxes, which are disproportionately paid by the poor and middle class. Even prior to this legislation, Kansas’ taxes were steeply regressive. A January report from the Institute for Tax & Economic Policy found that the top 1 percent of non-elderly Kansans paid state and local taxes at a rate less than half that faced by the bottom 85 percent of earners.

Brownback’s 2013 measure, which tax experts from both left- and right-leaning think tanks have decried, follows a similarly regressive rewriting of the income tax code in 2012. Last year’s measure included the elimination of a tax rebate program to partially offset the annual cost of sales taxes paid on food. The 2013 legislation restores the rebates, although at lower levels, according to the Kansas City Star.

The dramatic revisions under Brownback haven’t just increased the tax burden for those with the least financial stability. They’ve also worsened the state’s fiscal outlook. Taken together, the 2012 and 2013 tax changes will cost the state $1.1 billion. That lost revenue is already preventing the state from meeting its responsibilities to educate its public school children. In January, the state lost a court case over school funding, with federal judges in the state ruling that its education funding had fallen so low as to be unconstitutional. The judges found the state is falling $440 million short of fulfilling its obligations to students.

North Carolina lawmakers are seeking to shift much of the state’s tax burden off its wealthiest citizens and most profitable businesses and onto its low- and middle-income residents. After initially proposing to eliminate the state’s income tax outright, Republicans are instead introducing a flat income tax rate across all earning levels. The proposal unveiled Thursday would also expand the reach of sales taxes in the state, which hits low-income families hardest, and comes on top of the March repeal of a tax credit for 900,000 working families in the state.

The state’s effective tax rates already favor the rich. The North Carolina Justice Center, a progressive think tank in the state, explains that the richest one percent of tarheels pay 6.5 percent of their income in combined sales and income taxes at the state level, while the lower 80 percent of earners pay between 9 and 10 percent combined. Yet Republicans propose to give that top one percent a tax cut while hiking rates for those already paying more:

NCJC adds that the lost revenue from this plan “could be as high as $573 million” per year. Given that state law requires balanced biannual budgeting, the tax proposal is likely to force major cuts to public services if approved.

If all of this sounds familiar, it should. Supply-side economists have pushed for this sort of regressive tax reform in the name of economic growth for over 30 years, at all levels of American governance. Art Laffer, the chronically misleading godfather of this widely discredited approach to tax policy, helped press for the initial repeal proposal from North Carolina’s conservatives. Laffer’s had a prominent hand in the broad wave of state-level supply-side tax reform proposals since last year, and statehouse Republicans seem prepared to continue believing him even after his research for the American Legislative Exchange Council has been shown to be error-riddled.

Apple CEO Tim Cook testified Tuesday before the Senate Permanent Subcommittee on Investigations, following that panel’s report that Apple has avoided tens of billions of dollars in U.S. tax liability through complex, lawful multinational structures. Cook was the latest head of a major technology company to face Senate scrutiny for its corporate tax behavior, after the same panel summoned Microsoft and Hewlett-Packard executives in September 2012.

Just as his competitors did before the same Senate panel last fall, Cook defended his company’s tax strategies as both legal and in his shareholders’ interests. Cook’s endorsement of corporate tax reform was more specific than the broad support Microsoft executive Bill Sample offered last year. But his support for lowered rates, closed loopholes, and doctrinaire reforms is unlikely to take the heat off the eye-popping tax behavior that inspired the hearing.

The panel’s investigation found, with Apple’s cooperation, that the company’s three Ireland-based subsidiaries “have no tax jurisdiction at all,” as The Guardian explains, allowing it to shelter tens of billions in sales from not just U.S. but all taxation.

The complex arrangement includes three subsidiaries, based ostensibly in Ireland, which appear not to be designated as tax resident anywhere, the committee said. A source on the committee called them “iCompanies – I for imaginary, invisible”.

The commitee said that the arrangement, described by one senator as “the epitome” of tax-avoidance schemes, allowed Apple to pay only very small amounts of tax on much of its overseas profits, thanks to the Irish companies that exist “nowhere” for tax purposes. […]

One of those Irish affiliates, Apple Sales International (ASI), reported sales income of $74bn over four years but paid hardly any tax. In 2011 ASI had pre-tax earnings of $22bn but paid just $10m in tax, a rate of 0.05%.

Citizens for Tax Justice says Apple is holding fully $102 billion in untaxed offshore cash. The Financial Times notes Apple is careful to maintain appearances, however. It’s reported tax rate of 25.2 percent for 2012 “is an accounting entry and has no effect on the actual amount of taxes paid,” which amount to more like a 15 percent effective tax rate.

Throughout the hearing, both senators and witnesses repeatedly acknowledged that Cook and his fellow executives are indeed operating within the law. The dispute is over how policymakers should respond to a corporate tax code so riddled with loopholes and bad incentives that Apple and other multinationals behave in this way. As corporations have manipulated the flaws in that tax code and payroll taxes have increased, working people have replaced companies as a primary source of tax revenue:

One response to the flawed corporate code, supported by many businesses, would be to offer a tax holiday on repatriated profits currently sheltered overseas. Congress tried such a holiday before, and it was a massive failure. Cook’s rejection of this approach was heartening, but the rote ‘simplification’ of the system he repeatedly endorsed amounts to what’s known as a territorial approach, whereby loopholes are closed and the tax code is rewritten such that companies pay U.S. taxes on U.S. revenues.

For all their simplicity, such territorial systems encourage an international race to the bottom on corporate taxation, as Europe has discovered. Last week, Bloomberg’s Jesse Drucker detailed the perverse corporate tax outcomes created by European policymakers who talk about making it harder to dodge taxes but whose policies actually make it easier.

Threading the policy needle between race-to-the-bottom territorial policy, tax holiday giveaways, and the current ineffective legal web is quite difficult. But economist Alan Auerbach has one idea, explained in a paper jointly published by the Center for American Progress and the Hamilton Project, that would seem to balance both government and corporate interests. Auerbach suggests that multinational companies pay their taxes only in the countries that use their products, so that moving money across borders doesn’t alter the taxes they owe in any given country. Tim Fernholz of Quartz explains that Auerbach’s idea strips “the ability to move US profits overseas” artificially, as present law has encouraged Apple to do. With a few other tweaks, this could make it more attractive to invest in the U.S.

So far, today’s hearing has not entertained this notion of destination-based taxation on multinational activity. But it’s the sort of Gordian Knot approach to a longstanding, costly policy tangle that might appeal to the head of a company that once made “Think Different” its global slogan.

West, Texas continues to be rocked by the aftermath of the fertilizer plant explosion last month. Victims are now discovering they may still have to pay property taxes on their destroyed homes. While these homeowners can file protests until the end of May, the law requires property values to be determined on January 1 of the tax year. Local governments are allowed to reappraise homes after natural disasters, but the fertilizer plant explosion was very much a man-made calamity.

Even the mayor, Tommy Muska, has filed to protest the property value of his home, which is so badly damaged from the blast that it may cost $300,000 to repair. However, the mayor noted, granting victims relief is a “double-edged sword,” as the town will flounder from the millions of lost tax dollars. The magnitude of the explosion, which claimed 15 lives and injured 160 others, also devastated a huge chunk of West’s much-needed revenue for many years to come:

Hahn estimated that West lost at least $29 million in taxable value as a result of the blast, not counting damage to nontaxable property such as schools, water tanks and infrastructure.

That amount represents more than one-fifth of West’s tax base of $140.4 million, according to preliminary values. Hahn said losing that much revenue this year would hobble the finances of the city and West Independent School District when they need the money the most.

Whatever the appraisal district decides, either the victims or the town will take a debilitating hit. Victims cannot count on West Fertilizer Co. for compensation, either. The plant was only insured for $1 million of damages, a negligible sum that does not even begin to cover the actual losses. Property damage alone is projected to reach $100 million. Even so, the company was not required to carry any liability insurance at all. Many states, including Texas, do not impose any legal requirements for companies to have liability insurance. This latest revelation is just one of the myriad regulatory failures that led to the deadly explosion.

On Friday, the Texas Department of Public Safety and the Texas Rangers launched a criminal investigation into the explosion. Some victims are also pursuing civil lawsuits against the company.

The United States Senate voted Monday evening to pass the Marketplace Fairness Act, bipartisan legislation that would close what is known as the “Amazon loophole” by giving states the authority to collect sales taxes on online purchases even when internet retailers aren’t based within their borders. That loophole gives online sellers an advantage over brick-and-mortar retailers that have to collect sales taxes on most purchases.

The legislation passed 69-27.

The new rules would apply to all retailers with sales exceeding $1 million a year should it pass the House of Representatives, where it is expected to face opposition. Amazon, the largest online retailer, now supports it, but eBay and other online outlets are opposed. eBay sent 40 million emails to its users in April protesting the legislation.

“The contentious debate in the Senate shows that a lot more work needs to be done to get the Internet sales tax issue right, including ensuring that small businesses using the Internet are protected from new burdens that harm their ability to compete and grow,” Brian Bieron, eBay’s Senior Director of Global Public Policy, said in a statement. “eBay will continue to focus on bringing greater balance to the legislation by protecting small businesses with less than $10 million in sales or fewer than 50 employees.”

Despite those concerns, the closure of the loophole will have big benefits for states and taxpayers. States have lost billions of dollars to the loophole at a time when tight budgets have forced them to cut back on education and other programs. Low-income taxpayers, meanwhile, will benefit because closing the loophole will make state sales taxes slightly less regressive. However, raising the exemption, as eBay wants to do, would significantly reduce those benefits, which have been sought by governors, including Republicans, across the country in recent years.