Contrary to popular belief, the Boston Tea Party of 1773 was not about the colonists’ opposition to taxation. It was a rebellion against taxation controlled by the British Parliament, rather than by the colonists. It was also a protest against the generous tax break that Parliament was giving the East India Co., which monopolized tea exports and undercut colonial traders. Illustration by Nathaniel Currier, 1846

One would think that when people have been as successful in business as America’s billionaires have, they would understand basic economic arithmetic. But that doesn’t seem to be the case.

When it comes to the opinions most of them express about taxes, it seems like the billionaire class, along with their political enablers, suffer from a psychic disease that might be called blind spotitis.

Let’s start with one of economics’ most basic math questions: When a business makes money, how much should go to the government, as tax payments, and how much should the business’s owners or investors keep for themselves?

A prevailing belief among the politicians in control of our government at the moment is that taxes should be as low as possible. After all, business owners earned their profits, and they need that income to expand their operations and create new jobs.

This is blind spot number one, on several levels.

First, most U.S. businesses have not reinvested much of their extra income into business expansion, new jobs, or higher wages. Instead, they have passed more and more of those profits to their executives and investors, through dividends, stock buybacks, and various loopholes recently embedded in the tax code.

To Peter Thiel (the multibillionaire co-founder of PayPal and data analysis giant Palantir, and an early investor in Facebook), the main purpose of low taxes is to keep America competitive with other countries. “When you have marginal tax rates at 40 to 50 percent in this country, and they’re at 15 percent in other countries, we are at an increasing competitive disadvantage,” Thiel once said.

There’s one small problem with Thiel’s argument: His numbers are entirely made up.

What are the real numbers in the world’s most developed countries—which, along with China, are our primary competitors? The truest representation of this class are the 38 relatively wealthy nations that belong to the Organization for Economic Co-Operation and Development (commonly known as the OECD). In this group, the average corporate tax rate is almost 27 percent, and personal tax rates range from 35 to 42 percent. (These averages include tax rates in the U.S., which also belongs to the OECD.) China is even more aggressive, imposing a corporate tax rate of 25 percent, and personal income tax rates that top out at 45 percent.

Those high taxes pay off. After tallying the portion of economic growth its members collect in tax revenue, the OECD found that most of the world’s wealthiest countries rank near the top. Yet the U.S., as can be seen in the chart below, ranks near the bottom, flailing around with countries in Latin America and elsewhere that are not exactly known for their economic strength, or for other signs of social health.

If you think our low tax rate is actually a sign of America’s strength–of how wise we’ve been to let industry rather than government steer our economic ship–think again. A new set of OECD surveys, called the “Foundations for Growth and Competitiveness,” shows that our low tax structure has actually weakened the U.S on numerous fronts.

While we dominate in a few areas, such as private support for social services and lifelong learning programs, we trail most other developed countries on the strength of our financial institutions, our general “macro-economic stability,” regulation of our transportation infrastructure, protections against corruption in public decision-making, labor mobility, support offered to failing entrepreneurs, and pension and retirement programs. Perhaps most apropos, given our current president’s approach to international trade—the U.S. is rated as having the fourth most excessive tariff barriers among all 38 OECD countries.

The U.S. has not always been such an outlier. Once upon a time, primarily from the 1940s through the 1960s, the vast majority of Americans saw it as their duty, and an act of civic pride, to pay whatever taxes were asked of them to support the national cause. That attitude enabled U.S. political leaders to create a much fairer tax system, with the wealthy paying progressively higher rates commensurate with their levels of income. Not coincidentally, that tax structure operated during the peak of America’s economic strength (as I explained in Part 5 of this series).

Technically, we still have progressive income taxes, at least on the federal level, but that system has become a thin shadow of its former self.1 Back in 1980, the U.S. had 16 different personal income tax brackets, ranging from 14 percent to a stunning 70 percent; and graduating tiers for corporate income taxes that topped out at 46 percent. Today, we have only seven personal income tax brackets. They range from 10 percent to a meager 37 percent—nearly half what they were in 1980.

Meanwhile, U.S. corporations have been given a double treat. In 2017, with President Trump’s Tax Cuts and Jobs Act, they were freed of tiered rates entirely. They are now all asked to pay a flat rate of 21 percent. Although that’s almost half what the top corporate rate once was, it hasn’t satisfied our myopic corporate executives. Over the last decade, thanks to all the loopholes and escape hatches that have crept into today’s tax code, U.S. corporations have found ways to pay a tax rate that recently averaged around 12 percent. And the number of companies paying percentages in the single digits almost doubled, from 56 to 95.

No wonder the U.S. is struggling with record deficits, as well as weakening bond ratings.

What’s most curious about all these developments is that they’ve been part of America’s public debate for a long time. Sen. Bernie Sanders has talked about almost nothing else for more than a decade. So why do we keep swallowing the flawed logic that billionaires and their adulators keep throwing at us about the disaster that would occur if corporations and the ultra-wealthy paid higher taxes?

This question provokes an endless cascade of answers, ranging from billionaire greed and corporate dominance of political advertising to credulous voters believe higher taxes on billionaires will somehow hurt them, too. These explanations all have merit, but they miss the deeper problem. I think our reluctance to raise taxes on corporations and the ultra-wealthy is psychological, driven by people’s innate fear of change.

Daniel Biss, the mayor of Evanston, Illinois, and an unusually thoughtful candidate for Congress this year, touches on this idea. In his view, today’s economic paralysis stems from what he calls “status quo bias.” It’s like that old clichè—better the devil you know than the devil you don’t know. After all, we’ve been living with today’s economic devil for decades; during that time, Congress has gradually refined and added to the tax code’s devilish ways, turning everyday American citizens into the proverbial frog in boiling water.

Pardon the pile of metaphors, but they have a point. That devil that most of us don’t know—the new laws needed to return the tax code to its former strength—would not come so gradually. It would hit suddenly, with consequences that can feel unpredictable and frightening. And nothing creates better fodder for political attack ads than fear of the economic unknown.

But think about this for a moment. That devil we’ve gotten so used to—a tax system so unfair that it could be called an affirmative action program for the rich—has helped the U.S. develop the worst record in the developed world on income inequality. Today, when that level of inequality is coupled with gutting government programs that help the less fortunate, it’s no wonder that the U.S. also has one of the world’s worst records on illegal drug use; on infant mortality, obesity and overall health; on incarceration rates; and on job stress and work-life balance.

I don’t know about you, but I’d happily trade that track record for the economic devils you may not know personally, but which history knows quite well: tax rates close to what we had in the mid-20th century, a period when prosperity was so widespread it’s often called the “Golden Age of Capitalism.”

See you next month, when we’ll talk about California’s Prop 40, a potentially history-making billionaire tax that will test the ultra-wealthy’s ability to persuade people that 2+2 actually doesn’t equal 4.