Shocking story from ProPublica with this headline (as if we
didn’t already know – but this great article now confirms):
“ProPublica:
Many of the uber-rich pay next to no income tax”
The article follows (only edited to fit the blog’s format –
contents not changed):
WASHINGTON (AP) —
The rich really are different from you and me: They’re better at dodging the
tax collector.
1. Amazon founder Jeff Bezos paid no income tax in
2007 and 2011.
2. Tesla founder Elon Musk’s income tax bill was
zero in 2018.
3. Financier George Soros went three straight
years without paying federal income tax, according to a report Tuesday from the nonprofit investigative journalism
organization ProPublica.
4. Overall, the richest 25 Americans pay less in
tax — an average of 15.8% of adjusted gross income — than many ordinary workers
do, once you include taxes for Social Security and Medicare, ProPublica found.
Its findings are likely to heighten a national debate over
the vast and widening inequality between the very wealthiest Americans and
everyone else. An anonymous source delivered to ProPublica reams of Internal
Revenue Service data on the country’s wealthiest people like those six above.
ProPublica compared the tax data it received with
information available from other sources. It reported that “in every instance
we were able to check — involving tax filings by more than 50 separate people —
the details provided to ProPublica matched the information from other sources.”
Using perfectly legal tax strategies, many of the uber-rich
are able to shrink their federal tax bills to nothing or close to it.
A spokesman for Soros, who has supported higher taxes on the rich, told ProPublica that the billionaire had lost money on his investments from 2016 to 2018 and so did not owe federal income tax for those years.
Musk
responded to ProPublica’s initial request for comment with a punctuation mark —
“?″ — and did not answer detailed follow-up questions.
The federal tax code is meant to be progressive — that is, the rich pay a steadily higher tax rate on their income as it rises.
ProPublica found, in fact, that people earning between $2 million and $5
million a year paid an average of 27.5%, the highest of any group of taxpayers.
Above $5 million in income, though, tax rates fell: The top
.001% of taxpayers — 1,400 people who reported income above $69 million — paid
23%. And the 25 very richest people paid still less.
The wealthy can reduce their tax bills through the use of charitable
donations or by avoiding wage income (which can be taxed at up to 37%) and
benefiting instead mainly from investment income (usually taxed at 20%).
President Joe Biden, in seeking revenue to finance his
spending plans, has proposed higher taxes on the wealthy. Biden wants to raise
the top tax rate to 39.6% for people earning $400,000 a year or more in taxable
income, estimated to be fewer than 2% of U.S. households. The top tax rate that
workers pay on salaries and wages now is 37%.
Biden is proposing to nearly double the tax rate that
high-earning Americans pay on profits from stocks and other investments. In
addition, under his proposals, inherited capital gains would no longer be
tax-free.
The president, whose proposals must be approved by Congress,
would also raise taxes on corporations, which would affect wealthy investors
who own corporate stocks.
ProPublica reported that the tax bills of the rich are especially low when compared with their soaring wealth — the value of their investment portfolios, real estate and other assets. People don’t have to pay tax on an increase in their wealth until they cash in and, say, sell their stock or home and realize the gains.
Using calculations by Forbes magazine,
ProPublica noted that the wealth of the 25 richest Americans collectively
jumped by $401 billion from 2014 to 2018. They paid $13.6 billion in federal
income taxes over those years — equal to just 3.4% of the increase in their
wealth.
Chuck Marr, a senior director at the left-leaning Center on
Budget and Policy Priorities, suggested that Biden’s proposals, which face
fierce opposition from Republicans in Congress and from businesses, are
“modest” given how much the wealthy have benefited in recent years and how
comparatively little tax many of them pay. Marr said: “It always seems like the
solutions are cast as radical when there’s less focus on the current situation
being radical.”
Democratic Sens. Elizabeth Warren (D-MA) and Bernie Sanders (I-VT), among
others, have proposed taxing the wealth of the richest Americans, not just
their income.
Warren
tweeted in response to the ProPublica report: “Our tax system is
rigged for billionaires who don’t make their fortunes through income, like
working families do. The evidence is abundantly clear: it is time for a
#WealthTax in America to make the ultra-rich finally pay their fair share.”
Gabriel Zucman, an economist at the University of California, Berkeley, who is a leading expert on financial inequality, says there are three ways to ensure that the wealthy pay more: “Impose a direct tax on their wealth like the one Warren has proposed; tax the gains in their wealth, whether or not they cash in and realize a gain; or raise taxes on corporate profits.”
Sen. Ron Wyden (D-OR), who leads the tax-writing Senate
Finance Committee, said at the start of a hearing Tuesday on the IRS’ budget with
Commissioner Charles Rettig: “ProPublica’s data reveals that the country’s
wealthiest, who have profited immensely during the pandemic, have not been paying
their fair share of taxes.”
Wyden has proposed legislation that would tighten
enforcement of tax collection against wealthy individuals and corporations that
use artifices and loopholes to skirt paying taxes. It also would eliminate the
ability of high earners to defer paying taxes on capital gains until they are
realized, so that wealth would be taxed the same way as wages.
For his part, Rettig said that the IRS is investigating the leak of the tax data to ProPublica and that any violations of law would be prosecuted. (ProPublica reported that it doesn’t know the identity of the source who provided the data).
Rettig said: “We will find out about the
ProPublica article. We have turned it over to the appropriate investigators,
both external and internal.”
Also, at that hearing, Sen. Wyden told Rettig that it’s
wrong “…how the wealthy always seem to skip out on their obligations,” adding: “You
have a better chance of being struck by lightning than being audited if you’re
a partner in a partnership.”
Rettig responded: “We are outgunned.”
Now controlling the White House and Congress, Democrats are
focusing on the tax gap — the hundreds of billions of dollars’ difference
between what Americans owe the government in taxes and what they pay — and its
connection to economic inequality. The top 10% of earners have accounted for
most of that gap, experts say, by underreporting their liabilities,
intentionally or not, as tax avoidance or as outright evasion.
The tax gap is under a spotlight as a potential source for
recouping some revenue to help pay for Biden’s proposed spending on
infrastructure, families and education. Democrats have been pushing the IRS to
invigorate its enforcement of tax collection and make it fairer, by pursuing
the big corporations and wealthy individuals who manage to game the system.
Democrats have argued that the tax gap has widened mainly
because big U.S. corporations have parked revenue overseas and wealthy
individuals have failed to pay their fair share. They assert that the IRS, long
understaffed and underfunded, has tended to pursue taxpayers of modest means
more aggressively than high-powered businesspeople and corporations.
The agency’s funding has been slashed about 20% since 2010. Biden’s
new spending proposals include an extra $80 billion over 10 years to bolster
IRS audits of upper-income individuals and corporations, with an eye toward
recovering an estimated $700 billion.
Much of the gap comes from the use of overseas havens. The
government loses between an estimated $40 billion and $120 billion a year from
offshore tax evasion. Biden’s tax plan includes measures to stop corporations
from stashing profits in countries with low tax rates.
Last weekend, the Group of Seven wealthy democracies, which
includes the United States, agreed
to support a global minimum corporate tax of at least 15% to deter
multinational companies from avoiding taxes by stashing profits in low-rate
countries.
My 2 cents: Can’t add a thing to this exceptional article and public information … ProPublica should not and must not be punished in any way for informing the public about this story – the truth cannot be punished.
Thanks to ProPublica confirming what many
of have suspected and spoken out about for years. Congrats.
I likewise don’t imply
punishment for the ultra-rich. I only say and have said for years that our tax
laws to make them pay their “fair” share – for surely right now they do not.
Thanks for stopping
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