Here’s a good one. Jeff Bezos, Michael Bloomberg, Warren Buffett, and Elon Musk all go to the IRS. But none of them appear to have paid federal income taxes in different years.
Or how about this: The rich get richer … because they don’t always pay their fair share into the community treasury.
This is US tax law. And now we have a map of how the richest people are exploiting it, thanks to a bombshell report from ProPublica, the nonprofit investigative journalism organization that claims to have received years of tax returns for the country’s richest people from an anonymous source. Read it here.
His first report (it promises more, it is to come) is about the richest of the rich who claim losses in certain years that can wipe out their income tax liabilities. This should sound familiar; Former President Donald Trump did the same.
But that doesn’t mean it shouldn’t be a scandal that Bezos, the richest person in the world – who used his vast wealth to start a starship company that will take him into space, where he will also be the richest person – – has informed the federal government in recent years that, according to ProPublica, he does not owe any income taxes.
ProPublica also reports that Musk, the second richest person on earth, whose wealth has grown by many billions in recent years and who also has a passionate project space company, notified the government in 2018 that he owed no income tax.
The scandal is that these actions are perfectly legal. Bloomberg and Buffett, who both helped raise tax rates for the rich, both had $ 0 income tax bills. (At least Buffett has long acknowledged this, claiming he paid a lower tax rate than his secretary.)
Bloomberg became embroiled with Massachusetts Senator Elizabeth Warren while running for the 2020 Democratic presidential run over whether the government should tax extreme wealth in addition to income.
How is that possible? The report analyzes how this is possible and the reasons for this are many. First, U.S. tax law focuses on income, and much of the super-wealth is tied up in company stocks or other investments that have real value but are not taxable year-to-year.
Wealth vs. Income. ProPublica cites Forbes estimates, but it is an incomplete estimate. It states that Bezos made $ 99 billion in net worth between 2014 and 2018. But his income was much lower – he reported $ 4.22 billion and paid $ 973 million in income tax during those years. So he paid more than 20% of his reported income. The problem is, his fortune has skyrocketed at the same time. This is something that works out on a smaller scale for your average American homeowner or 401 (k) homeowner whose wealth is growing without being taxed by the federal government every year. The difference is in the scale. In addition, ordinary Americans are likely to pay property taxes and use mortgages to buy their homes.
Tax Avoidance Strategies. The report shows how the rich finance their lifestyles by borrowing against assets like real estate or stocks rather than realizing the value of an asset. You pay less interest to the bank than to the government on income tax.
Carl Icahn, the investor, gave ProPublica an interview about its tax returns and it printed out this insightful answer:
“There’s a reason it’s called income tax,” he said. “The reason is if you’re a poor person, a rich person, if you are Apple – if you have no income, you don’t pay taxes.”
He added, “Do you think that a rich person should pay taxes no matter what? I don’t think it makes sense. How can you ask me this question? “
But in these cases the loans act as income.
Other types of taxes. It is also true that with so much of their wealth tied up in stocks, they are effectively paying taxes through their companies; However, the corporate tax rate of 21% is well below the peak rate of 37% on incomes over $ 523,000 for individuals.
Bezos, in particular, has been in favor of increasing the corporate rate (Trump and the Republicans lowered it back in 2017), but as CNN reported, it’s still unlikely his Amazon would pay anything near either rate.
Even for the income the super-rich claim, often in the form of capital gains, they often pay a lower rate than Americans, who make much less money.
Taxes are currently much in the political discussion.
President Joe Biden wants to raise both corporate and personal income taxes for the wealthy, despite a difficult road ahead in the US Senate where minority Republicans can block it.
Globally and independently of this individual income tax discussion, Biden and his finance minister Janet Yellen are pushing for a global corporate minimum tax, and other industrialized nations in the G-7 agreed on a draft this week.
The idea is that if everyone had a corporate tax rate of at least 15%, businesses would be deterred from avoiding taxes.
All of this adds to the growing frustration of extreme inequality and what governments should do to ensure everyone pays their fair share, which gets more complicated when so much wealth is locked away by tax officials and more and more people think the government is doing it should do more to improve people’s everyday lives.
“Why did you print that? Is it illegal? ‘ Less interesting for the whole world, but really interesting for journalists like me, was ProPublica’s separate report on how ProPublica got the tax documents and why they decided to print them selectively.
It is technically against the law to post an individual’s tax information, although ProPublica argues that the public interest in an informed tax debate justifies the risk. A spokesman for at least one of the people whose taxes it is dissecting – that’s Bloomberg – is quoted as promising some sort of legal action despite the fact that the documents were leaked against anyone or whatever, and not against ProPublica.
ProPublica does not seem to know the source of the documents and even suggests that it may have been a foreign actor like China or Russia who has shown an interest in stoking class resentment in the US. This means that the reporting must be viewed against the background of the mystery of its provenance. It is noteworthy that none of the billionaires mentioned in the story disputes the accuracy of the tax returns, and some argue that they simply followed the rules. Others did not respond, according to ProPublica.
When asked about the ProPublica report on Tuesday, White House press secretary Jen Psaki told reporters, “Any unauthorized disclosure of confidential government information by someone with access is illegal and we take it very seriously.” She said the IRS commissioner referred the matter to investigators.
Sunlight> secrets. Given the status these men have in society, the respect their wealth shows, and the fact that many of them have publicized their views on tax policy – either with or against higher income, corporate and wealth taxes, I respect it the decision of ProPublica.
The US Capitol Police were “aware of the potential for violence”. From CNN’s report of a 95-page report by two Senate committees on security flaws dated Jan. 6: As comprehensive as it is, it only examined part of the bigger puzzle. It dealt with the “security, planning and response errors” made by law enforcement agencies. But what about the efforts of extremist groups to plot violence in the DC? What about former President Donald Trump and the Republican officials who started the flames? Congress is unable to examine these issues.
Senate officials said investigators purposely avoided the most politicized issues – like Trump’s guilt – because they wanted to keep the investigation non-partisan. Sources told CNN that the report avoided using the word “insurrection” to describe the attack in order to keep Republicans at bay.
Former President Barack Obama sat down with CNN’s Anderson Cooper. He warned that this democracy was “not a sure-fire success” for us. We have to protect it. Good point!
Talk to each other. He argued, “We have more economic stratification and segregation. You combine that with racial stratification and isolation of the media so that you have not just Walter Cronkite delivering the news, but 1,000 different places,” Obama said. “All of this has contributed to the fact that we have nothing in common.” Read the full report from CNN.
51% of Americans have received the Covid vaccine. But the country is in danger of not meeting Biden’s goal of vaccinating 70% of adults with at least one dose by July 4th. Rates are falling in certain states. Read the data.
Uneven recovery. New data shows how some states dwarfed their pre-Covid economies while others, like California and New York, still have a way to go. Continue reading.