During today’s Senate Finance Committee hearing, US Senator Elizabeth Warren (D-Mass.) Interviewed Treasury Secretary Janet Yellen about the need for significant reforms in US tax law. The exchange follows the latest ProPublica report, which revealed that the richest Americans often paid little or no federal income taxes. Senator Warren also continued her call for a wealth tax for people with assets greater than $ 50 million that would generate at least $ 3 trillion in revenue over a decade – money that can be used to generate income Pay for general childcare, tackle the affordable housing crisis, and rebuild crumbling infrastructure.
Transcript: “Hearing on the President’s Budget for Fiscal Year 2022”
US Senate Finance Committee
Wednesday June 16, 2021
Senator Warren: Welcome Chair Yellen nice to see you or Secretary Yellen. It is good to see you here. Last week, ProPublica published a study into the tax returns of some of the richest Americans, showing that multi-billionaires have essentially paid no federal income taxes year after year.
And here’s the worst: it’s possible they made all of this legal.
Because year after year, lobbyists and congressmen work together to undermine the tax law.
So, take Jeff Bezos. He is the second richest person in the world. His net worth is nearly $ 195 billion. But his salary? It’s about the same as the average Massachusetts public school teacher: $ 80,000.
So, Minister Yellen, I want to ask who benefits from our tax bill: Jeff Bezos or a teacher at a Massachusetts public school.
The average family in America pays about 7.2% of their total wealth in taxes – and that includes public school teachers. Had Jeff Bezos paid the same rate last year, he would have paid $ 14 billion in taxes.
So is it ever possible for Mr Bezos to pay the same proportion of his property in taxes as the average public school teacher if we just raise the federal income tax rate?
Secretary Yellen: Well, President Biden suggests important ways to address this inequality.
Senator Warren: I understand. But let’s just start with our current tax number. If we continue to focus on income tax, will Jeff Bezos ever pay a prorated amount of his property, like a school teacher in Massachusetts?
Secretary Yellen: Now, if we increase the rate on capital gains and eliminate the tax base increase and consider death a liquidation event so that all of those capital gains are taxed and not allowed to be taxed permanently, so if we are taxing capital gains –
(Crosstalk)
Senator Warren: I’m sorry, Secretary Yellen, I don’t want to interrupt, but my question was pretty simple. It was about income taxes, and I think what you are saying is that we only get a tax rate from Jeff Bezos if we are taxing something other than income. His income is only $ 80,000 a year. And Jeff Bezos uses all the tricks to keep his money in the form of today’s tax-free wealth.
So let me ask you another question: if billionaires like Jeff Bezos make about as much as the average public school teacher, where do they get the money to buy villas, private islands, and superyachts?
Well the answer is they can borrow for their assets instead of realizing the gains from stock growth.
So, Minister Yellen, do multibillionaires pay taxes when they borrow money for their assets, for example to buy superyachts?
Secretary Yellen: Well, to the extent that you avoid capital gains by selling assets to meet those spending needs, you avoid paying any capital gains tax, and even if you do, the capital gains tax is lower than what your teacher in Massachusetts does possibly deserved. So this seems like unfair tax avoidance, and of course anyone can borrow against assets, but billionaires have a lot to borrow.
Senator Warren: Well, actually, let me ask you about it, because I think you’re getting to the bottom of this. Does the Massachusetts public school teacher have the same options as Jeff Bezos – the option to earn shares in lieu of a salary, the option not to pay taxes, the option to amass tax-free wealth, and plenty of cash flow? pay their bills by borrowing?
Secretary Yellen: No, your school teacher does not have most of these options. And the Biden proposal would end many of these options for very wealthy individuals.
Senator Warren: So,
Secretary Yellen: We would in very different ways – the carried interest loophole would be closed, there would be higher capital gains taxes and no increase in the tax base in the event of death, and all of this for a person’s life.
(Crosstalk)
Senator Warren: Under our current law, the teacher pays her taxes year after year to benefit her community and nation. And Jeff Bezos laughs at her for paying the full freight while he keeps his money and even builds his personal fortune without paying a penny more in tax.
Our tax law basically allows billionaires like Bezos to opt out. It is said that once you have amassed enough wealth, you no longer have to co-finance to rule this country.
Jeff Bezos is a billionaire crook – and all the rest of those hugely wealthy people who pay next to no taxes.
So, Secretary Yellen, the choice is ours. Do you think we should stop taxing the ultra-rich like Jeff Bezos, or should we change our tax laws so that billionaires have to help run this country too?
Secretary Yellen: We have proposed changing the tax laws to make them much fairer in all these dimensions, and that is at the heart of the tax proposals that President Biden has put into this budget.
Senator Warren: Right, and I support the President’s proposals. They will go a long way towards generating income for everyone by making taxes a little fairer for millionaires.
But I would like to point out – the simplest and most obvious solution to this inclined system is to introduce a wealth tax. A tax on people worth more than $ 50 million would bring in at least $ 3 trillion Dollars in revenue. And that is money for universal childcare, for dealing with the housing crisis, for rebuilding our crumbling infrastructure.
This is about decisions. We can finance universal childcare. Or we can give Jeff Bezos enough tax savings to build a superyacht.
Senator Crapo: Thank you, Senator Warren.
Senator Warren: The time has come for public school teacher tax legislation to work. Not Jeff Bezos.
Thank you, Mr. Chairman.