Wealthiest Americans pay just 3.4% of income in taxes, investigation reveals

[Nevilledog]

Link to tweet

https://www.theguardian.com/us-news/2022/apr/13/wealthiest-americans-tax-income-propublica-investigation

No paywall
https://archive.ph/pVGVS


Between 2014 and 2018, the 25 wealthiest Americans collectively earned $401bn, but paid just $13.6bn – about 3.4% of that – in taxes, according to a bombshell ProPublica investigation into the finances of the wealthiest Americans released on Wednesday.

The investigation is the latest in a series ProPublica started in June 2021 that looks at the tax records of the top 0.001% wealthiest Americans. This installment uses a trove of tax filings from 2013 to 2018 to dive into the wealth of the 400 richest Americans, all of whom earn more than $110m a year. It found that the wealthy benefit from lower tax rates on financial assets and deductions from charitable contributions to keep their taxes low.

The difference in tax rates between the wealthiest Americans and the average worker comes down to two critical factors, according to the investigation: first, the wealthy have their income taxed at a lower rate because much of their wealth is accumulated through investments, like stocks; and second, the wealthy are able to use large charitable donations to get huge deductions.

Instead of the standard paycheck that most American workers get, which includes deductions for social security and Medicare taxes, the wealthiest Americans get their income through financial assets, like stocks, that are generally taxed at a lower rate. The long-term capital gains rate has been 20% since 2013.

*snip*

[BigmanPigman]

1. Our own American Oligarchs.

[Hoyt]

2. Obviously, since we don't typically tax paper gains. That should probably change.

But that’s a different headline.

An equally misleading headline — although true — would be that “top 10% pay over 70% of federal income taxes.”

We’ve got to find a solution and wealthy need to pay more.

[DFW]

4. In spite of the appearances, I would not tax unrealized paper gains.

Until the assets are actually dild, any gains are theoretical. If we take $10 million from someone who bought $200,000 of Apple Computer 25 years ago and never sold it, where is he going to come up with the money to pay that kind of a tax bill? And is the government prepared to pay out the billions it will owe back if the value of those unsold assets plummets due to another Republican recession?

An equitable solution, as usual, is far more complicated than anything a few slogans can cover. We need to find ways to close loopholes on those making a mid six figures and upwards of there, so that the bite is spread far and wide, and doesn't take so much more that widespread cheating seems worth the risk.

[PSPS]

5. That won't work. It just guarantees dynasties.

Here's how it works:

The fat cat's wealth is accumulated in stocks. This is why CEO's receive a modest "paycheck" but get a lot of "stock options" as compensation. (This is also why big corporations spent their PPP bailouts on stock buybacks instead of what it was really supposed to do so their stock price would rise.) So, you're a fat cat whose cash wealth is, say, a mere $100K but your stocks and options are worth 100 billion.

You finance your day-to-day "expenses," (GOP "campaign contributions," trophy wife, the second dozen overseas palaces, hush money to the hookers, etc.,) by borrowing against the 100 billion in stocks/options, so it isn't taxed (borrowed money is not considered taxable income.) Very little interest, if any, is charged on these "loans."

So, you're sitting pretty, essentially paying no taxes since your "paycheck" is $100K/year.

Now, you kick the bucket. You bequeath your stock/options portfolio to your spoiled and entitled spawn who inherits it with its basis now calculated AT CURRENT PAR VALUE. In other words, they can cash it out completely with no taxable income to report.

[Hoyt]

7. That's where a robust Estate Tax comes in. Not sure it will raise huge amounts

in relation to what we need for healthcare, jobs, education, childcare, etc., but it’s a start. Think some kind of required distribution from stocks, like retired folks have from IRAs and 401ks, would help.

[PSPS]

8. Yes, the MAD idea may work, as long as it's taxed as ordinary income, not capital gains.

Also, the top tax bracket rate should be at least double what it is now.

[Hoyt]

9. Not sure about an 80% tax rate, especially if unrealized gain, but most definitely more.

[Hoyt]

6. Tend to agree. But since it is unlikely most Democrats will get it or care,

we’re going to have to be creative in developing a solution that doesn’t help GOPers. Not sure we’ll ever work this out.

[Irish_Dem]

3. This is why American oligarchs buy elections and the media.

[tclambert]

10. I just heard a billionaire complaining that rich people pay 80% of taxes and poor people

don't pay their fair share. I think he said it on one of the financial shows, so the hosts were fine with not calling him on his BS. (You know if the rich guy really envies the poor, I'm sure he could try just a little harder and make himself poor. Seems like there are very few barriers to becoming poor.)

He also complained that some "taxpayers" pay no taxes at all. He didn't mean Jeff Bezos. Once again, he meant poor people. Imagine it! Some poor guy working TWO jobs (at minimum wage), barely able to feed his family, with the help of food stamps, pays not one dollar in taxes, while the oppressed rich guy paid MILLIONS in taxes. Why, he might have paid so much in taxes that he couldn't afford the yacht he wanted, he had to settle for the SECOND most expensive yacht in the world.

[gulliver]

11. "large charitable donations"

Facts are fine. People should know them. But it's what you make of them that matters. Some rich guy makes, say, $5B in capital gains, gives $4B to charity, and pays 20% long term capital gains tax on $1B. Looks to me like some charities got $4B that they were probably very glad to get. I don't care that much that it looks like the rich guy only paid 4% in taxes.

So what? Yeah, it's awkward, and, sure, the rich guy should probably pay more taxes. Great, let's do that.

But we need to do it without even the slightest resentment, because the resentment is misplaced.