ProPublica: Many of the uber-rich pay next to no income tax

[Omaha Steve]

Source: AP

By PAUL WISEMAN and MARCY GORDON

WASHINGTON (AP) — The rich really are different from you and me: They’re better at dodging the tax man.

Amazon founder Jeff Bezos paid no income tax in 2007 and 2011. Tesla founder Elon Musk’s income tax bill came to zero in 2018. And financier George Soros went three straight years without paying federal income tax, according to a report out Tuesday from the nonprofit investigative journalism organization ProPublica.

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.

An anonymous source delivered to ProPublica reams of Internal Revenue Service data on the country’s wealthiest people, including Warren Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg.



FILE - In this May 5, 2019, file photo Warren Buffett, Chairman and CEO of Berkshire Hathaway, speaks during a game of bridge following the annual Berkshire Hathaway shareholders meeting in Omaha, Neb. The richest 25 Americans pay less in tax — 15.8% of adjusted gross income — than many ordinary workers do, once you include taxes for Social Security and Medicare, the nonprofit investigative journalism organization ProPublica found, Tuesday, June 8, 2021. (AP Photo/Nati Harnik, File)


Read more: https://apnews.com/article/personal-taxes-business-ab6466a9dcc211907a753ccfb7660959

[dalton99a]

1. But they're providing jobs

Sen. Joe Manchin on Thursday strongly defended the Koch brothers from attacks by fellow Democrats, saying the wealthy and politically active businessmen are taxpaying Americans who are creating jobs.

“People want jobs. You don’t beat up people. I mean, I don’t agree with their politics or philosophically, but, you know, they’re Americans, they’re doing— paying their taxes,” Manchin said on Fox News’s “Fox & Friends.”

“They’re not breaking the law. They’re providing jobs,” he added.

https://www.politico.com/story/2014/04/dem-senator-defends-the-koch-bros-105570

[WHITT]

4. No Joe

they're NOT paying their taxes. Even more evidence you're out of touch.

[Dustlawyer]

9. It is not out of touch if he knows what he is doing, he does.

He is earning his campaign donations (bribes). Unless we demand en mass that our politicians enact publicly funded elections we will not have representation in Washington. The plutocrats and oligarchs are the ones represented. It is no accident that the wealthy pay little to no taxes, no climate change, immigration, gun control...

[Bettie]

8. Jobs are created by consumers

So, they create some jobs, but so do I and the rest of us.

We exchange currency for goods and services creating economic activity that drives how many workers are needed in industries.

WE are the job creators and a robust middle class is the biggest boon to employment around.

Of course, a middle class means that the currency goes through a few more hands than the rich folks like to see. They'd prefer it go directly to them, without any lag time.

[WHITT]

10. Exactly

we're a demand economy, yet the Repubs keep enacting supply-side agendas, which are repeatedly dismal miserable failures.

[TreasonousBastard]

2. For years Buffett has been making the point that his secretary pays a higher tax rate...

than he does. She may have even paid more taxes in some years.

He admits it's wrong, but hasn't done that much to change things.

The fundamental problem is that the rich can afford very talented lobbyists to get their taxes reduced. And then, even more talented lawyers and accountants to get them to pay even less.

Congress, which is not well known for brain power, can't keep up. Career government accountants and lawyers, often quite competent, and more often can't keep up, especially when budgets are cut.

I have no idea if there is a workable answer.

[MichMan]

3. A flat tax with zero deductions would

Hardly anyone here would support that however

[TreasonousBastard]

6. If it would stick, many would. But it's been tried and never got to a debate.

[WHITT]

7. Because It Would Be A Disaster

The originators of the misleadingly termed "Flat Tax" plan, Professors Robert Hall and Alvin Rabushka, freely admitted in the 1983 edition of their book, that the "Flat Tax" will be "a tremendous boon to the economic elite from the start." In an appendix to their book, Hall and Rabushka estimated that their flat tax proposal would increase the tax bill for the lowest income families by 78 percent, and decrease it for the very richest families by 41 percent.

Additionally, the Reagan administration originally wanted to push through a “Flat Tax" instead of the massive tax rate cuts for the Rich & Corporate. They changed their mind after their own Treasury Department warned them that a "Flat Tax", if it were to remain revenue neutral, would require massive tax increases on the Middle-class, while producing large windfalls to the wealthy. This was revealed in David Stockman's book, who was Reagan's Director of OMB.

[MichMan]

17. According to the OP, the uber wealthy are paying zero or close to zero

How would a flat tax be less than that?

[WHITT]

18. You're Conflating Several Different Metrics

There's tax avoidance, tax evasion, and an effective tax rate. The effective tax rate would be lower, exclusive of the other metrics.

What you're overlooking however, is that taxes on the Middle-Class and the Working Poor would increase rather dramatically.

[DanieRains]

20. Tax Wealth With A Flat Tax

Problem solved.

[WHITT]

22. Senator Warren

has a 'plan' for that.

[DanieRains]

24. Her Plan Is 2 Cents? Whaaaaat? I Say 2% Of Net Worth Over 5 Million Per Year

Until death.

[melm00se]

26. One of the problems with a "wealth tax"

Is that wealth is not always liquid.

I see the following issues:

1. If the person is forced to liquidate assets to pay the tax, this would create a double taxation event: the 1st is the wealth tax and the 2nd is a capital gains or income trigger.
2. Establishing the value of a wealth item, especially of this is a unique item. How do you fairly and equitably define its value?
3. If people are forced to liquidate items to pay for this tax, what do you think will happen to the value of items owned by Americans subject to this tax? I would predict that they, in very short order, become of less and less value.
4. Who is going to buy these wealth items?
5. Over time, issue #3 will cause a slow but certain decrease in tax revenue.
6. If you took the top 40 richest people in America, their total wealth is (as of July 2020) totals $1.6 trillion. News reports put the Biden administration's budget at more than $6 trillion. So even if you wiped out all of the wealth of those 40 people, it would pay approximately 1/4 of the proposed budget BUT that money would be gone thus no longer available next year's budget.

How to tax and what to tax is not this simple calculation but rather one that has to be carefully considered so the revenue collected over time is steady, predictable and the least damaging to the economy.

[MichMan]

27. I don't even know how one would calculate wealth

Stocks, Bonds, Real estate, Bank accounts, retirement accounts, cars, personal property.... etc etc

Would one have to get an appraisal of everything someone owns ?

How do I prove if my modest wealth is under a certain threshold unless I also have to get an annual appraisal ?

[melm00se]

30. Some are easy (sort of)

Stocks - publicly traded stocks have a value. The big question is: when do you lock the value?
Bonds - also easily calculated but they have the same issue as stocks.

But when you get to things that are unique, the value is whatever someone will pay for it and that will be extremely problematic if people are forced to liquidate something to pay the tax.

[moose65]

12. The devil is in the details, though

What would the tax rate be?

When you say no deductions, do you really mean that? So a person who makes $20,000 a year would pay the same tax rate as someone who makes $20 million??

The uber wealthy don't make much money from a job, salary-wise. Most of their wealth is tied up in stocks or assets. What do you propose for capital gains taxes? Anything?

Most "flat-tax" proposals are a billionaire's wet dream.

[Mysterian]

23. A progressive tax structure is necessary to prevent

capitalism from self-destructing. Continuing concentration of wealth like we have now will inevitably result in an implosion of society.

People should be allowed to get rich but not to the extent of Bezos, Zuckerberg, Gates, etc.

[Politicub]

29. I think people like Buffet are so rich that they are entertained by the fact

that their administrative assistants pay more in taxes. It’s all a big joke.

[Lonestarblue]

5. Remember when the alternative minimum tax caught a lot of middle income taxpayers?

The tax was originally intended to ensure that the wealthy paid tax, but because it was not indexed over time it snared more and more people, including those who earned between $100,000 and $200,000. We need a graduated alternative minimum tax for the wealthy based on their earnings, with higher rates applying to higher earnings. That would help ensure that someone like Bezos earning billions of dollars paid more in taxes. It should start with someone earning a million dollars and go up.

[erronis]

11. Replace with a Value-Added Tax. Hits the big spenders the hardest.

Much easier to administer.

Low-incomes can be given refunds on VAT paid.

[WHITT]

14. Problem There

is there are tens of millions of seniors that are on SS/Medicare, and tens of millions of low-income earners, who don't file a 1040. How would they be refunded?

[Bayard]

13. The trickle down theory

Their taxes trickle down to mere mortals.

[WHITT]

15. There's TONS Of Evidence

that a steeply progressive income tax functions quite spectacularly.

[Warpy]

16. Yes, we need to get that back but I don't see it happening within the next 2 years

and quite possibly not until Biden is out. I don't think he's evolved enough to sign it into law. He was in the pocket of the big banks for far too much of his Senate career.

Oh, they'll still stash the boodle offshore in dummy corporations and the like, those dummy corporations are already supplying the tax xhelter of things like strategic tax losses to offset income. A top rate of 95% on incomes over $100 million would cause all those tax avoidance experts to step up their game considerably.

I'd love to go back to a system in which the plutocrats compared how much tax they paid instead of how much money they cheated the government out of. to increase their net worth number.

[mahatmakanejeeves]

19. Be careful what you wish for.

An anonymous source delivered to ProPublica reams of Internal Revenue Service data on the country’s wealthiest people, including Warren Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg.

Are you sure this is what you want?

[cstanleytech]

21. Its certainly true they are job creators...........for China, India, Mexico, Brazil and so on.

[OxQQme]

25. I can't even imagine the payroll for this one Tesla project

Last edited Tue Jun 8, 2021, 08:33 PM - Edit history (1)

and these are not entry level paygrade workers.

5 of these factories in the world, or soon to be, already producing cars and trucks.

If you bring in the payroll for SpaceX, Starlink, Boring, I'd say he's a jobs creator.

Yes, I'm an 80 year old fanboi who sees Elon having visions of a better world for all.
More power to his overall vision.

More operations under Elon's financial umbrella -->

[Calista241]

28. My problem with this piece is that they've straight up invented this 'wealth growth' stat

that their numbers are based on. It's not based on anything real, just a conglomeration of guesses from different sources, and a bigger guess based on unrealized stock and business value gains.

Their own graph states that Elon Musk paid nearly a 30% rate on his reported income. Bezos paid over a 20% rate based on his reported income as well. Buffett and Bloomberg paid at a lower rate, but it was likely offset by actual realized losses, and not this phantom "wealth growth" number they talk about.

Now, if you want to implement some rules about stock options, and how a certain number need to be sold annually so that we can tax them, i'm all for having that discussion. Or if you want to tax them at different rates, or handle them as something other than income, great. But to count business growth value and equate that to stock value and then count all of it as income is just crazy.

[unblock]

32. the problem is that stock prices, at least, are readily known minute-by-minute.

fair point that if a wealthy person has a big art collection, it's not easy to put a price on it because it's an illiquid and bespoke market.

but stock prices are different because there's an active market that can tell us the immediate value of any holding. yes, i'm aware that there are practical challenges in selling off, say, 30% of a company, so using the market price for a single share might not be exactly correct. but it's good enough to judge that bezos is insanely wealthy even if he hasn't realized much, if any, of his share growth.

most relevant, banks treat him like the billionaire he is. he and others like him avoid taxes by borrowing against his assets. so he realized virtually no income as he doesn't sell his shares, but he can use them as collateral for the loans, live of the proceeds, and actually *deduct* the interest payment from his taxes.


so rich people are effectively able to extract cash from their stock growth, but in a manner which technically isn't "income" and therefore isn't taxes.

a triumph of form over substance.

[mahatmakanejeeves]

31. Not even ProPublica knows the source who provided blockbuster 'Secret IRS Files'

Media

Not even ProPublica knows the source who provided blockbuster ‘Secret IRS Files’

The nonprofit news organization argues the motivations of the tipster don’t matter — only that the information was legitimate

By Jeremy Barr
June 8, 2021 at 8:35 p.m. EDT

ProPublica does not know whom to thank for providing the raw material for what organization president Richard Tofel called “the most important story we have ever published.”

On Tuesday morning, the nonprofit investigative news operation published “The Secret IRS Files,” the first in a series of investigative stories based on federal tax documents from thousands of wealthy individuals covering a period of more than 15 years. It lays out how wealthy Americans “exploit the structure of our tax code to avoid the tax burdens borne by ordinary citizens,” with many not paying taxes at all for certain years.

In a companion piece, Tofel and top editor Stephen Engelberg made a stunning revelation: ProPublica does not know who sent the documents or why they were sent.

“The source says they were motivated by our previous coverage of issues surrounding the IRS and tax enforcement,” they wrote, “but we do not know for certain that is true.” ... They acknowledged the possibility that the documents could come from “a state actor hostile to American interests.” But “provenance is not essential; accuracy is.”

{snip}

By Jeremy Barr
Jeremy Barr covers breaking news about the media industry for The Washington Post. Twitter https://twitter.com/jeremymbarr