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The NGO ProPublica collated the 15-year tax records of thousands of IRS billionaires provided by the mysterious whistleblower, and the "real tax rate" paid by 25 super-rich people such as Buffett, Gates, Bezos, and Musk was only 3.4%.
Among them, Buffett won the least tax award in the rich list with an effective tax rate of 0.1%.
Rich people fancy tax evasion, American netizens fancy spit out: "Bezos, Musk, Buffett unanimously agreed that taxes are prepared for the poor." The Financial Times quipped: "If there are still Americans who think their tax system is fair and transparent, they should book a seat on Bezos' upcoming space trip!" ”
1 What is the secret of tax evasion among america's rich?
In fact, tax avoidance by the rich in the United States has long been known. The contribution of ProPublica's report is a vivid detail: From 2006 to 2018, Bezos's wealth soared by $120 billion, while he paid only 1.09% of the increase in wealth in federal taxes.
The situation is very different for the average American household: Personal income taxes exceed 100 percent of their wealth growth.
Philip, a tax law professor at the University of Pittsburgh, said: "I think it's important because it tells the story of wealth and how it's taxed, something that everyone expected but didn't know."
The New York Times commented: "Rich Americans live under a different set of rules, spending extravagantly money without paying taxes as income."
"The richest people in America who made a fortune during the pandemic didn't pay their fair share." Wyden, chairman of the Senate Finance Committee, said, "The richest people in this country, who make huge profits, don't pay their fair share because they've talked to good lawyers and accountants about how to delay, procrastinate, procrastinate, and do it almost forever." ”
The essence of legal tax avoidance for the wealthy is that U.S. income tax law taxes only individual taxable income— realized gains, such as wages or stock sales. It is no coincidence that the U.S. definition of tax revenue happens to be extremely favorable to the wealthy.
But the wealthy tend to get rich on unrealized gains — assets that become increasingly valuable over time in the form of stocks, real estate, artworks, and so on. The wealthy used those assets as collateral to buy homes, islands and private jets, then used a variety of tactics to avoid paying taxes when paying off debts.
In the words of MCC tax expert McCavery, it's "buy, borrow, die." "Our social structure is unequal. If you are very rich, the most basic thing to do is to hold a lot of wealth and let it appreciate. Generally speaking, in order to maintain your lifestyle, you only need to borrow money. Loans are tax-free, and the interest paid by the wealthy for the loan can often be deducted from their tax forms.
Musk pledged $57.7 billion worth of Tesla stock as a personal loan. ProPublica reported that he did not pay any federal income taxes in 2018.
As a result, the wealthy are often able to maintain lower levels of taxable income. Bezos declared income so little in 2011 that he was eligible for a $4,000 child tax credit for investment losses.
Billionaire Icahn didn't pay a dime of federal income tax in 2016 and 2017. "I don't think investors, rich or not, should be ridiculed for venture capital. On the contrary, I think our economic strength depends to some extent on the encouragement of this activity. ”
Buffett has long complained that it is wrong for a wealthy man like him to pay less tax rates than private female secretaries. That led Obama to propose the "Buffett Rule" in 2011 — a tax plan that would require the highest income earners to pay the same tax rates as the middle class. The idea has never been supported by Congress. Buffett stated that 99.5 percent of his wealth would go to taxes and philanthropy after his death, "and I still believe that major changes should be made to the tax code." ”
In addition, the top tax rate for individuals in the United States has fallen sharply over the past few decades. Princeton University economist Owen said: "Since 1997, how many taxes have we cut — including dividend taxes, inheritance tax thresholds, capital gains taxes and top rates. All of these factors have become more favorable to those at the top. ”
It's easy to accumulate wealth, but it's never taxed. Assets are segregated among nonprofit foundations whose primary beneficiaries may be the people who run them. Assets can also be passed on to children and grandchildren.
Moreover, the government allows heirs to take ownership at present value, eliminating accumulated tax liabilities. Wealthy people can bequeath huge estates to heirs tax-free, and the proceeds of stocks or other assets they have accumulated during their lifetimes are erased after they die as if they never happened.
Daniel, a tax law professor at the University of Chicago, said: "Tax law is a bit like Swiss cheese. So, let's add more cheese layers. "Unfortunately, America's elaborate system of personal income tax laws rewards the super-rich who can afford to hire a large number of lawyers and accountants.
2 Each has its own opinion, where is the tax reform
Administration official Lyndon noted: "We already know that some of the largest U.S. companies do not pay income taxes. Now we know that some of the wealthiest people can also skip paying income taxes. The time has come for reform. ”
Podcast host Jody said: "There's been a tiresome narrative about reports, which is 'what a scandal is, it's something that any rich person or financial journalist already knows.'" But that's the point!" Marr, senior director of federal tax policy at the Center for Budget and Policy Priorities, said: "Some solutions are often considered radical. What is really radical is the current situation. ”
Republican Senator Patrick said that while some of the wealthiest Americans don't pay income taxes, he thinks, overall, the taxes paid by high-income earners are fair. The data shows that the top 10 percent of U.S. earners who earn about half of all U.S. income and pay 70 percent of all income taxes.
"There's a myth that high-income people don't pay any taxes, with the exception of that? Definitely. We should see if there are loopholes that will make this happen for a long time, but we have a very, very progressive tax law. ”
Senator Charles, a Republican, said what infuriated him most was not the content of the ProPublica report, but the fact that so much private tax data had been leaked. "My concern is that any tax on the value of assets before they are sold will hit farms and private businesses. Taxing the capital gains of the super-rich as income discourages job-creating investment. ”
There are also cases in defense for the rich: "In fact, everyone's tax works like this: The average American doesn't pay income tax when our stock portfolios go up or our houses appreciate a little bit." Why should Billionaires in america be different? ”
No wonder the U.S. media lamented: "Taxes have always been a hot issue. As some have said, the United States is either the heaviest or least taxed country on the planet, especially for the wealthy. ”
"For billionaires, the federal personal income tax — the backbone of the U.S. tax system — has become a voluntary tax." Professor Zuckerman, an economist at the University of California, said there are three main ways to reverse the trend of the wealthy paying less tax.
One is a direct tax on wealth, as Senators Sanders and Warren have proposed. The second is to tax unrealized gains, as Senator Wyden proposed. The third is to increase corporate taxes, which President Biden supports. There are also some more moderate ideas, such as imposing more inheritance taxes.
Academic research shows that the richest 1 percent of Americans now own 40 percent of the country's wealth, the highest percentage in the past 50 years. The wealth gap between the top 1 percent and the bottom 90 percent has been steadily widening over the past few decades.
There is no doubt that tax reform, which is closely related to income inequality and narrowing the gap between rich and poor, continues to be a hot topic in the UNITED States.
This article is the original manuscript of "Fangyuan" magazine, please indicate the author in a conspicuous position when reprinting, and indicate the source: Fangyuan (ID: fangyuanmagazine).
Edited by 丨Xiao Lingyan Wang Li Design 丨 Liu Yan
Wen 丨 Yu Fei
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