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Wealthiest Executives Paid Little to Nothing in Federal Income Taxes, Report Says

cigaretteman

HR King
May 29, 2001
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Hardly news, but just shows how screwed up our tax system is:

The 25 richest Americans including Jeff Bezos, Michael Bloomberg and Elon Musk paid relatively little — and sometimes nothing — in federal income taxes between 2014 and 2018, according to an analysis from the news organization ProPublica that was based on a trove of Internal Revenue Service tax data.
The analysis showed that the nation’s richest executives paid just a fraction of their wealth in taxes — $13.6 billion in federal income taxes on $401 billion of their wealth.
The documents reveal the stark inequity in the American tax system, as plutocrats such as Warren Buffett, Jeffrey Bezos, Michael Bloomberg and Elon Musk were able to benefit from a complex web of loopholes in the tax code and the fact that the United States puts its emphasis on taxing labor income versus wealth.
The rare window into the tactics of the nation’s top billionaires comes as President Biden is trying to overhaul the tax code to raise taxes on corporations and the rich. Mr. Biden has proposed raising the top income tax rate to 39.6 percent from 37 percent.
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But the documents and the conclusions of the analysis could renew calls for Mr. Biden to consider a wealth tax, like those championed by Senator Elizabeth Warren, Democrat of Massachusetts. Ms. Warren’s plan would apply a 2 percent tax to an individual’s net worth — including the value of stocks, houses, boats and anything else a person owns, after subtracting any debts — above $50 million.
Mr. Biden and his advisers have deemed the idea unworkable.
Ms. Warren said on Twitter that the report showed “our tax system is rigged for billionaires who don’t make their fortunes through income, like working families do.”

ProPublica did not reveal how it obtained the information and it could not be independently verified by The New York Times. But the publication said the documents were provided to the outlet “in raw form, with no conditions or conclusions” and that it had run the information past every executive whose information was included in the article.
“Every person whose tax information is described in this story was asked to comment,” ProPublica said, adding that those who responded “all said they had paid the taxes they owed.”
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In a separate editors’ note, the outlet said it was publishing the information “quite selectively and carefully — because we believe it serves the public interest in fundamental ways, allowing readers to see patterns that were until now hidden.”

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The report highlights the techniques that the wealthy often use to reduce their tax bills, including taking advantage of a complex web of loopholes and deductions that are perfectly legal and can significantly reduce — or erase — tax liability. That includes borrowing huge sums of money backed by enormous stock holdings. Those loans are not taxed and the interest that the executives pay on the money can often be deducted from their tax bills.
In 2007, Mr. Bezos, the chief executive of Amazon, paid nothing in federal income taxes even as his company’s stock price doubled. Four years later, as his wealth swelled to $18 billion, Mr. Bezos reported losses and received a tax credit of $4,000 for his children, according to ProPublica.
One example that ProPublica unearthed was that Mr. Buffett, the chief executive of Berkshire Hathaway. Mr. Buffett has long said publicly that the tax code should hit the rich harder, but he paid just $23.7 million in taxes from 2014 to 2018, when his wealth rose by $24.3 billion.
The Treasury Department and the Internal Revenue Service did not immediately have a comment on the disclosures on Tuesday, but Charles Rettig, the I.R.S. commissioner, was scheduled to testify before the Senate Finance Committee on Tuesday morning.
At the hearing, Mr. Rettig said that he could not comment on the apparent breach at his agency but said that it was being scrutinized.
“I can confirm that there is an investigation with respect to the allegations that the source of the information in that article came from the Internal Revenue Service,” Mr. Rettig said. “The investigators will investigate.”



Senator Ron Wyden of Oregon, the chairman of the finance committee, told Mr. Rettig that he was concerned about the security of taxpayer data. He also emphasized that the disclosures made clear that the tax code needs to be rewritten.
“What this data reveals is that the country’s wealthiest, who profited immensely during the pandemic, have not been paying their fair share,” Mr. Wyden said, adding that he has proposals to fix that disparity.
Senator Mike Crapo of Idaho, the top Republican on the committee, said that the disclosures added to his concern about a Biden administration proposal to give the I.R.S. more access to the financial information of taxpayers. He suggested that the agency could not be trusted to keep the data secure.
The president said on Twitter on Tuesday that he was continuing to work with Republicans on infrastructure and jobs legislation and said that he would not seek a tax increase on anyone who earns less than $400,000.
“It’s long past time the wealthy and corporations pay their fair share,” Mr. Biden said.

 
Republicans worried about the important stuff as usual - like where did the reporters get this info and focusing on the difference between income and wealth.
There is a difference between income and wealth.

I don't think just because other individuals highly value the company that Bezos owns he should then be compelled to sell a portion of that ownership and satisfy a new tax obligation based on envy.

In time such a measure is simply wresting the control of the company from the owner over paper gains.
 
There is a difference between income and wealth.

I don't think just because other individuals highly value the company that Bezos owns he should then be compelled to sell a portion of that ownership and satisfy a new tax obligation based on envy.

In time such a measure is simply wresting the control of the company from the owner over paper gains.

Sure, but the wealthy hiding their income is what started this. If they just paid their share this conversation wouldn't be happening. Instead they aren't happy with having more than 99% of the world, they feel the need to use loopholes to keep a few dollars more from the tax chests. Money that they won't notice but the country will.
 
There is a difference between income and wealth.

I don't think just because other individuals highly value the company that Bezos owns he should then be compelled to sell a portion of that ownership and satisfy a new tax obligation based on envy.

In time such a measure is simply wresting the control of the company from the owner over paper gains.
Bezos owns the largest homes in both Washington DC and LA. His online retail business has put thousands of people out of work. I think he can afford to pay substantially more.
 
Sure, but the wealthy hiding their income is what started this. If they just paid their share this conversation wouldn't be happening. Instead they aren't happy with having more than 99% of the world, they feel the need to use loopholes to keep a few dollars more from the tax chests. Money that they won't notice but the country will.
What are you talking about? Their share of what? We have a progressive income tax system in place. The highest earners pay a HIGHER share of their income in taxes than the lower income groups. That is the reality, not just the intent:

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The article switches from income tax to wealth, as if they are the same thing.

A lot of that wealth is on paper. It's not cash or income; it's appreciation of stock value.
Yeah, it's a misleading headline. $13.6 billion over four years is still $136 million per person annually.
 
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Wealth?

so the IRS is going to come around and decide what artwork and jewelry are worth ?

I am glad I don’t have to pay taxes on my individual stocks that have gone up in value but I haven’t sold yet.

If you want to try and hit the rich more maybe a sales tax on boats over $100,000 or airplanes or jewelry over $50,000. Cars over $100,00.
 
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What are you talking about? Their share of what? We have a progressive income tax system in place. The highest earners pay a HIGHER share of their income in taxes than the lower income groups. That is the reality, not just the intent:

FF622_1.png

And that share the lowest it's been in history. The wealthy used to see it as their patriotic duty to support the country. Now they do everything they can to pay as little as possible.
 
And that share the lowest it's been in history. The wealthy used to see it as their patriotic duty to support the country. Now they do everything they can to pay as little as possible.
  • Since 2001, the share of federal income taxes paid by the top 1 percent increased from 33.2 percent to a new high of 40.1 percent in 2018.
That's based on the latest released info (2018) that came out this February. What are you talking about?
 
You’re confusing the top statutory bracket (mainly avoided with tax shelters pre-Reagan era reforms) with tax collections.
Do you care more about a virtue signaling top tax rate, or actual tax receipts collected?
I'm not confused. Look at that graph. Now tell me when we were building infrastructure and when our troubles with debt were. Any patterns show up?
 
Carl Icahn, another investor, paid no federal income tax in 2016 and 2017, years in which his total adjusted gross income was $544 million, the article said.

Icahn told ProPublica that he registered tax losses in both of those years as a result of taking deductions worth hundreds of millions of dollars due to the interest he paid on loans.

Asked whether it was appropriate that he had paid no income tax in certain years, Icahn said he was perplexed by the question, ProPublica reported.

“There’s a reason it’s called income tax,” Icahn was quoted as saying in the article. “The reason is if, 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 a rich person should pay taxes no matter what? I don’t think it’s germane. How can you ask me that question?”


 
I'm not confused. Look at that graph. Now tell me when we were building infrastructure and when our troubles with debt were. Any patterns show up?
In 1960 the top 1% of income earners paid 13% of federal income taxes.
Where is that on your graph?

Would you like to get into tax collections and outlays as a percentage of GDP now and then and start comparing outlays for ponzi-financed schemes like Social Security now compared to then and what they mean for the federal budget size relative to GDP?
 
In 1960 the top 1% of income earners paid 13% of federal income taxes.
Where is that on your graph?

Would you like to get into tax collections and outlays as a percentage of GDP now and then and start comparing outlays for ponzi-financed schemes like Social Security now compared to then and what they mean for the federal budget size relative to GDP?
Yes, yes, social programs bad. Boot-straps, good.
It's all working so well as you can see.
 
Yes, yes, social programs bad. Boot-straps, good.
It's all working so well as you can see.
Ponzi finance your social programs and they’ll crowd other spending out even as your overall budget grows as a share of GDP and the ‘defense’ budget shrinks under the same measure.
As you can see, if you ever bothered to look.
 
Biggest and easiest fix I see is to get rid of the capital gains tax. Income is income. Tax it all the same. No reason a guy swinging a hammer all day or punching the clock should be paying a higher tax rate than a guy who's only work is checking the stock quotes each day and taking a few calls.
 
Biggest and easiest fix I see is to get rid of the capital gains tax. Income is income. Tax it all the same. No reason a guy swinging a hammer all day or punching the clock should be paying a higher tax rate than a guy who's only work is checking the stock quotes each day and taking a few calls.
You would get more support if the first $100,000 or $200,000 wasn’t. Lots of middle class people that put away a few hundred every month don’t need that burden in retirement. I don’t care to hurt myself just to get somebody else.
 
Do you understand what the distinction 'discretionary' spending indicates?
That chart is leaving out the ponzi financed social programs.
You knew that, right?

In 1960 'defense' spending was 8.9% of GDP.
In 2020 'defense' spending was 3.7% of GDP

The 'mandatory' spending was about 30% of federal spending in 1960, now it is closer to 70%.
The 'mandatory' spending is somewhere around 14% of GDP now.
 
The issue is, if we are discussing the ultra wealthy and tax avoidance, is how easy it is for the ultra wealth to turn unrealized wealth into a cash flow (i.e., income) while avoiding income tax. As Icahn was stating, he has no "income" in the traditional definition and, thus, should not be paying "income tax." However, he manages and robust cash flow to maintain his lifestyle. But that article would dive into the weeds of tax accounting and no one would read it.
 
Bezos owns the largest homes in both Washington DC and LA. His online retail business has put thousands of people out of work. I think he can afford to pay substantially more.
And his online businesses and tech have directly and indirectly employed hundreds of thousands.
Please, tell us more about what you "think".....
 
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There is no current way to tax gains while paper assets that are held and not sold or transferred. But some programs like IRAs force distributions through RMDs, which then tax can be collected.

But owning real estate or farm land, it can be held; but yearly property taxes are owed. This is obviously a necessity for infrastructure, police, fire, and general services to the real estate and area.

What about a system setup similar.. so you own $3,000,000,000 of paper assets with no intent to sell or transfer, just hold. Maybe, similar to property tax, there is a yearly tax imposed on held paper wealth to cover government service costs that in theory provides some small benefit by the fact that you are living in America and have a slightly better ability because of how the government operates, to accumulate and grow that wealth.. something small like 0.001% of paper wealth.

Disclaimer, I would be against this type of proposal but I am purely brainstorming.
 
What's strange is, I'd actually be open to a proposal that taxes the uber-wealthy in some meaningful way.

But I'm so dumbfounded by the OP's thinking people should be paying 'income taxes' on their 'wealth' that I can't get past it.
 
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