> "The uber-rich in the United States tend to pay such low tax rates that they have less incentive to seek offshore havens. But their absence from the files also may mean that very wealthy Americans turn to different offshore jurisdictions."
[1] https://www.washingtonpost.com/business/interactive/2021/pan...
https://www.propublica.org/article/the-secret-irs-files-trov...
Hell, the person who used to be president was paying that or less. They have at least 60% of congress paid for in order to not raise taxes or close loopholes as well. Then you have so many otherwise smart people believing that taxation is theft, when they're just not rich enough to pay the good rates.
If you are a wharever-ionaire you could put your gains in index S&P 500 shares, then use them as collateral, paying everything you need with credit and having a $1 annual salary. So technically, that $1 it's their only income to the IRS. But what about interest? with that collateral, you have a special rate close to (or even lower than) inflation. Then you die, the bank takes your shares to pay your debt, and that's it.
https://www.wsj.com/articles/buy-borrow-die-how-rich-america...
At some point you want to open the floodgates so you don't leave any quality of life on the table.
You can't do that on margin loans, whereas you can if you are able to engineer a tax efficient way to cashout without paying capital gain tax
But why? It's a lot of quality of life left on the table.
Because you can't bring that "quality of life potential" in the grave
It’s the way humans are wired, and there’s a whole industry of lawyers, accountants and others to support it.
> Then you die
> The bank takes your shares to pay your debt
> The IRS taxes this against your estate as income
> The entire value of your estate is taxed for any capital gains at the “fair market value” of all your assets at the time of your death
> and then that's it.
The reality is that when you have enough cash to justify, you roll your assets into a series of South Dakota trusts and that money is perpetually tax-free.
Another tactic is to use Nevada and Delaware corporations to buy real property everywhere, and use that to avoid most taxation.
The exotic trust structures talked about here are money laundering structures, which exist because gullible voters are duped with tales of widows losing houses and farm families losing the mythical family farm. There’s a reason why the home base for this is a state with weird banking laws where there’s more cattle than people.
Mitt Romney’s (I point him out because of his fame in this regard, he’s not unique or alone) great-great-grandchildren will be living off some untaxed trust 150 years from now when we’re all dead.
-- Mitt Romney
Not sure if worse than his descendants living tax free hundreds of years for now, is having his image whitewashed for his "bullwark against Trump" that weirdly only manifested in the latter part of his term.
Maybe we should ban interest instead, just like how we were told thousands of years ago. See: Islam, Judaism, and Christianity.
https://en.wikipedia.org/wiki/Loans_and_interest_in_Judaism
…or “sabbath mode” on many appliances on the market.
The funny part to me is believing in an all-powerful and omnipotent god whom you can nonetheless fool with semantics and shuffling papers.
We don't do that in Islam.
We also have explicit texts in Hadith that call out and reprimand attempts to bypass usury by buying an item in installments, then selling it back to the original seller for a lower cash price. The effective transaction being a money for money contract with a disposable item in the middle. All this is prohibited.
You will not find a single Muslim scholar say that it is ok for a woman to wear a wig instead of a headscarf, even though technically she is still covering her hair.
There's no fooling going on. There's just faith traditions that believe God, either generally or for specific subsets of the overall rule set, is extremely concerned with the letter of the rules and not what humans might infer the spirit to be from the letter. That is, the rules are the rules, not an imperfect approximation serving some higher but difficult to express set of rules.
I'm not positive this works out, but:
- Banks tend to be well-established, identifiable entities.
- They are highly regulated and audited.
The question I'm not certain of the answer is what the result of such a tax would be. I suspect such loans would tend to be crowded out or inerest rates increased (raising costs to the billionaire utilising this cash-out option).
This seems to me along the lines of an HFT transaction tax, possibly operating similarly.
Sale of stock should be taxed at each states tax rate, because it’s the buying and selling of a good, it’s not capital investment.
It's not the rich that arent paying their fair share here.
The only “loophole” is inheritance with a stepped up basis, which every American gets.
I’d be happy to get rid of that rule. No need for inheritance taxes, just make the estate pay all capital gains up death.
I'm curious how I should rationalize that this is not in fact a giant loophole for billionaires. Bezos' wealth increased immensely such that he is now one of the richest people in the world, and yet his effective tax rate is far lower than anything you or I will ever see. If he needs "income", he can simply take out a low interest loan with his stock as collateral to pay for whatever he needs (yachts, spurious lawsuits against NASA, etc.). His stock is effectively cash, loans effectively "realize" his gains, and yet we don't treat any of it as income.
There's a vast difference between the unrealized gains of not-filthy-rich people with 401ks / middling stock portfolios and the unrealized gains of filthy rich people who primarily take stock as income (which they do for the exact purpose of paying lower taxes).
[0] https://www.forbes.com/sites/sarahhansen/2021/06/08/richest-...
.98% sounds like he paid just under 1 billion on 4.22 billion of reported income (or just under 25%). I guess it sucks to be Bezos, because he spent more in one year on taxes than I'll have to pay in my life.. I'm going to go out on a limb and suspect that figure is not AGI, but total income. I suspect he had many deductible expenses like donations to charity, though 25% isn't that low since the top marginal bracket for capital gains is 20%.
I guess I'm curious how he paid so much in taxes...
Alternatively, tax consumption over a certain threshold as though spending is income. Effectively instate a federal sales tax after one has spent $X dollars.
Although violence can resolve a situation, negotiation with only the threat of violence gets much better results.
The problem here is as always the government, which is not doing as much as we'd like and has supposedly gotten captured by bad individuals. We can't have our cake and eat it.
And despite being against taxation I'm all for flat or proportional taxation, while we have it. This whole mess arguably came about because we wanted the ability to make the rich pay more than the rest of us, and then while we were at it decided to use taxation to manipulate the behavior of the public. And look how it turned out, the market spoke and found optimal solutions around taxation, and unfortunately it only works for the wealthy. It's like shaking our fists at the sky because the rain caused a lake and mosquitos bred there.
/rant
The thing that irritates me about it is that none of these intermediate steps seem to get any traction. My pet theory about that is they don't get implemented because they would inevitably lead to full public control over social spending. And when we get there we're essentially doing libertarianism anyways and realise we are responsible for our neighbours and society and have no need for a government that does stuff without our consent.
By all means, I'm in favour that anyone can voluntarily opt-out of the social contract and go live in a cabin in the woods unmolested. But if you don't, then you need to pay taxes and obey laws.
Even ignoring taxes why would anyone ever want to get paid billions dollars in a direct cash transfusion? Nothing they would be buying regularly costs that much!
They should be leading with how much of the tax burden the billionaires are responsible for shouldering, not how much they are shouldering via one specific tax that isn't there to tax them. Income tax isn't for business owners, it is for people who earn an income!
You can't put a private investigator on the tail of every business owner.
Personal expenses will be justified as business expenses, it's a matter of catching the very big and obvious cases, doing it so very publicly with the help of the press and try to scare all the other business owners in order to scale down the amount of personal expenses that they claim as business expenses
That’s not single digit.
Not saying system is perfect but exaggerating the problem is definitely not the best way to fix it.
It's not an exaggeration to say the rich rarely actually pay these taxes you describe. There are innumerable ways around it.
You need to have income to pay income tax.