It’s Time for the Rich to Start Paying Their Fair Share
Higher income tax won’t affect the ultra-wealthy because their wealth doesn’t come from regular income.
I don’t mind paying taxes. Taxes pay for all kinds of useful things like roads, cops, teachers, judges, health care, $100 million dollar fighter jets (all right, maybe not everything is just as useful, but still).
What I do mind is having to pay taxes while the richest people don’t. Yet that is exactly what’s happening, according to recently released tax records for 25 of the wealthiest Americans by journalism nonprofit ProPublica.
According to these files, Jeff Bezos, aka guy-who-made-billions-off-a-global-pandemic-that-killed-millions, did not pay a penny in federal income taxes in 2007 and 2011. And although he added an estimated $99 billion to his fortune between 2014 and 2018, he reported just $4.22 billion in taxable income during that period, resulting in an effective tax rate of less than 1 percent.
And that wasn’t even the lowest tax rate.Warren Buffet added $24.3 billion to his wealth during the same period but reportedly paid only 0.10% tax.
Other billionaires paid slightly more but still far less than what regular people pay. Michael Bloomberg, for instance, paid only 1.3% tax between 2014–2018, while Tesla CEO —and part-time crypto troll — Elon Musk paid 3.27% tax.
Astonishingly, all of this is apparently completely legal. In fact, the only illegal thing is the leaking of the tax documents, according to a White House spokeswoman.
So why do the rich pay so little tax in the US? Largely because the American tax system is based on the concept of “realization,” meaning you are only taxed on gains you actually “realized.” Put differently, you can own 52.4 million Amazon shares and not pay a dime in taxes until you sell them.
You can also use your stocks as collateral to borrow against, which is exactly what the ultra-rich are doing to finance their lavish lifestyles. Called securities-backed lending, it basically allows the rich to live off their investment portfolio without ever having to sell it (and pay capital gains tax). It’s a classic example of having your cake and eat…