ProPublica Report Exposes Tax Strategies of America’s Super Rich | Chicago News
A explosive report from ProPublica based on a vast mine of leaked income tax returns from the super rich in the United States revealed that some of the richest men on the planet pay little or no income tax.
The report found that the 25 richest Americans, including Amazon’s Jeff Bezos and Tesla’s Elon Musk, collectively paid what he called a “real tax rate” on their wealth of just 3.4%, so even as their fortune increased by billions.
Senator Bernie Sanders (D-Vermont) said he was not shocked by the report when it was released last week.
“We have a regressive and unfair tax system. We have a corrupt political system where the rich can make huge campaign contributions and have all kinds of lobbyists here on Capitol Hill, ”Sanders said. “And then if you are rich, unlike an ordinary worker, you have dozens of lawyers and accountants who help you take advantage of every loophole that exists.”
The key to understanding how billionaires can legally pay so little income tax compared to their massive wealth is that the tax code is all about income, not wealth.
Northwestern University law professor and tax law expert Charlotte Crane says the most common method of avoiding paying taxes “is simply to be rich and hold that wealth in forms that do not pay taxes. ‘interest or dividends, but which the creditors are prepared to take as security. “
This allows wealthy individuals to borrow against their wealth. And because borrowed money doesn’t count as income, the rich can lead lavish lives while not reporting any income to the IRS.
Crane says one of the problems when trying to tax the ultra-rich is that unless the assets that make up the bulk of their wealth are listed on the stock exchange, it’s difficult to accurately assess their wealth. value unless an asset is actually sold. Since many assets owned by the rich are not publicly traded – and sometimes not even disclosed – assessing their value and how that value has changed over time for tax purposes is often impossible for l ‘IRS.
“You have a real problem measuring this change in value,” Crane said. “And the richer you are, the easier it is to confuse what that change in value might be.”
Crane, who worked in the Office of the Chief Legal Officer for the IRS from 2010 to 2011, said the growing complexity of the tax code means IRS auditors are often confused by the accountants of the wealthy. According to the IRS’s own estimates, at least $ 400 billion in taxes are not collected each year and that number could even reach $ 1,000 billion, according to testimony before the Senate Finance Committee in April.
Of his time with the IRS, Crane said, “It was pretty clear that they didn’t have the resources to even train the lawyers who were supposed to help auditors understand how these things were supposed to work.”
Note: This story will be updated with a video.