The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax

[barbos]

From OP effective tax rate:
Buffett 19.44%
Bezos 23.06%
Bloomberg 2.92%
Musk 29.9%

 

[ZiprHead]

To buy that yacht he had to pay 37% income tax, then luxury tax, then sales tax and now he is paying annual property tax.
Not to mention he has to pay for maintenance, salaries to the crew. Thanks to that yacht, a lot of people have jobs now.

Now if you want to take that yacht and divide among all the people in US I doubt you will get more than 1$ for each one of them.
You can of course add a bunch of other billionaires and get maybe $50 total, but that's about it.
Billionaire's personal spending is the least of your problem.
Corporate tax loophole is the real problem and it seems they finally decided to do something about it.

No, I don't want to take his yacht. I have to pay property tax and sales tax too. I want him to pay federal income tax on his income just like everybody else. Just because his income is in the form pf stocks and not cash should make no difference. If I win a car on The Price Is Right I have to pay tax on it as if it was income.

 

[Swammerdami]

The point is these guys get tax breaks unavailable to ordinary people and use them to pay no taxes to support the country they operate in.

I agree that extreme wealth and income inequality are bad, but this thread is very misleading. I do not think the low taxes paid by these multi-billionaires are due to special tax breaks. (Some fund managers get a special break, as has been mentioned, but does this apply to any of the mentioned billionaires?)

Unrealized capital gains aren't counted as income. When you sell a profitable stock it's not unusual to sell a loser the same year to eliminate the tax liability. These "tricks", if you want to call them that, are routinely used by ordinary Americans with small portfolios as well as by multi-billionaires.

The idea that someone like Warren Buffett has some moral obligation to voluntarily write huge checks to the IRS is absurd, the sort of confused "thinking" that gives liberals a bad name. (Actually Buffett and some of the others DO write huge checks ... but to charities.)

I might not be opposed to some sort of tax on wealth or unrealized gains, at least as an alternate when it would be higher than the income tax. A disadvantage of this is that new accounting rules (and opportunities for tax fraud) would arise.

 

[ZiprHead]

I might not be opposed to some sort of tax on wealth or unrealized gains, at least as an alternate when it would be higher than the income tax. A disadvantage of this is that new accounting rules (and opportunities for tax fraud) would arise.

That's the thing though, by calling it an unrealized gain makes it seem like it has no value when in truth it's extremely valuable. It should be considered income based on its value the day it was given, the same as the car in my post above.

 

[Harry Bosch]

To buy that yacht he had to pay 37% income tax, then luxury tax, then sales tax and now he is paying annual property tax.
Not to mention he has to pay for maintenance, salaries to the crew. Thanks to that yacht, a lot of people have jobs now.

Now if you want to take that yacht and divide among all the people in US I doubt you will get more than 1$ for each one of them.
You can of course add a bunch of other billionaires and get maybe $50 total, but that's about it.
Billionaire's personal spending is the least of your problem.
Corporate tax loophole is the real problem and it seems they finally decided to do something about it.

No, I don't want to take his yacht. I have to pay property tax and sales tax too. I want him to pay federal income tax on his income just like everybody else. Just because his income is in the form pf stocks and not cash should make no difference. If I win a car on The Price Is Right I have to pay tax on it as if it was income.

But this is just incorrect. Or maybe it's a misunderstanding. His income comes from when he converts some of his stocks to cash. He's not taxed until conversion because stocks are not cash. They are approximate estimations of cash value on a particular day. But it isn't cash. You can't buy a car with Amazon stock. You pay property taxes on your house at the state level, not at the federal level.

 

[ZiprHead]

To buy that yacht he had to pay 37% income tax, then luxury tax, then sales tax and now he is paying annual property tax.
Not to mention he has to pay for maintenance, salaries to the crew. Thanks to that yacht, a lot of people have jobs now.

Now if you want to take that yacht and divide among all the people in US I doubt you will get more than 1$ for each one of them.
You can of course add a bunch of other billionaires and get maybe $50 total, but that's about it.
Billionaire's personal spending is the least of your problem.
Corporate tax loophole is the real problem and it seems they finally decided to do something about it.

No, I don't want to take his yacht. I have to pay property tax and sales tax too. I want him to pay federal income tax on his income just like everybody else. Just because his income is in the form pf stocks and not cash should make no difference. If I win a car on The Price Is Right I have to pay tax on it as if it was income.

But this is just incorrect. Or maybe it's a misunderstanding. His income comes from when he converts some of his stocks to cash. He's not taxed until conversion because stocks are not cash. They are approximate estimations of cash value on a particular day. But it isn't cash. You can't buy a car with Amazon stock. You pay property taxes on your house at the state level, not at the federal level.

But they have value just like the car in my example. The car isn't cash but a tax is still due on it as if it was. Banks seem to think those stocks have value since they will loan money on the value of those stocks. And who says I can't buy a car with Amazon stock? Are you saying no one would be willing to trade a car for stocks? And I'm not the one who brought up property taxes.

The big question is why is a stock given in remuneration not considered income but virtually everything else is?

 

[barbos]

I might not be opposed to some sort of tax on wealth or unrealized gains, at least as an alternate when it would be higher than the income tax. A disadvantage of this is that new accounting rules (and opportunities for tax fraud) would arise.

That's the thing though, by calling it an unrealized gain makes it seem like it has no value when in truth it's extremely valuable. It should be considered income based on its value the day it was given, the same as the car in my post above.

Just because it's valuable does not mean you should tax it. I mean, you can, but you should not.
From economical point of view what is important is economic activity, not accumulated wealth. And taxes should be related to economic activity-consumption. You can make it progressive if you want but wealth tax is bullshit.

 

[ZiprHead]

I might not be opposed to some sort of tax on wealth or unrealized gains, at least as an alternate when it would be higher than the income tax. A disadvantage of this is that new accounting rules (and opportunities for tax fraud) would arise.

That's the thing though, by calling it an unrealized gain makes it seem like it has no value when in truth it's extremely valuable. It should be considered income based on its value the day it was given, the same as the car in my post above.

Just because it's valuable does not mean you should tax it. I mean, you can, but you should not.
From economical point of view what is important is economic activity, not accumulated wealth. And taxes should be related to economic activity-consumption. You can make it progressive if you want but wealth tax is bullshit.

Why?

 

[barbos]

The big question is why is a stock given in remuneration not considered income but virtually everything else is?

Because stock price can go up and down. Are you prepared to give collected taxes back when stock went and stayed down?
If not, then fuck off with your ridiculous ideas.

 

[ZiprHead]

The big question is why is a stock given in remuneration not considered income but virtually everything else is?

Because stock price can go up and down. Are you prepared to give collected taxes back when stock went and stayed down?
If not, then fuck off with your ridiculous ideas.

The car I just won and had to pay taxes on dropped 20% as soon as I drove it off the lot. How is that any differant?

Why is it a ridiculous idea?

 

[barbos]

The big question is why is a stock given in remuneration not considered income but virtually everything else is?

Because stock price can go up and down. Are you prepared to give collected taxes back when stock went and stayed down?
If not, then fuck off with your ridiculous ideas.

The car I just won and had to pay taxes on dropped 20% as soon as I drove it off the lot. How is that any differant?

Why is it a ridiculous idea?

It's different because you put only 5 bucks into this lottery ticket.
In case of stock, you bought stock on $1000 it went up to $11000, then IRS made you pay $3000 (30% on unrealized gain), then next year it goes back to $1000, and you are suddenly out of real $3000.
Then you will have IRS buildings going up in flames.

 

[ZiprHead]

The car I just won and had to pay taxes on dropped 20% as soon as I drove it off the lot. How is that any differant?

Why is it a ridiculous idea?

It's different because you put only 5 bucks into this lottery ticket.
In case of stock, you bought stock on $1000 it went up to $11000, then IRS made you pay $3000 (30% on unrealized gain), then next year it goes back to $1000, and you are suddenly out of real $3000.

That's a differant situation than what is being discussed in the OP. The people in the OP are being remunerated in stocks, not cash. They didn't buy them as an investment.

 

[RVonse]

From OP effective tax rate:
Buffett 19.44%
Bezos 23.06%
Bloomberg 2.92%
Musk 29.9%

Based on what each of these billionaires actually contribute to society, I would tax Musk the least and Bloomberg the most. After all Musk may save all of humanity and Bloomberg is just a financial money changing leach. The actual rates paid above are actually the opposite. Which strongly indicates that tax rates between billionaires themselves are not even fair!

When you consider claims made by Elizabeth Warren who feel government has unlimited power to spend and borrow forever......why should anyone pay a federal income tax anyway? Especially given how unfair this tax appears to everyone, rich and poor alike? It would appear the only purpose of the IRS is to make sure we all know we are their slaves.

That's not what the founders of this country had in mind at all...

 

[barbos]

The car I just won and had to pay taxes on dropped 20% as soon as I drove it off the lot. How is that any differant?

Why is it a ridiculous idea?

It's different because you put only 5 bucks into this lottery ticket.
In case of stock, you bought stock on $1000 it went up to $11000, then IRS made you pay $3000 (30% on unrealized gain), then next year it goes back to $1000, and you are suddenly out of real $3000.

That's a differant situation than what is being discussed in the OP. The people in the OP are being remunerated in stocks, not cash. They didn't buy them as an investment.

It makes no difference. Bezos could have sold all his stock to himself and claim cash enumeration and avoid all your proposed "founders" tax.
The fact that he arranged certain amount of stock for himself as a founder, virtually for free, makes no difference.

The best you can do is to have small wealth tax. Basically make everybody to give government certain and very small percentage of their stock.
Tax on stock price fluctuations is not going to work. It would destroy the stock market.

 

[barbos]

From OP effective tax rate:
Buffett 19.44%
Bezos 23.06%
Bloomberg 2.92%
Musk 29.9%

Based on what each of these billionaires actually contribute to society, I would tax Musk the least and Bloomberg the most. After all Musk may save all of humanity and Bloomberg is just a financial money changing leach.

It's clear that Bloomberg had carried out losses from previous years when he sold on $10bil.
Whereas Musk had no losses and therefore paid much more.

 

[ZiprHead]

Based on what each of these billionaires actually contribute to society, I would tax Musk the least and Bloomberg the most. After all Musk may save all of humanity and Bloomberg is just a financial money changing leach. The actual rates paid above are actually the opposite. Which strongly indicates that tax rates between billionaires themselves are not even fair!

You've been watching too many science fiction movies. Musk could save the planet today with his wealth. He could reverse global warming. He could end hunger.

 

[ZiprHead]

That's a differant situation than what is being discussed in the OP. The people in the OP are being remunerated in stocks, not cash. They didn't buy them as an investment.

It makes no difference. Bezos could have sold all his stock to himself and claim cash enumeration and avoid all your proposed "founders" tax.
The fact that he arranged certain amount of stock for himself as a founder, virtually for free, makes no difference.

The best you can do is to have small wealth tax. Basically make everybody to give government certain and very small percentage of their stock.
Tax on stock price fluctuations is not going to work. It would destroy the stock market.

1. You're justifying tax loopholes by making more loopholes?

2. So now you're for a wealth tax.

 

[jonatha]

Note the number they are comparing it to is "total wealth growth". Three of these four have the vast majority of their wealth in shares of their company (not addressing the fourth, I simply don't know.) Taxes are only due when those shares are sold, pretending that that's their income is being very deceptive.

It's not very deceptive, since they can translate wealth gains into cashflow by borrowing against their holdings (which you'd know if you'd read the article).

The mark-to-market rules already apply to people in certain positions who derive a substantial amount of their income from intangible assets. Extending them to certain large shareholders, or insiders, could be done to address the issue.

 

[jonatha]

To buy that yacht he had to pay 37% income tax,

Probably not.

then luxury tax, then sales tax and now he is paying annual property tax.

Probably, although I expect he paid it in a manner that allowed him to deduct it from some income stream or other of which he is a beneficiary, a legal maneuver that is not available to Joe Sixpack.

 

[jonatha]

Corporate tax loophole is the real problem and it seems they finally decided to do something about it.

Why do you think corporate tax loopholes can be a problem but loopholes for the oncome of the super rich can't be a problem?

Because income tax loopholes simply don't exist.