Let’s Talk Taxes

Are they too low? Too high? Just right?

Some folks, mostly of Republican stripe, cry loud and long, complaining that personal and corporate income tax rates, and other forms of taxes, are TOO HIGH, even excessive. Yet in the mean time, many folks, aka The Common Man, feel more than just a little pinched, and stressed out not just by inflation which has affected everything from groceries to housing, but by the cost of everything in general… even before inflation took its toll.

And, at the end of the day, for many, particularly our most vulnerable — the elderly, children, the impoverished, veterans, the homeless, those without healthcare insurance, etc. — there are more bills than there is money.

Kitchen table economics are real.

And though our nation sorely needed it, very few — exactly 19 Senators, and 2 Representatives — voted FOR the Infrastructure Investment and Jobs Act (H.R.3684). Maybe

It’s True: The Über-Wealthy Pay ZERO Income Taxes

Moochers.

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We are disclosing the tax details of the richest Americans because we believe the public interest in an informed debate outweighs privacy considerations.

Today, ProPublica is launching the first in a series of stories based on the private tax data of some of our nation’s richest citizens. We obtained the information from an anonymous source who provided us with large amounts of information on the ultrawealthy, everything from the taxes they paid to the income they reported to the profits from their stock trades.

In the coming months, we plan to use this material to explore how the nation’s wealthiest people — roughly the .001% — exploit the structure of our tax code to avoid the tax burdens borne by ordinary citizens.

Many will ask about the ethics of publishing such private data. We are doing so — 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.

Tax experts have long understood that the wealthiest Americans reap outsized benefits from the federal tax code’s emphasis on taxing income rather than assets like stock holdings and property. Yet, when The New York Times disclosed in 2020 that President Donald Trump had amassed so many deductions he paid no taxes in 11 of 18 years, it was assumed that his case was an anomaly, reflecting the unique breaks real estate developers receive under our tax system.

It is now clear that there isn’t just one such taxpayer — there are many, in multiple industries. We believe that disclosing the identities of billionaires who paid little to no taxes in years their fortunes grew by billions of dollars will help readers understand the magnitude of the tax advantages the ultrarich enjoy.

https://www.propublica.org/article/why-we-are-publishing-the-tax-secrets-of-the-001

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“America’s billionaires avail themselves of
tax-avoidance strategies
beyond the reach
of
ordinary people.
Their wealth derives from the
skyrocketing value of their assets,
like stock and property.
Those gains are not defined
by U.S. laws as taxable income
unless and until the billionaires sell.”

In 2007, Jeff Bezos, then a multibillionaire and now the world’s richest man, did not pay a penny in federal income taxes. He achieved the feat again in 2011. In 2018, Tesla founder Elon Musk, the second-richest person in the world, also paid no federal income taxes.

Typical Americans his age paid more in taxes than they saw in wealth growth over that period.

For every $100 of wealth growth from
2006 to 2018,
typical Americans paid $160 in taxes.

Bezos paid only $1.09.

Michael Bloomberg managed to do the same in recent years. Billionaire investor Carl Icahn did it twice. George Soros paid no federal income tax three years in a row.

ProPublica has obtained a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years. The data provides an unprecedented look inside the financial lives of America’s titans of business, including Warren Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg. It shows not just their income and taxes, but also their investments, stock trades, gambling winnings and even the results of audits.

Taken together, it demolishes

The Cornerstone myth of the American tax system:

That everyone pays their fair share and the richest Americans pay the most.

The IRS records show that the wealthiest can — perfectly legally — pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year.

Many Americans live paycheck to paycheck, amassing little wealth and paying the federal government a percentage of their income that rises if they earn more. In recent years, the median American household earned about $70,000 annually and paid 14% in federal taxes. The highest income tax rate, 37%, kicked in this year, for couples, on earnings above $628,300.

The confidential tax records obtained by ProPublica show that the ultrarich effectively sidestep this system.

American multi-BILLIONAIRES
LEFT to RIGHT, TOP to BOTTOM: Mark Zuckerberg (Facebook), Michael Bloomberg (Bloomberg), Rupert Murdoch (News Corp), Warren Buffett (Berkshire Hathaway), Carl Icahn (Icahn Enterprises), George Soros (Soros Fund)

America’s billionaires avail themselves of tax-avoidance strategies beyond the reach of ordinary people. Their wealth derives from the skyrocketing value of their assets, like stock and property. Those gains are not defined by U.S. laws as taxable income unless and until the billionaires sell.

To capture the financial reality of the richest Americans, ProPublica undertook an analysis that has never been done before. We compared how much in taxes the 25 richest Americans paid each year to how much Forbes estimated their wealth grew in that same time period.

We’re going to call that their true tax rate.

The results are stark. According to Forbes, those 25 people saw their net worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%.

It’s a completely different picture for middle-class Americans, for example, wage earners in their early 40s who have amassed a typical amount of wealth for people their age. From 2014 to 2018, such households saw their net worth expand by about $65,000 after taxes on average, mostly due to the rise in value of their homes. But because the vast bulk of their earnings were salaries, their tax bills were almost as much, nearly $62,000, over that five-year period.

No one among the 25 wealthiest avoided as much tax as Buffett, the grandfatherly centibillionaire. That’s perhaps surprising, given his public stance as an advocate of higher taxes for the rich. According to Forbes, his riches rose $24.3 billion between 2014 and 2018. Over those years, the data shows, Buffett reported paying $23.7 million in taxes.

That works out to a true tax rate of 0.1%, or less than 10 cents for every $100 he added to his wealth.

In the coming months, ProPublica will use the IRS data we have obtained to explore in detail how the ultrawealthy avoid taxes, exploit loopholes and escape scrutiny from federal auditors.

Experts have long understood the broad outlines of how little the wealthy are taxed in the United States, and many lay people have long suspected the same thing.

But few specifics about individuals ever emerge in public. Tax information is among the most zealously guarded secrets in the federal government. ProPublica has decided to reveal individual tax information of some of the wealthiest Americans because it is only by seeing specifics that the public can understand the realities of the country’s tax system.

Consider Bezos’ 2007, one of the years he paid zero in federal income taxes. Amazon’s stock more than doubled. Bezos’ fortune leapt $3.8 billion, according to Forbes, whose wealth estimates are widely cited. How did a person enjoying that sort of wealth explosion end up paying no income tax?

In that year, Bezos, who filed his taxes jointly with his then-wife, MacKenzie Scott, reported

Warren Buffett Blasts American Corporate Practices

As the saying goes, “There’s no news like old news.”

And so, that’s the case with this entry.

I have little doubt that you – indeed that very few Americans – have read the 2003 Report to Shareholders of Berkshire Hathaway.

However, I have – and I read it when it was published in 2004.

In it, one of the world’s wealthiest men opines about corporate practices that have grieved Americans, the excesses of which have outraged many, if not most.

The report is available here, in its entirety, from the Berkshire Hathaway website.

Excerpted here below, for your convenience, are Warren Buffett’s thoughts from his 2003 Report to Shareholders.

I can understand why the Treasury is now frustrated with Corporate America and prone to outbursts. But it should look to Congress and the Administration for redress, not to Berkshire.

Corporate income taxes in fiscal 2003 accounted for 7.4% of all federal tax receipts, down from a post-war peak of 32% in 1952. With one exception (1983), last year’s percentage is the lowest recorded since data was first published in 1934.

Even so, tax breaks for corporations (and their investors, particularly large ones) were a major part of the Administration’s 2002 and 2003 initiatives. If class warfare is being waged in America, my class is clearly winning. Today, many large corporations – run by CEOs whose fiddle-playing talents make your Chairman look like he is all thumbs – pay nothing close to the stated federal tax rate of 35%.

In 1985, Berkshire paid

Warren Buffet tells Congress, “Stop coddling the Super-Rich.”

Op-Ed Contributor

Stop Coddling the Super-Rich

By WARREN E. BUFFETT

Published: August 14, 2011

Omaha

OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was

Tim Pawlenty uses economic gimmickry as GOP hopeful – UPDATED

Tim Pawlenty (R), Governor of Minnesota, official portrait

Tim Pawlenty (R), former two-term Minnesota governor who balanced the state’s budget without raising taxes, and GOP presidential hopeful, is casting stones at the White House.

At the University of Chicago recently, he said, “President Obama is a champion practitioner of class warfare.” While he is the first to level such a charge against President Obama, several critics accused his predecessor – President George W. Bush – of the same thing. However, the one, and perhaps most important, person to validate that assertion against Bush II was none other than Berkshire Hathaway Chairman & CEO Warren Buffett. In his 2003 report to share holders, Buffett wrote,

“Corporate income taxes in fiscal 2003 accounted for 7.4% of all federal tax receipts, down from a post-war peak of 32% in 1952. With one exception (1983), last year’s percentage is the lowest recorded since data was first published in 1934. Even so, tax breaks for corporations (and their investors, particularly large ones) were a major part of the Administration’s 2002 and 2003 initiatives. If class warfare is being waged in America, my class is clearly winning. (emphasis added) Today, many large corporations – run by CEOs whose fiddle-playing talents make your Chairman look like he is all thumbs – pay nothing close to the stated federal tax rate of 35%.”

Berkshire Hathaway Chairman & CEO Warren Buffett speaking to students at Kansas University School of Business

While it seems Pawlenty is disgruntled with national economic performance, he interestingly suggests that

Warren Buffett, General Electric and Jesus

In a response to a reader’s remarks upon the entry “How to fix this ROTTEN economy,” I had quoted in context the published remarks of Berkshire Hathaway CEO Warren Buffett – whom is among the world’s wealthiest men.

Even “the Oracle of Omaha” Warren Buffet, CEO of Berkshire Hathaway, in his report to stockholders in 2003 wrote “Corporate income taxes in fiscal 2003 accounted for 7.4% of all federal tax receipts, down from a post-war peak of 32% in 1952. With one exception (1983), last year’s percentage is the lowest recorded since data was first published in 1934. “Even so, tax breaks for corporations (and their investors, particularly large ones) were a major part of the Administration’s 2002 and 2003 initiatives. If class warfare is being waged in America, my class is clearly winning.(emphasis added) Today, many large corporations – run by CEOs whose fiddle-playing talents make your Chairman look like he is all thumbs – pay nothing close to the stated federal tax rate of 35%.”

The idea of taxation is

“Do you have limited income and resources?”

So began the paragraph on a document sent to a retiree friend of mine.

The next paragraph read in part, “You may qualify for extra help paying your Medicare prescription costs.”

As I pondered the question it was suddenly obvious that everyone has “limited income and resources,” including Bill Gates and Warren Buffett.

…unless, of course, you’re God.