ProPublica has obtained a vast cache of IRS information showing how billionaires like Jeff Bezos, Elon Musk and Warren Buffett pay little in income tax compared to their massive wealth — sometimes,…
I kinda went off on tax havens and tax fraud, but I forgot to mention securities-based lending which is 100% legal, and is the main way rich people avoid paying taxes. It’s so easy to do, J.P. Morgan has a simple web form where wealthy clients can request for a bank representative to contact them or their assistants to set up a loan.
Most rich people hold their wealth in the form of securities like stocks, bonds, and real estate. They only have to pay income tax when they sell these securities, so as long as they don’t sell their securities they won’t pay income tax. However, rich people need money to live too, so what they can do instead of selling their securities is take out loans and use their securities as collateral. The info graphic on J.P. Morgan’s site shows how this strategy is more profitable than selling assets, but to make things egregious keep in mind that Client A would also pay $577,707.50 in capital gains taxes while Client B pays $0! Client B does pay $58,500 to service the loan, but that is paltry compared to the additional $148,500 profit, and dodging almost $600,000 in taxes.
Again, this is 100% legal. These tax optimization strategies, and the policies that permit them, are a big contributor to the dramatic wealth inequality in the United States. There’s a lot of focus on income inequality, raising the minimum wage, and Universal Basic Income, but these campaigns primarily distract from the root of the problem: the ownership of securities needs to be more equitably dispersed, and tax policies must be rewritten to disallow flagrant tax dodging.
I kinda went off on tax havens and tax fraud, but I forgot to mention securities-based lending which is 100% legal, and is the main way rich people avoid paying taxes. It’s so easy to do, J.P. Morgan has a simple web form where wealthy clients can request for a bank representative to contact them or their assistants to set up a loan.
Most rich people hold their wealth in the form of securities like stocks, bonds, and real estate. They only have to pay income tax when they sell these securities, so as long as they don’t sell their securities they won’t pay income tax. However, rich people need money to live too, so what they can do instead of selling their securities is take out loans and use their securities as collateral. The info graphic on J.P. Morgan’s site shows how this strategy is more profitable than selling assets, but to make things egregious keep in mind that Client A would also pay $577,707.50 in capital gains taxes while Client B pays $0! Client B does pay $58,500 to service the loan, but that is paltry compared to the additional $148,500 profit, and dodging almost $600,000 in taxes.
Again, this is 100% legal. These tax optimization strategies, and the policies that permit them, are a big contributor to the dramatic wealth inequality in the United States. There’s a lot of focus on income inequality, raising the minimum wage, and Universal Basic Income, but these campaigns primarily distract from the root of the problem: the ownership of securities needs to be more equitably dispersed, and tax policies must be rewritten to disallow flagrant tax dodging.