A ProPublica story about the low (or $0) tax bills paid by Elon Musk, Jeff Bezos, Warren Buffett other billionaires, comes from what the nonprofit newsroom calls a “The Secret IRS Files”. The IRS probes how ProPublica got the “trove of never-before-seen records.” Should conservatives be more concerned with the violation of these billionaire’s privacy, or the prospect that they pay almost no income tax on their massive earnings?
BACKGROUND RESOURCE:
The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax, ProPublica, June 8, 2021
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46 replies on “IRS Probes “Secret Files” that Show Musk, Bezos and Buffett Pay Scant Income Tax”
I am one who leans towards a flat, zero deduction tax, but I always say I don’t care how the government taxes me, if they don’t cut spending, it will be punitive and excessive. As Bill put it, we don’t have a revenue problem, we have a spending addiction.
I don’t know about the others, but Elon’s annual wage is 1 dollar. He only gets paid in share options that he has to keep over a number of years without selling; so essentially most of his ‘wealth’ is tied up in the company and its prospects.
From what he’s said in interviews he really doesn’t care about money at all; other than using it to drive forwards innovation or invest in new ideas. Can’t say the same for Bezos though.
Musk for example will pay in capital gains or sales taxes when that money is vested or spent; even if not in income tax.
Personally I’m a believer in a flat tax. Probably around 10-20%. The whole point of a percentage is that it’s fair; the more you earn the more you pay.
I have long been a proponent of some version of the Fair Tax, but only if we can limit the percentage (which must be far lower than the current 23% “revenue neutral” amount), perhaps tied to GDP, and take into account state sales taxes in the total–as part of a constitutional amendment.
However, it’s always bothered me that this attempt to strangle the beast is too simplistic. And someone somewhere explained it recently in a throw-away line in an interview (sorry, don’t know who/when/where):
Quantitative easing. The tax rates and even the revenue (from whatever source) don’t really matter, as long as they can continue to just print money. This is the new monetary policy experiment we’re living through. THIS is the theft, through inflation/increasing the money supply. It doesn’t matter how hard you have worked, how much you have saved, how much you have invested, they will just print more money, and your assets and income (your buying power) will shrink while prices go up.
What’s more, I also learned recently that the reason interest rates remain so low (and even went negative in Europe, and might do here) is because the government will not be able to pay the INTEREST on the DEBT (not spending deficit) if they allow interest rates to go up.
It’s hard to see a way out of this as long as we try to play by the rules as they are now. Even constitutional amendments won’t fix this spending problem.
Coloring outside the lines, I see two possibilities to get out of debt:
But even these will just increase the spending problem, not fix it.
If I understand the Fair Tax situation correctly, it would require:
1) repeal of the 16th Amendment, and remove but not totally eliminate a lot of the tax law complexity, but still retain a smaller, less intrusive IRS to track revenue collection, etc.
2) impose a “sales tax equivalent” cost for every transaction (outside of the pre-bate categories, which are exempted via the bar code process Ron presented below*) of about 23%, to match current revenue coming in.
So some rich person buys a $100K
yachtboat and then pays $23K extra to the government for taxes. Or a rich person buys $10K worth of stock (via a broker) and pays an extra $2300 that goes to the government. Then 5 years later he sells that stock for $20K (e.g., it doubled in value), and whomever buys that stock pays another $4600 to the government in taxes**. The seller then realizes a gain of ($7700, after his Fair tax payment is accounted for), or 77% and not the nominal 100% gain it appears happened initially. And if the stock goes down in value, I guess he is out of luck — no deduction for losses, etc. ?? [Or see ** below].There are still a lot of devil-in-the-details questions that proponents of the Fair Tax need to answer. Maybe those answers are available but I have not heard of them (granting I have not made any serious search for them, either.)
If you sell a used car, does that buyer also pay a Fair Tax, or not?
Do legal services fall under this scheme, too, or will the lawyers want to have their services under the pre-bate umbrella (or at least in an exempted category)? Same for a lot of other special interests?? Somebody’s oxen will be gored no matter how this is handled, so universal acceptance is not assured.
*Or not exempted but reimbursed by the pre-bate monthly payment made to everyone, regardless of income level. [Is that equivalent to a lower bound on a basic income scheme?] Don’t we sort of have a pre-bate situation now, with our increased standard deductions (via the 2017 tax law)?
**Or does the buyer only pay $2300 in tax as a tax on the gain amount, rather than the initial amount for which tax was already paid?? And if the stock is now worth less than before, does the buyer, or the government, reimburse the seller for that fraction of taxes prorated against the loss in capital value?
Stocks and bonds, as “inputs to capital” would not be taxed – much like a business wouldn’t be taxed when they buy goods to sell. Only services and *new* goods are taxed. So, if you buy a new Ford F-150 for $40k (or a 10′ 2×4 from Lowes for the same price), you get hit with the tax. Buy a used Mercedes for $40k, no tax.
Unlike today, food and other essentials are taxed, with the prebate refunding the tax on cost of living.
As for whether we have a pre-bate now, we don’t. The deductions happen at the end of the year, making them a rebate. You can increase your number of exemptions… but that’s a rough tool at best.
The only real issue I see is the effect on new construction.
I worry about the possibility of double dipping. Let’s use your 10′ 2×4 example (I just built a sunroom and while you have exaggerated the cost somewhat, the difference in 2 years is ludicrous).
If I build my own sunroom, I would pay the 23% tax on the material I buy. If I contract to have a sunroom built, does the contractor pay 23% on material and then I pay 23% on the total value of the sunroom? Or is there a material backout somehow so that I only pay the tax on the added value? I know this has been thought out in the study, but it leaves things open for politicians and bureaucrats or other bad actors to double dip.
In the home example, I would like to think they’d follow the same rules as a new F-150 so that there is not double dipping of tax on materials.
Sorry, didn’t see that there was a response. I need to find the notifications setting I see.
So, as an input to industry, your contractor pays no tax on the 2×4. When you pay XYZ Contractors Inc., you pay them the tax and it’s passed on from there, just like your state and local sales taxes. All taxes are paid “at the register” only when a service or a new good is purchased as an “end item.”
Also note that this is agnostic of what is being bought (with the exception that used items incur no tax). If you buy baby food and diapers – taxed. If you buy a brand-new Bentley – taxed. The purpose of the prebate is to refund… er, prefund the taxes paid on essentials.
Devote our lives to government’s preferred behaviors as prodded by their parasitic theft?!? True, that may yield us material bounty, but it sure ain’t the self-determining individual sovereignty we hire that government to secure, promote, and defend. To my reckoning, such a suggestion carries the stink of a livestock corral, but to each his own. Give me the sweet scent of fresh air wafting over even the sparsest of grassland any day.
IMO one of the biggest advantages of a scheme like the Fair Tax is that it would almost eliminate both economic social engineering through the tax code.
This is a hit piece designed to help promote wealth taxes.
Propublica has decided that unrealized gains should be taxes and then presents their own interpretation of tax rates. How far does this go?
Since most wealth in that realm is intangibles like stocks, bonds, etc., the act of cashing out will reduce the value of remaining holdings as the price drops. In addition, the wealth tax was in addition to capital gains, so this means that the taxpayer must cash out 115% of their wealth tax due.
Given the history of taxes, we know this tax will not be one-time, not stay 2%, and not retain a floor of $50M.
Eseentially forcing individuals and corporations to spend all that they take in would destroy R&D efforts, long term planning, rainy day funds, etc.
If they somehow got their way and corporations “spread” their wealth, the tax collections would dwindle and that would spur demands to close “loopholes” and lower thresholds. Watch for them to push for taxes on increases in house and property values – they’ll start with people they will describe as “land barons” and “megamansions”, and then move on to the suburbs.
One of the reasons the liberals hate Trump so much is he took advantage of the tax codes and the bankruptcy rules to still build an empire.During his campaign for 2016, he admitted to using the tax laws to his advantage and did it legally, which they didn’t like at all! This is why they are still trying to investigate him for it.
I agree with Scott’s closing comments very much. Productive greed which makes Bezos and others very wealthy has also elevated my financial picture with a steady good paying job.
I am and have been missing the comments of a certain member. What has happened to Gallstones? I hope the member is not sick or unable to comment. Seems like there has been good topics for the picking and other comments to address.
A consumption tax is unfair in that a much smaller percentage of wealth of the rich is taxed compared to everyone else. A “fair” tax would tax everyone at the exact same rate based on their gross income, remitted monthly like most every other bill.
The Fair Tax as written gives a pre-bate based on family size for the taxes that would be incurred for purchasing basic needs, like food. It was written prior to the major use of computers and barcoding that could now easily exempt items from the tax. Therefore, lower income people who purchase few “luxuries” would pay essentially 0 tax.
People who buy high dollar, luxury items, would pay more total tax. But everyone would pay the same rate.
We do not, and should not, tax wealth.
Except that clear ice cubes are a luxury that should clearly be taxed to the maximum, while ordinary cloudy ice cubes can be tax tree, right? 🙂
Good point about bar codes, a remarkable invention when you think about um. RFID chips, too. Can we find a way to bar code ice cubes??
Do you recall off the top of your head if the (theoretical) Fair Tax pre-bate was adjusted for geographical location, especially for “imputed rent” or commuting travel distances? San Francisco vs. Nashville, etc. Would seem only “fair”.
I don’t recall that detail of the pre-bate. Good point though. I now live in sw VA but used to live in Westchester County NY. Way different cost structures.
In response to the government spending problem …. I’m reminded how the Israelites were warned about getting a king:
Samuel told all the words of the Lord to the people who were asking him for a king. 11He said, “This is what the king who will reign over you will claim as his rights: He will take your sons and make them serve with his chariots and horses, and they will run in front of his chariots. 12Some he will assign to be commanders of thousands and commanders of fifties, and others to plow his ground and reap his harvest, and still others to make weapons of war and equipment for his chariots. 13He will take your daughters to be perfumers and cooks and bakers. 14He will take the best of your fields and vineyards and olive groves and give them to his attendants. 15He will take a tenth of your grain and of your vintage and give it to his officials and attendants. 16Your male and female servants and the best of your cattle and donkeys he will take for his own use. 17He will take a tenth of your flocks, and you yourselves will become his slaves. 18When that day comes, you will cry out for relief from the king you have chosen, but the Lord will not answer you in that day.”
It is and always has been the misfortune of people to bear the consequences of their progenitors’ errors as well as their own.
I’m kinda with Steve on this one and maybe even a little moreso.
I’m developing an attitude of:
“Give ’em what they say they want, good and hard, right up the ol’ sphincter. Until they cry ‘Uncle’ and repent of their evil ways.”
The one thing the opposition wants most of all and the thing we dare not give them is a lock on power. Other than that we all know their policies if implemented will cause suffering and make them very, very unpopular politically.
So let ’em. The pendulum will swing back with a vengeance and after we get through their self made disaster we could very well have a few decades of responsible, reasonable, productive policies. All the while smiling benevolently and saying “We told you so.” at every opportunity.
This approach assumes two things:
I prefer a peaceful waiting game, but ….
Well … I did say the one thing we cannot give them is a lock on power. I did not say how we were going to prevent that lock from occurring. I hope it doesn’t come to a bloody civil conflict. I’ve seen a civil war up close and personal. It’s not pretty and it’s not something we want here.
However, as with most conflicts, the struggle is forced upon the unwilling or else there would be no conflict. If the side doing the forcing didn’t, then the side being forced would not be forced to fight back.
Like Bill has reminded us repeatedly — “It’s easy to vote your way into Socialism and hard as hell to shoot your way back out of it.”
Every step the Left takes towards giving itself that lock on power brings us another step closer to the use of armed force. I think that’s a good part of the reason the Left makes anyone who doesn’t follow their narrative out to be some sort of evil person. They’re lining themselves up to paint themselves as the “good guys” and hoping the rest of us won’t notice that they’re the opposite..
Which is foolishness. Lots and lots of people see through that childish ploy. It might not seem like it due to the corruption of the media but it’s true.
I am glad that Steve is surviving the cloudy ice ordeal
Neat whiskey is good whiskey.
Never diluted, and at room temperature … the best!
I think the time is ripe for me to introduce what I like to call my “100% Deficit Spending Program” proposal. Consider that in 2020 the through immeasurable blood, sweat and tears, IRS managed to extract revenue equal to about half of what the federal government ended up spending and then we simply borrowed the rest. If we can so easily borrow half the budget, what’s to stop us from borrowing all of it?
Reams of federal regulations suddenly shredded. Threats of fines and imprisonment gone. April 15th no longer an annual stress on our lives. No reason to jump through hoops to save for retirement. No payroll withholding or social security taxes. No records to keep.
No way to cheat.
We would all be “taxed” by in inflation. Inescapable, automatic and as painless as succumbing to anoxia. Simple.
Scott, I think you’re way off base. This isn’t about how much the rich pay. It’s about how much the federal government wastes.
Strikes me that the complaint, accurately so, is that our government has a spending problem. The reason I’m weighing is is that the proposed solution is likely to make the underlying problem worse. The Fair Tax, where the cost of government is embedded in the cost of the products we buy and business is the tax collector/remitter guarantees that most people will be even more divorced from the realization of the fiscal cost of their electoral choices. If you want to cure a spending problem of this nature you need to make the costs obvious. A flat tax is more efficient than the current system but less so than the Fair Tax but a flat tax with the elimination of withholding would be the most efficient method of combining tax collection and spending restraint. There’s nothing quite like paying a bill, whether monthly, bi-weekly or anually that focuses the mind on the cost/benefit of that bill.
You’re right as far as it goes but you’re looking at it like a reasonable, productive person. That’s good, but it doesn’t reflect the real world very accurately because …
Those who manage to not pay a tax bill because politicians will exempt them to get their votes will vote for the politician that exempts them. A tax code is not something that is written in stone, it can and will be “tweaked” out of “fairness” by the party in power when it can gain by that.
The Democrat Party is already using this method of favorable entitlements to buy votes. There’s no reason to think they’re going to stop doing that any time soon.
Like the guys pointed out in the video, if the Democrats get a “soak the rich” tax structure they’re not likely to rescind or remove middle class taxes. Giving major tax breaks to the lower income tiers is already a “thing”, poor people pay little or no tax now. If they wind up paying more real-world taxes and see their buying power diminished thereby it’s going to hurt them and drive them in the opposite direction, right back into the waiting arms of the Democrats.
I’m on your side and I agree with you in principle. I’m just pointing this out so people can understand that the situation is complex and there are other real world considerations. No matter what, there are likely be unintended consequences also.
Just read about this in Paper this am and it also noted that SOROS also paid zilch
They seem to be trying to conflate wealth and income.
More specifically, “they” are conflating our income and wealth with their own. In a rational world it’s called theft.
The US gubment has no claim to our income. Taxation is theft and what they do with the money also makes it fraud.
No income tax. Flat tax on NEW sales only with the total between the feds (max 5%) and state taxes not to exceed10% combined with the states getting up to 5% and first right of refusal.
Fire 90% of the federal employees, eliminate ALL of the unconstitutional depts (ATF, HUD, Energy, Transportation, etc), force the feds to do ONLY the very few things we EXPRESSLY allow them to do (95% of what they do today is not the stuff we expressly permitted them to do).
There is no valid reason for the federal budget to exceed $2T at any time. Let these stupid crooks work for a living instead of living off the backs of the producers. Bring nearly all the power back to the states and to the people.
Well said
I sympathize with you greatly but the “US gubment” absolutely does have a claim on our income. It’s called the Sixteenth Amendment –
–AMENDMENT XVI – Passed by Congress July 2, 1909. Ratified February 3, 1913. The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
That Amendment was passed and ratified correctly, openly and legally according to the mechanisms the Constitution itself stipulates for its own modification. It’s the law and part of our U.S. Constitution. As long as that is the case, any Constitution respecting, rule of law admiring, law and order abiding citizen is beholden to acknowledge and live by it.
The Constitution has mechanisms that must be followed and the amendment process is one of them. The Left tries to circumvent the Constitution in many, many ways. Including avoidance of the amendment process. The Left picks and chooses what laws they will abide by arbitrarily to suit their own agenda.
No Pro-American, right thinking citizen could do that in good faith and allegiance. It’s one of the most blatant indicators that the Left is actually Anti-American.
Don’t be like them.
The “US gubment” ‘s claim on our income is not only “the law”, it is The Law of the Land. You might not like that law, I know I sure as hell don’t, but you don’t get to only obey the laws you like. Unless you’re on the Left, then you seem to get away with that kind of thing with disturbing increases in frequency. That needs to stop, too.
That said, I’ve noticed that repeal of the 16th Amendment is never, ever on the lips of Republicans blatting on and on about tax reform and lower taxes. If that’s something that you care about you might bring it to the attention of your Congressmen and Senators.
Maybe even better said.
Constitutionally enacted tax legislation is NOT THEFT! It may not always be the price we have to pay for civilization, as we can end up paying way too much (and we undoubtedly do), but if we want government services (and some goods?) we should pay for them. Don’t like taxes, cut the spending! Way back!!
I could rant on some more, but will leave it there for now.
You are correct on all points, but just because the theft is “legal” doesn’t make it not theft.
I think that the most disgusting fact you stated is this:
I have made such assertions to my representatives, but they are of the Left and don’t give a flying monkey poo about me.
Scott your close is the one time I truly disagreed with you. Us Normals do try to play by those rules – we just don’t have a few hundred million to make our own rules. Don’t like YouTube censorship? Why haven’t you guys just built your own platform? Don’t like how Media Matters did that hit on Bill years back? Why don’t you guys just drop a couple of million dollars onto “nonprofits” to dig up dirt on every member of the MSM? With that beard you’re just a bottle of dark hair dye and glasses away from becoming Jonah Goldberg
It is us vs the rich when the rich are allied with our govt
Bill, how can you not include a link to your original video here?
https://www.youtube.com/watch?v=661pi6K-8WQ
Here you go.
That post has aged well – thanks!
This long distance dedication goes out to Democrats everywhere
https://www.youtube.com/watch?v=Wh3t49NsWBA
It’s not that the billionaires follow the tax code, employ millions, etc, etc. It’s that they (Musk excluded) demand taxpayers pay more, including themselves, but they don’t and complain that we don’t, either. Their self-righteous and hyper hypocritical.
Scott, you missed the point. Again.
To Bill’s point… the taxes I will have paid to the government during my entire lifetime would fund the government for 8.6 seconds. My life means nothing to the government, but it means a lot to me. I’m going sailing…