Home > Uncategorized > The billionaire tax swindle of the American public – posted 4/24/2022

The billionaire tax swindle of the American public – posted 4/24/2022

The French writer, Honore de Balzac, once wrote, “Behind every great fortune, there is a crime”. Today’s crop of billionaires are determined to prove Balzac right. Tax cheating is a billionaire specialty in the crime world.

A new ProPublica investigation looked at the tax records of the top .001% wealthiest Americans. All earn more than $110 million a year. ProPublica found that between 2014-2018, the 25 wealthiest Americans paid a tax rate of about 3.4%. In 2018, Elon Musk, former New York City mayor Michael Bloomberg, and Amazon founder, Jeff Bezos, paid zero income taxes.

In contrast, the average single worker earning $45,000 paid an average tax rate of 21% while a married couple with one child who earned $200,000 paid a rate of 26%.

ProPublica found two big reasons for why the super-rich are taxed at lower rates. First, much of their wealth is accumulated through investments, like stocks. Second, they use charitable donations to get huge deductions. A goal of their financial shenanigans is to escape wealth from being classified as “income”, subject to taxation.

Theoretically, our tax system was designed to tax the rich at higher rates than everyone else but it hasn’t worked out that way. The super-rich run a variety of scams. They hide billions outside the U.S. in tax havens like the Cayman Islands or Switzerland. They have legions of lobbyists to avoid taxes while writing tax policies in their favor. They have long argued, like for 40 years, that tax rates on the wealthiest would promote growth and trickle down but the trickle-down never happens.

It helps the billionaires that the Internal Revenue Service has been de-fanged. Between the years 2010-2017, Congress reduced the IRS budget with the number of IRS tax auditors cut by one-third. The primary beneficiaries were corporations and the super-wealthy.

Audits of households making more than $1 million a year have fallen by nearly three-fourths in recent years. Almost inexplicably, the IRS has focused more on poor taxpayers. Overall, the IRS conducted 675,000 fewer audits in 2017 than it did in 2010. The result is many billions in lost revenue every year with the super-rich getting away with murder.

Since the pandemic, the nation’s 735 billionaires have seen their collective wealth skyrocket by 62% while worker earnings have inched forward by just 10%.

Considering the enormous gains made by billionaires , it is remarkable how little commentary has focused on them. The super-rich are masters of evasion. They have transcended accountability but there are some things that deserve to be said.

Compared to robber barons of old, they have junked any notion of noblesse oblige. The concept of noblesse oblige goes back to the late nineteenth century. The idea was that there is an unwritten obligation for people of great wealth to act honorably and generously to others. Whatever their checkered history, earlier robber barons like Andrew Carnegie or John D. Rockefeller are examples.

What is different about our current crop of billionaires is their absolutely voracious, unfettered hyper-greed. While you can find examples of billionaire philanthropy (for example, Bill Gates), billionaires now are generally conscience-free predators who seize every opportunity to expand their wealth.

How many billions is too much? I am afraid they have set no limit. They are fundamentally about amassing unprecedented fortunes for themselves. Does the DSM have a diagnosis for such unrestrained behavior, such bottomless greed?

Just to cite a recent example, why is Jeff Bezos fighting so hard to deny workers a union that could provide better wages and working conditions? In 2021 Amazon reported record profits of more than $35 billion. Surely the company can easily afford a union. The other side of the coin of the extreme wealth of billionaires is crushing workers. Many Americans appear to be unaware of that dark side relationship.

In his book, Davos Man, Peter S. Goodman provides a good description of the billionaires:

“Those reared in the most exclusive communities, educated at the fanciest schools, and intertwined in the most elite social networks have leveraged their privileges to secure unfathomable wealth, shuttling in their private jets between their beachfront villas and their mountain redoubts, buying their children passage to Ivy League universities, while stashing their holdings on Caribbean islands and other territories beyond reach of a tax collector.”

Goodman argues that the super-rich are expert at finding ways to evade taxation focused on income. Through the use of accountants, lawyers and lobbyists they move money around like a giant game. They buy politicians from both parties to do their bidding. Their public relation shills try to make it seem like the status quo is inevitable. They fail to speak out when authoritarian demagogues blame immigrants and threaten democracy as their big concern remains protecting their ungodly amount of money.

Contrary to the protestations of the billionaire class, a wealth tax is eminently doable. Our tax code is archaic and needs to be reformed so that hidden wealth can be reached. During the 2020 Democratic primaries, both Sen. Bernie Sanders and Sen. Elizabeth Warren advocated such a tax.

Sen. Sanders proposed a a 1% annual tax on fortunes greater than $32 million with increases reaching to 8% for those whose wealth exceeded $10 million. Sen. Warren favored a 2% annual tax on fortunes greater than $50 million and 3% above $1 billion. If enacted, it was estimated both proposals could raise over two trillion dollars over the ten year period from 2020-2029.

That kind of revenue could guarantee universal health care and child care, could greatly expand affordable housing, could assist the cancellation of much student loan debt and could help address our looming climate catastrophe.

More recently, President Biden, as part of his proposed budget for fiscal year 2023, has also proposed a wealth tax on billionaires.

It is entirely predictable that the billionaires will howl to the heavens about any tax. They always will say it is unworkable but such a tax would be highly popular. It would require more bodies at the IRS and more expertise with complex tax issues but the rewards would be great.

A long time ago Supreme Court Justice Louis Brandeis wrote:

“We can either have democracy in this country or we can have great wealth concentrated in the hands of a few but we can’t have both.”

Those words still ring true.

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