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

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This is a companion discussion topic for the original entry at https://talkingpointsmemo.com/?p=1376709
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Wow! Nice work if you can get it.

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ZOMG! Who knew unrealized capital gains aren’t taxable as “income?” Shocking! Next thing you are going to tell me is businesses aren’t paying sales taxes on unsold inventory.

Seriously, this is an argument for a wealth tax, if someone can figure out how to pass one that passes constitutional muster, but not paying income tax on things that are, as a matter of legal definition and common sense alike, not “income” is not a “loophole.” The legal and policy naivete undermines the credibility among those who do law and policy, to the extent ProPublica cares.

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Duh. Many years ago, when I took tax courses in grad school, I heard myself ask about a particularly complex structure for tax avoidance: “you do all this just to avoid the tax?” and my professor, a Yale law school scholar, retorted with derision: “Mr. *****, Rich people never pay taxes!” I remember that moment as if it were yesterday. Buffett is right, but half the country believes it is not poor but “pre-rich” as George Carlin used to explain.

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I guess we all kinda knew this and it’s a national disgrace.

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Changing the marginal rate is not a bad idea, but it isn’t going to make these guys pays substantially more. What we need to do is limit what they can write off.

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At least we know that when Congress works to protect people, they do a really good job of it. It just only affects the wealthy. The hell with the rest of us.

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So where are T****'s tax returns? Oh yeah, they’re still under fraudit…

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It just shows that he doesn’t fall under the category of “one of the richest in the country.”

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Just to amplify, “unrealized capital gain” means the increase of value in an asset other than cash-the appreciation in value of a house or of stock, for example. The reason we don’t tax that increase as income is twofold: first, it’s not actually “income” in any real sense unless and until you sell it and, second, because if we tax unrealized gain, we have to give a deduction for unrealized losses which creates perverse incentives to buy and hold money-losing investments.

A tax on wealth, the net value of all assets, would bypass many of these complications (but further incentivize hiding wealth). It would open up the door to all kinds of fuckery on the valuation of assets without a ready market and cause weird shit to happen on “Valuation Day” in marketable assets but that kind of thing is probably more or less manageable.

There is a real constitutionality problem with a wealth tax, however, especially in Mitch McConnell’s judicial branch, but even viewed apolitically.

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My thoughts exactly. I can’t help but shake my head reading this as a progressive that believes income inequality is a serious issue. It would be madness to tax unrealized cap gains as if they’re worth the current market rate. If Bezos sold a serious chunk of AMZN stock in a short time frame, the supply/demand upset alone would reduce his tax bill dramatically.

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This is supposed to be news? Anyone with an IQ over 50, that leaves Trumpy out, knows and has known for years that the wealthy do NOT pay their fair share. Let’s put another myth to bed as well. The wealthy do not create all that many jobs either.

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Except it’s not just that, as noted in the article. They give a couple of specific examples in Bloomberg and Bezos of years in which they had plenty of income, but managed to avoid paying much of anything (zero on $47 million in income in Bezos’ case) due to different write-offs.

Good luck to any of us pulling that off.

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Ok

god bless propublica

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What surprises me is how much these so called bright guys write off as investment losses. What are they investing in? Worm Farms?

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So are trump’s taxes buried somewhere in the trove of stuff ProPublica has?

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Totally true. But most of us pay wealth taxes every single year. It’s called the property tax and in Vermont, it’s capped at a % of income for the middle class. Some states also tax cars on their book value each year, another wealth tax. So doing this for the millions or billions in the bank accounts of the wealthy shouldn’t be that much of a stretch. And the argument that hard assets aren’t a good proxy for ability to pay doesn’t hold water - that argument certainly doesn’t fly wrt to houses and cars except in those few states like VT that deign to make it so.

ETA For most middle income people, the percentage of income that goes to pay property taxes is significantly higher than anything that’s been discussed with regard to wealth taxes on the truly well off.

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Temporarily embarrassed millionaires.

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It seems like the way around this is either some kind of wealth tax (with what that means TBD), or else a limit on the losses that can be taken in comparison to income. All these large loans being taken out seem like a real danger to the economy, if one of these titans fails they might take a lot of other things with them. Taxing that risk, either by limiting the write-offs based on some income vs. loan size formula or a direct limit on the allowed amount, would cut into the ability to avoid paying any taxes at all.

I’m sure there are other avenues to follow to deal with this, but the clearest point is that the system is set up so the wealthy can continue to gain wealth regardless of what else is happening. It’s just an unequal system, with the wealthy decreasingly paying into the system that benefits them more than the rest of us, and that just has to be adjusted so everything is more equal for all.

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