Pro Publica published a piece showing how the wealthiest Americans have gone years without paying income tax after obtaining a cache of IRS information spanning 15-years. The names in the article are some of the wealthiest people in the world – Jeff Bezos, Elon Musk, Warren Buffett, Mark Zuckerberg, and Michael Bloomberg.
At this point, can we bypass the outrage? Yes, it’s the first time someone has seen the raw data but hasn’t this been the consensus for years?
Directing anger towards the names within the article is unreasonable. If you’re feeling anger, direct it towards our tax code and elected officials.
The IRS encourages tax avoidance strategies, and that’s what they’re using.
Don’t get me wrong, no one should make $46 million, pay no income tax, and claim a $4,000 child tax credit – but we’re operating within a broken system.
I saw this image and said, oh, come on. True Tax Rate is a Pro Publica made-up term to compare the taxes Buffett, Bezos, Bloomberg, and Musk paid each year compared with how much their estimated wealth grew. The creation of a True Tax Rate does nothing but aid their narrative.
In 2021, if you’re filing as a married couple with $350,000 in income, the income above $329,850 is taxed at 32%.
Your effective rate is the total tax owed divided by your total income. Using the same example, if you paid $94,500 in federal taxes your effective rate is 27% (94,500 / 350,000 = .27).
A less clickbait-ey image for The Ultrawealthy by The Numbers image should look like this.
Vilifying the uber-wealthy isn’t going to change the systemic problems our population faces or close the wage or wealth gap. I’m also not convinced that instituting a wealth tax is the answer either.
The wealth tax only adds to the complexity of the tax code. And let’s be honest, the largest tax and legal firms will discover ways around it as they have with every other piece of legislation enacted.
Reports show Americans owe nearly $131 billion in unpaid taxes, with the bulk owed by the wealthiest in the country.
According to Charles Rettig, the IRS commissioner, the agency literally can’t afford to audit the rich. It’s more cost and time-efficient to audit the everyday taxpayer.
What’s more, concerning the $131 billion, Rettig said the IRS has no plan and won’t have one until Congress agrees to restore the funding it slashed from the agency over the past nine years.
So let’s start there. It seems bizarre to expect an underfunded and understaffed IRS to enforce new tax legislation when they don’t have the resources to collect the $131 billion already owed.
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