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On Tuesday, ProPublica published details from “a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years. The data provides an unprecedented look inside the financial lives of America’s titans, including Warren Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg. It shows not just their income and taxes, but also their investments, stock trades, gambling winnings and even the results of audits.” ProPublica
The left is disturbed that billionaires are able to pay such low taxes and argues for tax reforms to reduce inequality.
“[It’s estimated] that the wealthiest Americans are holding about $2.7 trillion in wealth on which they have not paid taxes. The logic of this standard rests on a tripod of assumptions that aren’t true. The first is that an increase in asset value is in some sense unreal, or at least unusable… The reality, however, is that many wealthy Americans live lavishly by borrowing against the value of their assets. ProPublica provides the example of Elon Musk, who has pledged shares of Tesla stock worth $57.7 billion as collateral for personal loans…
“The second and very common falsehood is that people will eventually pay taxes on their wealth… [but] It is easy to accumulate wealth that is never taxed. Assets can be siloed in nonprofit foundations whose main beneficiaries may be the people who run them. Assets can also be passed on to children and grandchildren…
“The third objection is that taxing wealth is a bureaucratic nightmare. There are difficulties, such as fixing rules for determining the value of assets. There also are downsides, such as the possibility that someone might have to sell an asset to pay taxes. But we know it can be done because Americans already pay property taxes, and it seems to work fine. Even for those who aren’t ready to jump onto the wealth tax bandwagon, the data obtained by ProPublica underscores the need for a significant overhaul of the system.”
Binyamin Appelbaum, New York Times
Skeptics of the wealth tax note that “If you tax the gain in an unsold stock’s value in good years, the IRS will have to pay refunds to those same taxpayers when their shares decline in bad years. And what about investments whose value isn’t so easy to determine, like non-fungible tokens or ownership shares in a startup that has yet to go public? Taxing gains when they are realized — when an item is sold or transferred — is far more straightforward…
“Still, the accumulating wealth of the taxpayers analyzed by ProPublica points to a real problem: the income and wealth inequality that has widened over the last four decades in this country.”
Editorial Board, Los Angeles Times
“While the idea [of a wealth tax] polls extremely well, its constitutionality is questionable… So let’s talk about some more promising ideas. One, which Biden has endorsed, is raising the corporate income tax rate…
“We could also impose a national consumption tax. Right now, billionaires can fund lavish lifestyles by borrowing at low interest rates against their stock holdings and use this untaxed money to fund things such as mansions or yachts. A consumption tax would hit such purchases. Consumption taxes tend to be regressive, though, so other policy changes would be required to prevent hurting the poor. Then there’s Biden’s proposal to raise the top tax rate on capital gains.”
Catherine Rampell, Washington Post
“The Administration wants to raise the top income-tax rate to 39.6 per cent and tax the capital gains of millionaires at that rate. Because the current tax rate for long-term capital gains is only twenty per cent, and because it’s the same for all income groups, this would make a big difference…
“And, finally, the White House wants to eliminate the notorious ‘step-up in basis’ loophole, which allows rich people to pass down property, including financial assets, to their heirs without either party paying any taxes on the appreciation in value. Under the Biden proposal, unrealized capital gains would be taxed at death…
“A skeptic might object that the ultra-rich, with their armies of accountants, will find a way to get around any tax system. That is a counsel of despair. With clear tax rules in place and a well-financed I.R.S. there to enforce them, it is perfectly possible to shift the tax burden toward the ultra-wealthy even if there is still some avoidance.”
John Cassidy, New Yorker
The right is critical of ProPublica’s analysis and calls for an investigation into the leak.
The right is critical of ProPublica’s analysis and calls for an investigation into the leak.
“ProPublica compared the amount of taxes paid by these people not to their earned income but to the amount their wealth grew during the period in question. That’s not an analysis of their incomes but their wealth. So, what ProPublica is engaged in isn’t a dive into our tax code but a speculative lobbying effort in favor of taxing wealth…
“ProPublica fails to note that these billionaires own vast amounts of stock in companies that pay large corporate income taxes. In a recent year, Berkshire Hathaway paid $6 billion in corporate income taxes, and Warren Buffett owns one-third of Berkshire Hathaway. So, didn’t he pay $2 billion of that corporate tax bill?”
John Steele Gordon, Commentary Magazine
“Democrats used the ProPublica exposure as leverage to demand wealth taxes and more IRS resources for enforcement. That just happens to be on Joe Biden’s agenda, and undoubtedly the IRS and its employees are cheering at the mention of it. Including, almost certainly, the lawbreaker who stole that private data in the first place. This only incentivizes more manipulation of private data to serve bureaucrats’ public-policy interests…
“How difficult should it prove to find out who did it? Presumably, the IRS uses systems that logs access requests to this protected data… [Attorney General Merrick] Garland and the Department of Justice should already have a pretty good idea who leaked this. If the IRS doesn’t have such a system, that should prompt explanations from the IRS and Treasury Secretary Janet Yellen as to why not. That’s even more critical in these days of ransomware hackers, not to mention penetrations by China and Russia into government systems for other purposes.”
Ed Morrissey, Hot Air
“The IRS wields an extraordinary amount of power, and there will always be somebody somewhere who thinks that it should be used to advance their favorite political cause… It has long astonished me that left-leaning Americans are as bothered as they are by the PATRIOT Act — a concern I share, for the record — and yet are not only comfortable with the IRS as it exists, but, in many cases, would like to make it even more intrusive. Elizabeth Warren wants to institute an unconstitutional ‘wealth tax’ that would require high earners to invite the IRS to superintend a whole host of their quotidian transactions…
“At some point prior to the release of ProPublica’s piece, somebody was rifling through information that, as a matter of course, we all expect to remain confidential. This time, they filtered for ‘Buffett,’ ‘Bezos,’ ‘Gates,’ and ‘Musk.’ But they didn’t have to. ‘Cooke’ is just as easily found. And so, too, will be the last name of the next person who really, really, annoys the guy sitting in front of the terminal. Does that bother you? It should…
“A government that is this reckless or sinister with the information of men who are lawyered to the eyeballs is unlikely to worry too much about being reckless or sinister with your information.”
Charles C. W. Cooke, National Review
Some note that “There are legitimate proposals for a flat tax, a simple calculation against total income. Americans would pay a percentage of their income regardless of age or marital status and it would eliminate other deductions to manage behavior. This tax proposal usually excludes the first $50,000 in income and imposes a 10-12% tax on the remainder and would result in a two-line tax return for everyone: total income and 10% of the total…
“Even better, let’s abolish the IRS altogether and switch to a consumption tax. Instead of taxing labor and investment, which is what income and capital gains taxes do, use a federal sales tax. This type of proposal is often called the Fair Tax and includes mechanisms for rebates to the indigent. It eliminates some of the most apparent forms of double taxation, such as the estate tax. Americans would receive their entire paycheck and pay a 23% sales tax on items they choose to buy, with specific exceptions.”
Stacey Lennox, PJ Media
A libertarian's take
“Despite ProPublica's best efforts to make the information enclosed within seem damning, the data tell us little we didn't already know. For the 2018 tax year, the last year for which we have data, the top 1 percent paid over 40 percent of federal income taxes, despite earning just under 21 percent of total adjusted gross income (AGI). The bottom 50 percent of taxpayers earned 11.6 percent of total AGI, but paid less than 3 percent of income taxes…
“The biggest takeaway from the ProPublica data reveal should be just how much the data lined up with what we already know. There was no exposure of secret tax evasion and fraud—just the obvious point that the wealthy have a lot of non-liquid assets, presented as a smoking gun… Taxpayers should not be fooled by this ‘exposé.’ Instead of exposing misdeeds on the part of the wealthy, ProPublica exposed the lengths to which some are willing to go to deceive the public in service of the grand progressive campaign for higher taxes.”
Andrew Moyland and Andrew Wilford, Reason
