Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax

hungryhobbit

If you live in California and see the endless stream of TV ads against the wealth tax, reading this will make you want to murder everyone involved in those commercials. (To be clear, I'm not advocating murdering anyone ... not even the ultra rich ... but man, their aversion to paying taxes is shameless .)

java-man

A few countries, including Switzerland and Spain, have wealth taxes on a small scale. Several, most recently France, have abandoned them as unworkable. There exists a simple self-correcting protocol for establishing the value of property: the owner declares the value, and the state reserves the right to buy at that price. Or auction it off. If the owner declines to sell that auction price becomes the new value for computing the wealth tax. The reason they say "it's unworkable" is because the rich don't want to pay taxes.

mring33621

We need to figure this out. These people don't have "income", but do somehow have plenty of money to spend. So we should use their sources of spending money as a proxy for income, for taxation purposes. Can we: - create a progressive tax on dividends and capital gains, based on total wealth? - create a tax on asset backed loans?

mindslight

I really wish articles like this wouldn't anchor around this refrain of "... while their wealth increased by $XXX". It's a staple of tax law that you're only taxed when income is actually realized, and there are a few glaring loopholes that allow people to avoid realizing capital gains. At the very least, things should be changed such that taking a loan against an asset beyond its basis is considered a realization of income - similar to how if you take a loan against your IRA it is considered a distribution. But we already knew all that! We don't need numbers calculating out infinitesimally small fictitious "tax rates" (for a tax regime that doesn't actually exist) to illustrate it. Unless someone is actively selling the stock they own, they are not paying any income tax on its value, period end of story. And so rather it feels like a wasted analysis to keep focusing on the value of zero divided by $big_number, when there are going to be far more interesting things like exactly what income did they realize, and what type of expenses did they use to offset it, what amounts did they actually pay tax on, and so on. Because capital gains deferral is not the only way the tax code skews towards the rich by far , yet it's currently using up all the air in the room.