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Why America's Billionaires Owe You a Thank You Note
America’s billionaires minimize their tax burdens, making the rest of us pick up their tab.
Apr 10, 2015
This tax season, America's billionaires are toasting you, the ordinary taxpayer.
That's because you're the one picking up the tab for our nation's ailing infrastructure of roads, bridges, and rail transport. You're also footing the bill for military forces, disaster relief, veterans' health services, and national park protection.
The share of taxes paid by the 1 percent is declining, even as wealth flows upward to them at dizzying pace.
Maybe you're not shocked to hear that the wealthy shift their tax obligations onto ordinary Americans. But perhaps you don't know all their tricks. Here are five tax secrets billionaires deploy to keep you paying more than your fair share.
1. Tax Work More Than Wealth.
The United States taxes income from investments more lightly than the money you earn by working.
For example, a teacher who earns $40,000 from her job owes Uncle Sam 25 percent of her income. But a hedge fund billionaire raking in $400 million from investments will only pay between 15 and 20 percent of that haul in taxes.
2. Hide Money Offshore.
Senator Elizabeth Warren quipped that Boston's winter had been so harsh that Mitt Romney "left his money here and he went to the Cayman Islands."
But that's no joke. Congressional researchers estimate that people who use offshore tax havens cost the rest of us as much as $70 billion a year. And that's just the tip of the tax-dodging iceberg.
Global Financial Integrity, a financial watchdog agency, estimates that global corporations and wealthy individuals are hiding a total of over $21 trillion.
3. Assemble Tax-Proof Trusts.
You can't hitch a U-Haul of money to your hearse, though some billionaires have found ways for their fortunes to live forever. They deploy tax planners who design trusts and other mechanisms to reduce or flat-out eliminate their estate taxes.
In 2013, casino mogul Sheldon Adelson used a complex trust mechanism to transfer $8 billion to his heirs, shielding over $2.8 billion in federal estate and gift taxes on the assets they'll inherit once he passes on.
Congress could close these billionaire loopholes tomorrow, if it weren't so busy cutting college Pell Grants for working-class college students.
4. Inherit Fortunes.
If I find $100 on the street, that's taxable income. But if my grandfather gives me $100 million, I don't pay any income tax on that jackpot. Inheritances are 100-percent exempt from the income tax.
While a tiny number of extremely rich families will pay taxes on estates before distributing funds, their relatives who inherit that money don't need to fork anything over to the IRS once they take possession of those assets.
Combine this arrangement with low-tax or no-tax trusts, and you can see why the living is easy for the children of billionaires.
5. Subsidize Charity.
When a billionaire donates money to a large hospital or university, we're encouraged to applaud their generosity. We seldom realize that we're actually subsidizing those buildings adorned with the billionaire's name.
Since donations reduce taxes on a billionaire's income and estate, ordinary taxpayers chip in about 50 cents of every dollar they donate. And we're not even invited to the gala.
If billionaires aren't paying their fair share of federal taxes, who is?
You are -- every time you pay higher state and local taxes as the federal government shifts responsibilities onto local jurisdictions, or when it imposes steeper fees for you to exercise your right to obtain a passport or enter a national park.
And that's why America's billionaires owe us all a thank you note this tax season.
An Urgent Message From Our Co-Founder
Dear Common Dreams reader, It’s been nearly 30 years since I co-founded Common Dreams with my late wife, Lina Newhouser. We had the radical notion that journalism should serve the public good, not corporate profits. It was clear to us from the outset what it would take to build such a project. No paid advertisements. No corporate sponsors. No millionaire publisher telling us what to think or do. Many people said we wouldn't last a year, but we proved those doubters wrong. Together with a tremendous team of journalists and dedicated staff, we built an independent media outlet free from the constraints of profits and corporate control. Our mission has always been simple: To inform. To inspire. To ignite change for the common good. Building Common Dreams was not easy. Our survival was never guaranteed. When you take on the most powerful forces—Wall Street greed, fossil fuel industry destruction, Big Tech lobbyists, and uber-rich oligarchs who have spent billions upon billions rigging the economy and democracy in their favor—the only bulwark you have is supporters who believe in your work. But here’s the urgent message from me today. It's never been this bad out there. And it's never been this hard to keep us going. At the very moment Common Dreams is most needed, the threats we face are intensifying. We need your support now more than ever. We don't accept corporate advertising and never will. We don't have a paywall because we don't think people should be blocked from critical news based on their ability to pay. Everything we do is funded by the donations of readers like you. When everyone does the little they can afford, we are strong. But if that support retreats or dries up, so do we. Will you donate now to make sure Common Dreams not only survives but thrives? —Craig Brown, Co-founder |
This column was distributed by OtherWords.
Chuck Collins
Chuck Collins is co-founder of CARP and author of Burned by Billionaires: How Concentrated Wealth and Power are Ruining Our Lives and Planet.
This tax season, America's billionaires are toasting you, the ordinary taxpayer.
That's because you're the one picking up the tab for our nation's ailing infrastructure of roads, bridges, and rail transport. You're also footing the bill for military forces, disaster relief, veterans' health services, and national park protection.
The share of taxes paid by the 1 percent is declining, even as wealth flows upward to them at dizzying pace.
Maybe you're not shocked to hear that the wealthy shift their tax obligations onto ordinary Americans. But perhaps you don't know all their tricks. Here are five tax secrets billionaires deploy to keep you paying more than your fair share.
1. Tax Work More Than Wealth.
The United States taxes income from investments more lightly than the money you earn by working.
For example, a teacher who earns $40,000 from her job owes Uncle Sam 25 percent of her income. But a hedge fund billionaire raking in $400 million from investments will only pay between 15 and 20 percent of that haul in taxes.
2. Hide Money Offshore.
Senator Elizabeth Warren quipped that Boston's winter had been so harsh that Mitt Romney "left his money here and he went to the Cayman Islands."
But that's no joke. Congressional researchers estimate that people who use offshore tax havens cost the rest of us as much as $70 billion a year. And that's just the tip of the tax-dodging iceberg.
Global Financial Integrity, a financial watchdog agency, estimates that global corporations and wealthy individuals are hiding a total of over $21 trillion.
3. Assemble Tax-Proof Trusts.
You can't hitch a U-Haul of money to your hearse, though some billionaires have found ways for their fortunes to live forever. They deploy tax planners who design trusts and other mechanisms to reduce or flat-out eliminate their estate taxes.
In 2013, casino mogul Sheldon Adelson used a complex trust mechanism to transfer $8 billion to his heirs, shielding over $2.8 billion in federal estate and gift taxes on the assets they'll inherit once he passes on.
Congress could close these billionaire loopholes tomorrow, if it weren't so busy cutting college Pell Grants for working-class college students.
4. Inherit Fortunes.
If I find $100 on the street, that's taxable income. But if my grandfather gives me $100 million, I don't pay any income tax on that jackpot. Inheritances are 100-percent exempt from the income tax.
While a tiny number of extremely rich families will pay taxes on estates before distributing funds, their relatives who inherit that money don't need to fork anything over to the IRS once they take possession of those assets.
Combine this arrangement with low-tax or no-tax trusts, and you can see why the living is easy for the children of billionaires.
5. Subsidize Charity.
When a billionaire donates money to a large hospital or university, we're encouraged to applaud their generosity. We seldom realize that we're actually subsidizing those buildings adorned with the billionaire's name.
Since donations reduce taxes on a billionaire's income and estate, ordinary taxpayers chip in about 50 cents of every dollar they donate. And we're not even invited to the gala.
If billionaires aren't paying their fair share of federal taxes, who is?
You are -- every time you pay higher state and local taxes as the federal government shifts responsibilities onto local jurisdictions, or when it imposes steeper fees for you to exercise your right to obtain a passport or enter a national park.
And that's why America's billionaires owe us all a thank you note this tax season.
Chuck Collins
Chuck Collins is co-founder of CARP and author of Burned by Billionaires: How Concentrated Wealth and Power are Ruining Our Lives and Planet.
This tax season, America's billionaires are toasting you, the ordinary taxpayer.
That's because you're the one picking up the tab for our nation's ailing infrastructure of roads, bridges, and rail transport. You're also footing the bill for military forces, disaster relief, veterans' health services, and national park protection.
The share of taxes paid by the 1 percent is declining, even as wealth flows upward to them at dizzying pace.
Maybe you're not shocked to hear that the wealthy shift their tax obligations onto ordinary Americans. But perhaps you don't know all their tricks. Here are five tax secrets billionaires deploy to keep you paying more than your fair share.
1. Tax Work More Than Wealth.
The United States taxes income from investments more lightly than the money you earn by working.
For example, a teacher who earns $40,000 from her job owes Uncle Sam 25 percent of her income. But a hedge fund billionaire raking in $400 million from investments will only pay between 15 and 20 percent of that haul in taxes.
2. Hide Money Offshore.
Senator Elizabeth Warren quipped that Boston's winter had been so harsh that Mitt Romney "left his money here and he went to the Cayman Islands."
But that's no joke. Congressional researchers estimate that people who use offshore tax havens cost the rest of us as much as $70 billion a year. And that's just the tip of the tax-dodging iceberg.
Global Financial Integrity, a financial watchdog agency, estimates that global corporations and wealthy individuals are hiding a total of over $21 trillion.
3. Assemble Tax-Proof Trusts.
You can't hitch a U-Haul of money to your hearse, though some billionaires have found ways for their fortunes to live forever. They deploy tax planners who design trusts and other mechanisms to reduce or flat-out eliminate their estate taxes.
In 2013, casino mogul Sheldon Adelson used a complex trust mechanism to transfer $8 billion to his heirs, shielding over $2.8 billion in federal estate and gift taxes on the assets they'll inherit once he passes on.
Congress could close these billionaire loopholes tomorrow, if it weren't so busy cutting college Pell Grants for working-class college students.
4. Inherit Fortunes.
If I find $100 on the street, that's taxable income. But if my grandfather gives me $100 million, I don't pay any income tax on that jackpot. Inheritances are 100-percent exempt from the income tax.
While a tiny number of extremely rich families will pay taxes on estates before distributing funds, their relatives who inherit that money don't need to fork anything over to the IRS once they take possession of those assets.
Combine this arrangement with low-tax or no-tax trusts, and you can see why the living is easy for the children of billionaires.
5. Subsidize Charity.
When a billionaire donates money to a large hospital or university, we're encouraged to applaud their generosity. We seldom realize that we're actually subsidizing those buildings adorned with the billionaire's name.
Since donations reduce taxes on a billionaire's income and estate, ordinary taxpayers chip in about 50 cents of every dollar they donate. And we're not even invited to the gala.
If billionaires aren't paying their fair share of federal taxes, who is?
You are -- every time you pay higher state and local taxes as the federal government shifts responsibilities onto local jurisdictions, or when it imposes steeper fees for you to exercise your right to obtain a passport or enter a national park.
And that's why America's billionaires owe us all a thank you note this tax season.
We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.