Time for the Deep-pocket guys to come out Clean

Photo by Lukas from Pexels

The recent news about Jeff Bezos, Elon Musk, Warren Buffet paying minimum- sometimes even nothing on federal income tax has raised an eyebrow in many. Earlier when Trump was accused of similar charges, most of us assumed that he manipulated the system well enough to get rid of the tax, little did we all know that the system had enough loopholes to be penetrated by many.

A recent investigative report on the 25 richest Americans, has clearly exposed how the tax system is not fair for all taxpayers. ProPublica, an independent non-profit newsroom, has published a report recently that Jeff Bezos did not pay a penny in tax during 2007 and 2011; Elon Musk paid 0 federal income tax in 2018. Not just them, titans like Warren Buffet, Bill Gates, Mark Zuckerberg, and many more have paid much less when compared to millions of taxpayers. How do they get away with such massive exploitation of the system, while the commoner who lives paycheck to paycheck, has their tax filed very religiously?

When the whole world was fighting the pandemic, Jeff Bezos was silently becoming the world’s richest with record business growth. If it’s true that audits in IRS usually happen when they suspect a sudden large inflow of money, how did these deep-pocket guys escape the scrutiny? What is that they do differently to pay meager taxes when we commoners pay hefty taxes.

How do the rich get away with it?

One common reason reported by many publications is that these billionaires had most of their wealth in the form of stocks, shares, assets, and trusts. According to the rich, this is legal but this is how they hide their wealth too. As per US law, these sources are not taxable unless they sell them off for a profit.

But many of us have shares and stocks, so how do the rich manage to dodge the tax systems?

According to financial publications, long-term stock holdings are subject to less tax than short-term ones. Basically, long-term financial gains are less or non-taxable whereas short-term capital gains fall under the normal tax bracket. The irony is that the rich would never or hardly want to trade their stocks whereas most of us trade stocks as a side hustle to look out for profits in a short span. The rich need these stocks to increase their wealth proposition and dodge the tax system.

If these stocks and assets are taken into consideration for their wealth assessment and ranking them on the billionaires list, shouldn’t the same assets and stocks not be taxed? IMHO

If not, should the system be blamed or the wealthy who exploit the system?

This can never be a fair tax system and is contrary to what America portrays as a “Fair tax system for all”.

I know, you know, everybody knows their wealth proposition keeps skyrocketing year on year but what not many of us know is that the rich’s tax remains the same or less for years. Warren Buffet has been an advocate of “tax the rich more” for so long, now should we understand that he was conveniently advocating the fact because he knew he will never fall under the “High tax” category? Commoners like you and me would dread to exploit any system but these billionaires seem to be quite smart.

Where is the loophole and how come we don’t see it?

The term “Income Tax” says it all. The rich do not have income , they have investments.

The beauty of this system is that investments cannot be taxed unless one sells and makes a profit out of it. Yeah right, why will Jeff Bezos, Warren Buffet, and Elon Musk sell their assets to make a profit?

In recent years, billionaires decide when they would want to pay taxes, the system allows them to pick and choose. Reports say that in the 1950s and 60s the top American class paid 91% while today the top rate is 43.4%. It is a fact that the wealth of the bottom 80% of the population is distributed among the top 0.1% of the rich but the irony is that the 0.1% pay taxes much less than the majority.

The loopholes need to be fixed to bring in a fair tax system so the rich do not outsmart us.

Finally,

Wealthy Americans need to have a separate income tax bracket that is based on all their income and assets. The IRS system needs to be fixed for all the loopholes being exploited. These rich Americans have enough wealth to hire the entire attorney in defense for them, so it is necessary to strengthen the law for such abuse of power. End of the day ‘Money is Money’, it doesn’t matter if it belongs to you or the wealthy.

The income, in whatever form it is needs to be taxed. Hope the wealthy come out clean and lead by example.

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