CGTN: In America, paying taxes is optional if you’re a billionaire
BEIJING, Dec. 12, 2021 /PRNewswire/ — American billionaires have been paying tax on just a tiny fraction of their income, if any at all, at a rate much lower than the average person struggling to live paycheck to paycheck, according to a report published in June by the non-profit investigative news organization ProPublica, based on a vast trove of leaked tax records from the Internal Revenue Service (IRS).
The report compared the amount of tax paid annually by the richest 25 Americans to their wealth accrual during the same period, as estimated by Forbes magazine. Of a total wealth accumulation of $401 billion, the group collectively paid $13.6 billion in taxes – a dazzling sum that nonetheless translates to a real tax rate of just 3.4 percent.
In contrast, the average American household paid 14 percent in federal taxes, at rates that rise progressively in relation to income. Between 2014 and 2018, a typical household of wage earners in their early 40s saw their net worth expand by $65,000 on average, mainly due to the rise in value of their homes. But the bulk of such earnings – roughly $62,000 – went to the taxman.
IRS funding cuts combined with ever-more sophisticated tax avoidance tactics developed by the rich have made dodging taxes easier than ever, according to a report by the National Bureau for Economic Research. These tactics often include accessing resources not available to the general public, such as offshore tax shelters, pass-through businesses and complex accounting techniques, all of which exploit legal grey areas.
Last year, America’s 50 wealthiest family dynasties held a total of $1.2 trillion in assets. By comparison, the bottom half of all U.S. households – an estimated 65 million families – shared a combined wealth of $2.5 trillion, according to the report.
The lead author of the study, Chuck Collins, pointed out in an interview with the Jacobin magazine that these wealthy billionaire families are less focused on starting businesses and care more about rent extraction.
“With this system being solidified, today’s billionaires will be tomorrow’s dynastic facilities,” he said. “If the pattern persists for 20 years on the current trajectory, we will have even greater concentrations of hereditary wealth and power dominating our politics, economy, media, and philanthropy. Looks like feudalism, smells like feudalism.”