Analysis from the White House published last year suggested that the wealthiest 400 billionaire families in America paid an average tax of just 8.2 percent of their income. Your average Joe has a starting tax rate of 10 percent, making billionaires the least taxed group in the country. There are large and unfair differences in the way that income from work is taxed compared to income from assets.
“That income (is only) subject to taxes if they actually sell the asset that generated that income,” Chye-Ching Huang, executive director of the Tax Law Center at NYU School of Law, told Teen Vogue. “So, unlike the ordinary wage and salary owner who’s paying taxable income in real time, very high net worth people can choose whether and even when to pay taxes on the growth of their wealth.”
What tactics do billionaires use?
A method to avoid paying tax is gaming capital gains taxes. The tax can only be levied on investments once the investment has been sold, which is when an asset becomes ‘realized’. Therefore, this money gained can be offset against loans taken to keep someone’s income low. This was shown to be the case when 18 billionaires received covid-19 stimulus checks, as their actual income was next to zero.
There has been a growing link between politics, capital, and billionaires in recent years. America’s richest want to keep a hold of their money so lobby politicians to keep taxes low. In terms of corporation tax, the rate in the US sits at 21 percent, lower than many other countries in the G7 economic group.
Hedge fund billionaire Ken Griffin spent $54 million to stop Illinois from taxing the super-rich.
It worked. His savings over 10 years from beating the measure: $510 million.
It’s not much of a democracy when you can buy ithttps://t.co/3YpvrSyZsB
— Dan Price (@DanPriceSeattle) July 11, 2022
Another tactic is the hiring of top-grade lawyers who can navigate complkex tax law to get their clients the best outcome.
What happened to Biden’s billionaire tax?
Last year, it was suggested and pushed by the Democrats that there would be tax hikes for America’s welathiest, while not increasing tax for those earning under $400,000. The Billionaire Minimum Income Tax (BMIT) would require American households worth over $100 million to pay a minimum tax of at least 20 percent on all income. This would affect 0.01 percent of households in the country.
But this proposal was wrapped up inside the dead reconciliation bill from last year. West Virginia Senator Joe Manchin will not vote for the plan as he has said he does not believe in a tax on unrealized assets. The bill has been dead for some time and looks like it will never be passed as the midterm elections draw nearer and nearer.