The wealthiest don’t sweat the income tax

Washington: The 25 richest Americans paid little or no federal income taxes, according to a report released Tuesday by the nonprofit news organization ProPublica, a claim that has reignited debate about the tax code and sparked an investigation by the IRS into the leak of private tax documents, reported NBC News.

The report does not detail any illegality by the people whose tax documents it reviewed, and they include Jeff Bezos, Elon Musk, Warren Buffet and Michael Bloomberg. The White House is pushing a plan that would tax capital gains as income for those making over $1 million annually.

IRS Commissioner Charles Rettig said in a previously scheduled hearing Wednesday morning before the Senate Finance Committee that the agency is looking into the leak of the documents.

The chairman of the committee, Ron Wyden, D-Ore., seized on the revelations to underscore his point, now echoed by the Biden administration, that the richest people use tactics that most Americans do not.

The article illustrates the extremely wealthy evade taxes by using a simple three-pronged approach known in tax circles as “buy, borrow, die.”

The strategy focuses on making money off investments and capital, which are taxed only when the assets are sold, known as “realization” or a “realized gain.” Typically, investors pay a drastically lower effective tax rate compared to people who make a similar amount in wages.

Image courtesy of (Illustration courtesy Pro Publica)

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