Another day, another screaming headline designed to rouse people to action and, of course, sell newspapers or clicks or whatever the MBAs think is going to fund a business.
Today’s outrage comes to us from ProPublica, who want to tell us that a recent leak has showed us that the wealthy pay almost no income tax:
According to Forbes, those 25 people saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%.
It’s a completely different picture for middle-class Americans, for example, wage earners in their early 40s who have amassed a typical amount of wealth for people their age. From 2014 to 2018, such households saw their net worth expand by about $65,000 after taxes on average, mostly due to the rise in value of their homes. But because the vast bulk of their earnings were salaries, their tax bills were almost as much, nearly $62,000, over that five-year period.
They slap you in the face with the fullness of the fact pattern, so that you have technically seen it, fully knowing that their fellow journalists will cherry-pick the bits about how billionaires pay nothing (“not their fair share“!).
Here is their “plausible deniability”:
America’s billionaires avail themselves of tax-avoidance strategies beyond the reach of ordinary people. Their wealth derives from the skyrocketing value of their assets, like stock and property. Those gains are not defined by U.S. laws as taxable income unless and until the billionaires sell.
Your average voter, who lives paycheck-to-paycheck, does not understand the difference between wealth and income. Wealth means owned things; income means money generated by those things or the sales of goods and services.
If I create, say, a company that makes voting machines, it will sell a certain number of those. That influences its stock price and, in order to control the company, I need to have a majority of voting shares, so I will own a lot of stock. That means that I have a great deal of wealth on paper.
I may still be poor in real life. If those shares do not pay dividends, I will receive only the salary that I get from that company, and my salary will not go that far because I have new expenses, such as security to avoid kidnap-for-hire and industrial espionage.
Even more, I am going to enter a new world, one where no one looks at the restaurant bill before signing (Karens complain to the manager; rich people have financial managers who will call that manager’s manager about a fraudulent bill). Everyone lives in big nice homes in “safe” neighborhoods, belongs to clubs, and socializes at expensive places. You do not join this group while driving a Toyota.
At this point, you might be crazy to even drive yourself. Being rich makes you a target for all sorts of lawsuits and scams, so if you go somewhere, you want to have a driver that you vet and hire so that no one can accuse you of negligence or driving under the influence.
You would also be nuts to send your kids to the local public school where they are going to stand out like sacrificial crucifixions. For the same reason, you probably have food delivery, private medical care, and socialize at elite institutions. Your goal is more stealth than showing off your wealth; you know exactly where you fit on the wealth curve, and mostly are focused on those above you.
As time goes on, your average CEO or business owner commands more wealth, usually in the form of stock shares rather than direct income. They need a high salary to pay for the lifestyle, but the real goal is to get your pile and get out, because in this strange world, burnout is high and market shifts can make you a pauper overnight. Pile up your wealth, invest it broadly so it is secure against the vicissitudes of the market, and get the heck out.
These people pay almost no tax because they receive relatively little in terms of income and either spend it or stash it in their virtual bug-out bag. Nothing the far-Right says would surprise them; they know, and they are planning to survive it. If nukes detonate across the world, they will already be in their survival bunkers far away, or retired to a neutral nation like Switzerland (which thrives on the income generated from such people).
In other words, this “the rich pay no tax” is not only a non-issue but a feauture of the system. If they sense a big tax bill coming, they will just give another few million to their favorite charities like MoveOn or BLM, since every gift reduces taxable income and therefore pays for itself twice in reduced tax. If you have money to give, you can blow away any tax bill. The rich want to be taxed because they will simply transfer their wealth to non-dividend shares, maintaining control while paying less, and give even more to their favorite Left-wing groups.
Any raised taxes will have a huge benefit to them: these will come down hardest on those who are striving to rise. Someone with a few billion in wealth can shrug off a tax bill, but the new businessperson or doctor trying to break out from the middle class — who still gets his money from income, not yet having purchased enough wealth-generating assets — will find themselves owning very little and not liking it.
As usual, the grifters want to rile you up. The ones already in the system want to raise taxes; they will kick payments to their friends, and receive kickbacks through book deals, honoraria, seats on boards, stock tips, and other gifts. The ones below the system want to make an audience for themselves by speaking out in favor of, as you probably guessed, “muh equality.”
If we are to survive this phase of human evolution or better yet, defeat it, we can only do so by first getting our mental states in order. This requires understanding what is actually happening so that the grifters do not manipulate us.
Tags: grifters, tax the rich, taxation, the rich