"The very richest are able to quietly shape tax policy that will allow them to shield billions in income."
How is this possible? How can $Billionaires help shape tax policy which is determined by Congress? Who in Congress are the accomplices of these $Billionaire tax-cheats?The republicans.
There are two fundamental dynamics in American politics today. First Extremely Wealthy Americans pay the republican party to lower their taxes:
"In the heat of the presidential race, the influence of wealthy donors is being tested. At stake is the Obama administration’s 2013 tax increase on high earners — the first in two decades — which amounted to a significant increase for the ultrawealthy. Also at stake is an I.R.S. initiative to ensure that, in effect, the higher rate sticks by cracking down on tax avoidance by the wealthy.
While Democrats like Bernie Sanders and Hillary Clinton have pledged to raise taxes on these voters, virtually every Republican has advanced policies that would vastly reduce their tax bills, sometimes to as little as 10 percent of their income."
How do these republican-supporting #TaxCheats
avoid paying taxes?
"Moreover, each has exploited an esoteric tax loophole that saved them millions in taxes. The trick? Route the money to Bermuda and back. [...]
Operating largely out of public view — in tax court, through arcane legislative provisions and in private negotiations with the Internal Revenue Service — the wealthy have used their influence to steadily whittle away at the government’s ability to tax them. The effect has been to create a kind of private tax system, catering to only several thousand Americans.
The impact on their own fortunes has been stark. Two decades ago, when Bill Clinton was elected president, the 400 highest-earning taxpayers in America paid nearly 27 percent of their income in federal taxes, according to I.R.S. data. By 2012, when President Obama was re-elected, that figure had fallen to less than 17 percent, which is just slightly more than the typical family making $100,000 annually, when payroll taxes are included for both groups."
The second major dynamic in American politics is that the republican party panders to ethnocentric white lower-income and middle class voters justifying the tax cuts to the Extremely Wealthy by using thinly-veiled #Racism
. But that is a story for another day.“There’s this notion that the wealthy use their money to buy politicians; more accurately, it’s that they can buy policy, and specifically, tax policy,” said Jared Bernstein, a senior fellow at the left-leaning Center on Budget and Policy Priorities who served as chief economic adviser to Vice President Joseph R. Biden Jr. “That’s why these egregious loopholes exist, and why it’s so hard to close them.”
Yes and this notion is correct. To be diplomatic, Professor Bernstein stated that the Extremely Wealthy can buy politicians to create egregious tax loopholes. What he meant to say is that the Extremely Wealthy are buying republican
politicians. How do we know? Because the republicans want to eliminate all
or most taxes on the wealthy such as the #Inheritance
tax (which kicks in only after
"At the same time, most Republican candidates favor eliminating the inheritance tax, a move that would allow the new rich, and the old, to bequeath their fortunes intact, solidifying the wealth gap far into the future. And several have proposed a substantial reduction — or even elimination — in the already deeply discounted tax rates on investment gains, a foundation of the most lucrative tax strategies."
As you can see from the accompanying graph, "Two decades ago, when Bill Clinton was elected president, the 400 highest-earning taxpayers in America paid nearly 27 percent of their income in federal taxes, according to I.R.S. data. By 2012, when President Obama was re-elected, that figure had fallen to less than 17 percent, which is just slightly more than the typical family making $100,000 annually, when payroll taxes are included for both groups."
Lots of middle-class people including myself (PPKFP) paid more than 17% in taxes last year. Unfortunately we could not buy off republican politicians so that we can run tax scams like the following (which actually are quite clever I must say):
"Mr. Loeb, for example, has invested in a Bermuda-based reinsurer — an insurer to insurance companies — that turns around and invests the money in his hedge fund. That maneuver transforms his profits from short-term bets in the market, which the government taxes at roughly 40 percent, into long-term profits, known as capital gains, which are taxed at roughly half that rate. It has had the added advantage of letting Mr. Loeb defer taxes on this income indefinitely, allowing his wealth to compound and grow more quickly."
My (remember I am speaking only for myself PPKFP and not for the far more ethical Professor Krugman), selfish and corrupt side wishes I could do this kind of scam to avoid the capital gains tax indefinitely like Mr. Loeb.
What has President Obama done to fight this republican corruption?
"President Obama has made fighting tax evasion by the rich a priority. In 2010, he signed legislation making it easier to identify Americans who squirreled away assets in Swiss bank accounts and Cayman Islands shelters.
His I.R.S. convened a Global High Wealth Industry Group, known colloquially as “the wealth squad,” to scrutinize the returns of Americans with incomes of at least $10 million a year.
But while these measures have helped the government retrieve billions, the agency’s efforts have flagged in the face of scandal, political pressure and budget cuts. Between 2010, the year before Republicans took control of the House of Representatives, and 2014, the I.R.S. budget dropped by almost $2 billion in real terms, or nearly 15 percent. That has forced it to shed about 5,000 high-level enforcement positions out of about 23,000, according to the agency."
In summary, President Obama has lost this battle to the republicans:
'For the ultra-wealthy, “our tax code is like a leaky barrel,” said J. Todd Metcalf, the Democrats’ chief tax counsel on the Senate Finance Committee. ”Unless you plug every hole or get a new barrel, it’s going to leak out.”