In 2009, 1,470 households reported income of more than $1 million but paid no federal income tax on it, through their use of various tax loopholes and shelters. Tax rates for millionaires have fallen by 25 percent since the mid-’90s, while one quarter of millionaires currently pay lower tax rates than the average middle-class household.
Numbers like these are the driving force behind the Buffett rule, the administration’s proposal aimed at ensuring that millionaires can’t pay lower tax rates than middle-class families. To add to the pile of evidence that such a rule is necessary, Bloomberg News ran a segment today on billionaires who manipulate the tax code to lower their tax rate all the way down to one percent:
Warren Buffett became the de facto face of the effort to increase taxes for the nation’s wealthiest when he proclaimed his secretary had a higher tax rate than he does, his being 17 percent. But the real figure for billionaires is often a lot smaller than that. Sometimes they even have a tax rate as low as 1 percent.That’s because they derive the bulk of their income from stock appreciation, and they use complicated strategies — some of them — to make sure those gains don’t get classified as taxable income. Basically what they do is enter into transactions known as “variable pre-paid forward contracts” and it can enable them to defer paying capital gains tax until a later date…Much of the wealth never converts into income on a tax return.
Watch it:
The tax code is full of provisions that help the very wealthy, like the pernicious carried interest loophole or the preferential treatment of investment income. And the end result is a tax code that advantages the 1 percent over the 99 percent.
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We’ve borne witness to a chaotic first few months in Trump’s presidency.
Over the last months, each executive order has delivered shock and bewilderment — a core part of a strategy to make the right-wing turn feel inevitable and overwhelming. But, as organizer Sandra Avalos implored us to remember in Truthout last November, “Together, we are more powerful than Trump.”
Indeed, the Trump administration is pushing through executive orders, but — as we’ve reported at Truthout — many are in legal limbo and face court challenges from unions and civil rights groups. Efforts to quash anti-racist teaching and DEI programs are stalled by education faculty, staff, and students refusing to comply. And communities across the country are coming together to raise the alarm on ICE raids, inform neighbors of their civil rights, and protect each other in moving shows of solidarity.
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