Eat the rich!

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There are few stories more sordid than the surging wealth gains of the world’s billionaire class during a pandemic when so many have lost their lives, health, and livelihoods.

A handful of billionaires and corporations have seen their wealth surge to record levels, in part as a result of their monopoly status and opportunism during the pandemic.

https://inequality.org/great-divide/bil ... ty-health/

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https://inequality.org/great-divide/u-s ... -pandemic/

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https://inequality.org/great-divide/the ... ing-401ks/

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https://www.counterpunch.org/2020/11/30 ... ing-401ks/

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In addition to various Western governments, the Bill and Melinda Gates Foundation Trust, which manages the foundation’s endowment, is also investing in private equity, taking positions in farm and food businesses around the world.

https://www.counterpunch.org/2020/12/01 ... the-world/

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The share of the nation’s wealth pie owned by the richest 0.01 percent has quadrupled over the last 70 years. Their percent of the total tax obligation has stayed the same. What’s wrong with this picture?

https://inequality.org/great-divide/no- ... air-share/

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TAXATION

Hey, Wealthy Tax Cheat, Hearing Any Footsteps Yet?

Our biggest tax evaders have been living high on the hog. They may soon have cause to worry.

MARCH 26, 2021
by Sam Pizzigati

Cheating on your taxes — if you happen to be filthy rich — has never been easier. Or more lucrative.

So we’re learning from a new surge of scholarship and research from academics, activists, and veteran tax attorneys. Our richest aren’t just paying a smaller share of their income and wealth in taxes than average Americans. Many of our rich, the data show, are barely paying any tax at all.

How could this be? The simplest reason: Budget and staffing cuts, report researchers at the Syracuse University TRAC project, have left the IRS “incapable of fairly and effectively auditing” the over 637,000 Americans who last year pocketed incomes over a sweet $1 million.

Since 2010, the number of IRS “revenue agents” — the staff qualified to audit the complex tax returns of America’s rich and the corporations they run — has dropped 43 percent. What has a cutback that steep meant for wealthy tax filers? IRS internal documents show a 72 percent drop in the number of millionaire-income audits over the last eight years — at a time when the nation’s millionaire-income population was nearly doubling.

Last year, overall, only 2 percent of millionaire-income taxpayers faced an audit.

Fewer audits have, in turn, meant fewer finds of shady returns. The 2012 IRS audits unearthed $4.8 billion in unreported taxes, the 2020 audits only $1.2 billion. At the corporate level, the same story. Audits of companies with over $250 million in assets identified $24.4 billion in unreported taxes eight years ago. Last year, these corporate audits uncovered just $5.4 billion.

We also need to remember, the Syracuse researchers point out, that 2012 represented no tax-enforcement golden age. The agency even then was falling short.

Funding more IRS auditors could and would catch people of means who underreport their income and break the law in the process. But auditors alone can’t stop people of means — and their small armies of lawyers and lobbyists — from manipulating their way through the tax code’s “gray areas” or even getting that code rewritten to serve their self-interests.

We have today, in effect, a “wealth defense industry,” a billionaire-bankrolled juggernaut adept at punching out loopholes to our tax rules and regulations. This wealth defense industry, notes my Institute for Policy Studies colleague Chuck Collins, thrives on “opaque transactions” that amply justify its existence for its ultra-wealthy benefactors.

Collins has a new book out, The Wealth Hoarders: How Billionaires Pay Millions to Hide Trillions, that explores the wealth defense tricks of the trade, everything from the creation of dynasty and grantor trusts to “valuation discounts.” Just one of these clever tricks, the grantor retained annuity trust (just “GRAT” to those in the know), has cost the U.S. Treasury — according to the attorney who invented it — over $100 billion in revenue since 2000, a “grotesque understatement,” observes Collins.

INEQUALITY'S ESSENTIAL RULEOur tax system is speeding wealth's concentration
How much do all these tricks and more blatant tax evasion crimes all total together? Two IRS researchers have joined up with three leading academic economists and just published a landmark paper on “Tax Evasion at the Top of the Income Distribution” that offers some answers.

These five analysts challenge the conventional wisdom about random audits, the gold standard historically for catching tax cheats. Random audits, they show, work just swell for taxpayers in the bottom 99 percent. But such audits “may not detect sophisticated evasion strategies” in the upper reaches of the top 1 percent because these tax evading sophisticates have “much more information, resources, and specialized staff than available to tax authorities.”

Offshore tax evasion, for instance, “goes almost entirely undetected in random audits.” In sum, this new analysis finds, up to 35 percent of the income collected at the tippy top of America’s income distribution turns out to be “not comprehensively examined.”

How much of an impact does this much unreported income have on income inequality writ large? Accounting for unreported income increases the top 1 percent’s income share “significantly,” from 20.3 percent to 21.8 percent on average over the 2006-2013 years studied, the new academic-IRS study reports.

A mere 1.5-percentage-point increase might not seem too terribly “significant,” but keep this stat in mind: That level of increase would now make over a $930 billion difference in the collective income of America’s top 1 percent.

The tax cheating that has given our wealthiest this enormous boost need not continue. Legislative decisions created a tax system that winks at tax evasion. Legislative decisions could, by the same token, fashion a tax system that clamps down on wealthy tax cheaters. That refashioning now appears to have some real momentum.

In the House of Representatives, members of Congress belonging to the Progressive Caucus have introduced legislation that would, for starters, require the IRS to audit at least 20 percent of returns reporting at least $1 million in income and give the IRS the funding necessary to reach that goal.

In the Senate, Elizabeth Warren has taken the legislative lead on a “wealth tax” that would raise an estimated $3 trillion over the next decade from the nation’s 100,000 richest households. Her bill includes stringent reporting requirements and other anti-tax avoidance provisions.

Just this week, Senator Bernie Sanders and Representative Jimmy Gomez from California have introduced the “For the 99.5% Act,” a bill that would hike the federal estate tax rate to 65 percent on bequests over $1 billion and plug decades-old estate tax loopholes along the way. The legislation figures to raise $430 billion over the next 10 years.

A year ago, none of these bills would have had a shot at gaining any traction. Times have changed. We need to change them some more.

Sam Pizzigati co-edits Inequality.org. His latest books include The Case for a Maximum Wage and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. Follow him at @Too_Much_Online.

https://inequality.org/great-divide/hey ... steps-yet/