$23.7 million in taxes on $24.3 billion? Seems low. Let's rectify the ridiculous US tax situation!

 

Earlier this week Propublica reported a story about how little in taxes some of America's richest men paid in taxes. In case you missed it, here is a summary of 4 culprits highlighted in the article:

Although this isn't a very surprising, nor is there any claim from the article that these people broke any laws (because they didn't), it is still jarring to see how little they paid in taxes. Interestingly, Warren Buffett, who has long railed against the fact that he pays less in taxes (as a percentage of course) than his secretary, has the lowest actual percentage according to Propublica. Now this may largely be down to the fact that I assume his lifestyle is much more modest than that of his peers on this list and hence he doesn't need to take out as much money from his personal ATM that is his ownership of Berkshire Hathaway.

What does this all reveal and what can be done? I will leave aside the fact that there was a leak and what are the pros and cons of Propublica publishing this story, as that is not quite in my wheelhouse. Firstly, it is clear that equality is still a long way off. The billionaire class benefits from our monstrous tax structure in ways that the mere wealthy and middle class cannot. Secondly, we might need to do something about this in order to protect our democracy. It is known that billionaires have a disproportionate effect on our politics through frequent communications and donations to their senators and congressional representatives. Finally, is a wealth tax an appropriate way to take care of this? It doesn't seem to have worked in countries such as France, as people will simply relocate and domicile in lower taxed jurisdictions. That being said the US could consider measures such as:

• a one time wealth tax of a few % in order to capture some of the huge increase of the last few years;
• an AMT similar to the global minimum corporate tax rate of 15% that Biden and G-7 leaders discussed on Friday;
• equalizing capital gains tax rates with those of regular income; and/or
• massive simplification of the tax code.

I doubt that any of these will come to pass, but if they do it will be a good first step in addressing the harms of the current tax system. This may not do much to shore up our massive budget deficit and pay down our national debt, but at least it shows that the government is keen on tackling the inequality that currently exists...