American billionaires avoid taxes by borrowing money: ProPublica

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6/10/2021 2:39:00 AM

The wealthiest Americans avoided billions in taxes by voluntarily doing something most only do out of necessity: borrowing money.

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One of the key strategies employed by the ultrawealthy to keep their tax bills low: borrowing money.Many Americans borrow money only when they have to for large purchases like college tuition or a house, as interest can quickly add up, especially if they're not able to pay back the loan right away.

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But according to ProPublica andindependent experts, America's billionaires have often financed their lavish lifestyles by using their vast fortunes as collateral for loans, which can come with single-digit interest rates.Borrowing money allows the ultrawealthy to earn minuscule salaries, avoiding the 37% federal tax on top incomes, as well as avoid selling stock to free up cash, bypassing the 20% top capital gains tax rate. Since loans aren't considered taxable income, the wealthy need only pay back the principal and interest, rather than the higher taxes that would accompany multimillion-dollar incomes and investments.

America's 25 wealthiest individuals saw their net worth grow by $401 billion from 2014 to 2018, according to Forbes. But they paid a total of $13.6 billion in federal income taxes in that same period, amounting to 3.4% of that newly acquired wealth, ProPublica found. headtopics.com

By contrast, a middle-class American in their 40s who had amassed a"typical amount of wealth for people their age," saw their net worth grow by $65,000 from 2014 to 2018, but paid $62,000 in income taxes, or 95% of that new wealth, according to ProPublica.

The US does not directly tax individuals' total wealth, unlike someEuropean countries.Nor does it tax stock holdings until they are sold. And billionaires tend to have a lot of their net worth wrapped up in stocks. However, ProPublica's analysis revealed in new detail how America's tax code allows the ultrawealthy to take advantage of a litany of tax loopholes and wealth-management strategies to increase their wealth without also increasing their tax bills substantially.

To illustrate the gap between wealth and taxes paid by the ultrawealthy, ProPublica created what it called a"true tax rate." ProPublica defined this as the total federal income tax a person paid, in this case from 2014 to 2018, compared to how much new wealth they acquired in that same time period.

ProPublica did not publish its source data or disclose how it obtained IRS data.According to ProPublica, the top 25 wealthiest Americans paid a"true tax rate" of 3.4% — a result of tax avoidance strategies that are out of reach for most Americans.  headtopics.com

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Borrowing, it turns out, is one of those strategies.In 2014, for example,disclosed he had used 250 million of his Oracle shares as collateral to secure a $9.7 billion personal line of credit.Elon Musk has similarly put up a massive amount of hisequity in Tesla and SpaceX

as collateral for loans, rather than sell those shares and pay 20% in capital gains tax to free up the money. From 2014 to 2018, Musk paid $455 million in taxes on a reported income of $1.52 billion, resulting in an effective tax rate of 29.9%. But his wealth grew by $13.9 billion during that time, meaning his"true tax rate," according to ProPublica's methodology, was just 3.27%.

Musk replied to ProPublica's request for comment with:"?"Investor Carl Icahn also took advantage of borrowing money, paying $0 in federal income taxes despite reporting an adjusted gross income of $544 million, as he had an outstanding loan with Bank of America worth $1.2 billion, ProPublica reported. 

"I didn't make money because, unfortunately for me, my interest was higher than my whole adjusted income," Icahn told ProPublica, adding that while he does borrow a lot of money, it's"not at all" meant to lower his tax bill, but rather that he borrows"to win. I enjoy the competition. I enjoy winning." headtopics.com

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HowManyDaysAreMyOrdersDelayed Interesting read, I noticed Carl Icahn said 'I didn't make money because, unfortunately for me, my interest was higher than my whole adjusted income' if I'm not mistaken he uses margin loans from his stock investments their not that bad if use wisely I use them too.

elonmusk JeffBezos BillGates any chance you'd be willing to send be 1 bitcoin. According to this article you're in a great space to do so. poor people should not pay taxes

Richest Americans pay almost no income taxes, report findsThe 25 richest Americans paid little to no federal income taxes, according to a report released Tuesday by ProPublica, a claim that has reignited debate about the tax code and sparked an investigation by the IRS into the leak of private tax documents. The ONLY THING that will come of this is that you and I will damn sure pay more taxes than the rich guys vwheato For Shame. If they could only pay their taxes maybe we could get this Country out of debt.? The IRS would be better served investigating the loop holes and catching the fraud…hell with the leaked info..

The Secret IRS Files: Trove Of Never-Before-Seen Records Reveal How The Wealthiest Avoid Income TaxProPublica has obtained a vast cache of IRS information showing how billionaires pay little in income tax compared to their massive wealth — sometimes, e... Qué rabia I can’t remember the stupid ass, who was sent into the IRS during baby bush’s admin, she started having Audits done by 3rd party instead of the IRS. One thing they did, was stop auditing the taxes of those, who had sufficient funds to take the findings to court and fight the IRS.

Many of the uber-rich pay next to no income tax, report saysUsing legal tax strategies, many of the uber-rich are able to shrink their federal tax bills to nothing or close to it, ProPublica said in a new report. Sick of hearing about it. How many more Panama Papers before we switch up the narrative. We know the rich don't pay taxes. They have a million ways to play the game while our moms are paying mad tax on that 15 an hour. Start writing about how to change this.

ProPublica Investigation Proves Billionaires Won the Class WarThe public-interest news organization has obtained tax information on the wealthiest Americans, and how little they pay the IRS Ok I Kill that Bastard Bernie 2024 And you were the FIRST to sell out Rolling Stone, and put mullusk on the fuckin cover TWICE. Does anyone even subscribe to your dogshit magazine anymore? Y'all promoted this horseshit, thought the magazine was about rock and roll culture.

As If You Needed Another Reason to Loathe This ManOh, look, a large group of billionaires paying little to nothing in income tax for years. EmmaPeel_Knight This is a new story every year for years and years.

Opinion | Return of the IRS ScandalFrom WSJopinion: Someone leaked the tax information of rich Americans to serve the left’s agenda, but the details don’t prove what ProPublica claims, writes The Editorial Board opinion The whitewash begins, opinion. Good work, propublica keep digging. You obviously hit a rich vein. opinion You don't think the American people are smart enough to not believe your horseshit? Wealth is very disproportionate in this country and that's going to change ✌️🇺🇲💙 opinion Unfortunately literally nothing will happen except get a bunch of people in an uproar & then some celeb will do something stupid & BOOM all is forgotten if POTUS won’t push SenWarren’s ultra wealth tax there’s no hope. He’s in bed with Bezoz anyway