https://www.propublica.org/article/billionaires-tax-avoidanc…
Ten Ways Billionaires Avoid Taxes on an Epic Scale
After a year of reporting on the tax machinations of the ultrawealthy, ProPublica spotlights the top tax-avoidance techniques that provide massive benefits to billionaires.
This article misses the main point. That society benefits in the end. Because either society gets 40% of these huge fortunes as estate tax received by the IRS, or, more usually, society will get 100% of it to charity. Allowing unrealized capital gains to accumulate to be taxed later, as huge estate tax, is part of the secret sauce of America. It enables those with the skill, capital and luck to build businesses etc while still getting a big payoff for society in the end.
Does society really benefit when taxation (or charitable contribution) is delayed by 30, 40, 50 years? There are needs that should be met now, not decades from now.
—Peter
Does society really benefit when taxation (or charitable contribution) is delayed by 30, 40, 50 years? There are needs that should be met now, not decades from now.
Absolutely. Long term deferred gratification provides society a much bigger payoff for the future. Just as prior long term gratification provides a bigger long term payoff today. The answer to your question is “absolutely”.
Long term deferred gratification provides society a much bigger payoff for the future.
So we don’t need to worry about, say, poor children who may not survive into that future benefit because they need help now? Or older folks who don’t have 20 years to wait for that future benefit? How about roads and bridges that are in need of repair now? Should they just wait for another 20 or 30 years?
A larger payoff in the future is not helpful when there are needs to be met now that are not being met.
–Peter
So we don’t need to worry about, say, poor children who may not survive into that future benefit because they need help now? Or older folks who don’t have 20 years to wait for that future benefit? How about roads and bridges that are in need of repair now? Should they just wait for another 20 or 30 years?
A larger payoff in the future is not helpful when there are needs to be met now that are not being met.
There are AlWAYS current needs and future needs. Part of the reason we may be in a serious economic mess is because we ALREADY borrowed too heavily from the future. The current system of taking about half, or more likely having ALL of a large fortune go to society via charity, reaps immediate benefits from those who accumulated before. Warren Buffet is 92. I wish him to live to 120, but odds are that society will soon reap from him. Munger is 98. Sheldon Adelson died recently. So did Sumner Redstone, Whitney MacMillan and Joseph Safra. It’s great that we’ll get the benefit of their accumulation, instead of it having been taxed away years ago. Because, as you say, we need it now
But you morphed the conversation away from the main point. Circling back to that, the article misses the huge point that any tax breaks in the short run are recaptured many times over by society in the long run.
Allowing unrealized capital gains to accumulate to be taxed later, as huge estate tax, is part of the secret sauce of America.
Estate tax revenues in the US are only about 0.5% of total revenues (at an average 17% tax rate). Not a major contributor.
In 2020, revenues from federal estate and gift taxes totaled $18 billion.
Total 2020 US federal revenue was $3700 billion.
Estate tax revenues in the US are only about 0.5% of total revenues (at an average 17% tax rate). Not a major contributor.
In 2020, revenues from federal estate and gift taxes totaled $18 billion.
Total 2020 US federal revenue was $3700 billion.
This is irrelevant to the discussion. Because the original article discussed talks about how billionaires avoid taxes. But misses the big point that society gets most of their money in the end, with the bonus that it’s been able to compound along the way. The fact that there aren’t that many wealthy people, hence the estate tax is only a small percentage of total revenues, is besides the point. Maybe we need policies that encourage a higher percentage of the population to become wealthy! Also, most billionaires leave their estates to charity. So that societal revenue doesn’t show up in tax receipts. But it’s still big money coming back to society.