HomeTechHow America's Tech Billionaires Evade Tax

How America’s Tech Billionaires Evade Tax

Can you be Jeff Bezos, the richest man in the world, and not pay any federal income tax in the United States legally? According to a large survey of the American site ProPublica published on June 8, the answer is simple, it is yes. Silicon Valley founders and CEOs even have their favorite tax optimization technique, inspired by Warren Buffett.

FBI investigates data breach used by ProPublica

In 2007 and 2011, Jeff Bezos had no tax to pay to the US tax authorities, same performance for Elon Musk in 2018. ProPublica reports that this data comes directly from the Internal Revenue Service (IRS), the government agency that collects tax in the United States. They concern the taxation of the richest people in the country over fifteen years. The FBI and the US Treasury Department have already announced that they have launched an investigation to discover the origin of the leak.

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The site explained, of course, that it “ does not disclose how she obtained this data “, But specifies that they were” communicated in raw form, without conditions or conclusions “. The journalists behind the article published on June 8 have ” spent months processing and analyzing the material to turn it into a usable database “.

Income tax, the account is not good

Among the first information revealed (ProPublica having promised other articles) is presented the capacity of the ultra-rich Americans to pay ridiculous amounts compared to their fortune. To support his demonstration, ProPublica made a comparison based on his documents and Forbes rankings: at the end of 2018 the fortunes of the 25 richest people in the United States reached $ 1.1 trillion. To reach such a summit, it is necessary to regroup 14.3 million ordinary American employees. The former paid $ 1.9 billion (1.56 billion euros) in taxes that year, the latter 143 billion (117.2 billion euros). In other words, faced with such a gap, the notion of tax justice in the United States appears to be a vast mirage.

To achieve this result, the great American fortunes engage in a passionate pursuit of tax optimization. In 2007, Forbes estimated that the fortune of Amazon CEO Jeff Bezos jumped $ 3.8 billion. Yet that year he declared “only” $ 46 million in income. An amount compensated by losses on investments, loan repayments, etc. In 2018 he even claims to have lost money, for similar reasons. He also claims and obtains a tax credit of $ 4,000 for his children. His fortune was then estimated at $ 18 billion.

The costly legacy of a 1920 Supreme Court ruling

To understand how this fiscal sleight of hand is possible, a quick detour into American history is in order. At the start of the 20th century, when social inequalities became more and more glaring in the country, Congress had to change the Constitution, and integrate the 16e amendment to be able to implement an income tax. Three years later, in 1916, Myrtle Macomber sued the federal government. His taxes have gone up, because his stocks have gone up. However, she believes that she did not receive the benefits of this increase since she did not sell her shares, so she did not receive any income per se. In 1920 the Supreme Court ruled in favor of Myrtle Macomber. Since this judgment, the Court considers that only the sale of an asset (share, bond, building) is taxable, creating a gaping hole in the tax system.

Warren Buffett, the inspiration of Silicon Valley on tax

According to ProPublica it was the multi-billionaire nonagenarian Warren Buffett who knew how to best exploit this flaw, very quickly imitated by the new rich of Silicon Valley. The technique, adopted by the GAFAM in full force and Tesla, is, in the idea, simple. No dividends are paid to shareholders, instead the amounts are reinvested to increase the value of the shares. Thus the founders of companies see their wealth swell with the value of the shares, without drawing any direct income. A strategy on which Jeff Bezos seems to have recently returned.

Remain wages? Here too, it’s simple, just don’t overdo it. Jeff Bezos has long touched “only” $ 80,000 a year at the head of Amazon, Steve Jobs on his return to Apple in the 90s, touched a dollar, same for Mark Zuckerberg at Facebook and Larry Page at Google. Result of the races by simplifying a hair, no income, no income tax. CQFD.

To live, these penniless billionaires borrow heavily from banks easily in confidence. Tesla, for example, reported that Elon Musk pledged 92 million shares worth $ 57.7 billion for a personal loan. The IRS considers that with the payment of interest, repayment, borrowing does not constitute income. In this way, multi-billionaires escape 37% income tax, and 20% capital gains tax.

Can the Biden administration’s measures really restore the situation?

Among the 25 largest American fortunes, there are other optimization techniques and some others that play the tax game, but the problem is posed. Faced with these injustices, conducive to social tensions, the Biden administration intends to increase the tax rate for people earning more than $ 400,000, increase the maximum income tax rate from 37% to 39.6%, with a corresponding rate for long-term capital gains and increase corporate tax.

Encouraging, but probably insufficient to readjust the scale. The wealth tax proposal proposed during the Democratic primary by Senators Bernie Sanders and Elizabeth Warren was not taken up by the Biden administration. The proposal of Senator Ron Wyden, chairman of the Senate finance committee, to tax unrealized capital gains, and therefore to put an end to the Macomber judgment of 1920, does not seem destined for a better fate for the moment. On the billionaire side, Warren Buffett and Jeff Bezos, among others, have said they are in favor of paying more taxes.

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Are you able to be Jeff Bezos, the richest man on the planet, and never pay any federal earnings tax in the US legally? In line with a big survey of the American web site ProPublica revealed on June 8, the reply is easy, it’s sure. Silicon Valley founders and CEOs even have their favourite tax optimization method, impressed by Warren Buffett.

FBI investigates information breach utilized by ProPublica

In 2007 and 2011, Jeff Bezos had no tax to pay to the US tax authorities, identical efficiency for Elon Musk in 2018. ProPublica studies that this information comes straight from the Inside Income Service (IRS), the federal government company that collects tax in the US. They concern the taxation of the richest individuals within the nation over fifteen years. The FBI and the US Treasury Division have already introduced that they’ve launched an investigation to find the origin of the leak.

In the identical class

ShazamKit: Apple opens its music recognition to third-party functions

The location defined, after all, that it “ doesn’t disclose how she obtained this information “, However specifies that they have been” communicated in uncooked type, with out circumstances or conclusions “. The journalists behind the article revealed on June 8 have ” spent months processing and analyzing the fabric to show it right into a usable database “.

Revenue tax, the account is just not good

Among the many first data revealed (ProPublica having promised different articles) is introduced the capability of the ultra-rich People to pay ridiculous quantities in comparison with their fortune. To help his demonstration, ProPublica made a comparability primarily based on his paperwork and Forbes rankings: on the finish of 2018 the fortunes of the 25 richest individuals in the US reached $ 1.1 trillion. To achieve such a summit, it’s essential to regroup 14.3 million atypical American workers. The previous paid $ 1.9 billion (1.56 billion euros) in taxes that 12 months, the latter 143 billion (117.2 billion euros). In different phrases, confronted with such a spot, the notion of tax justice in the US seems to be an enormous mirage.

To attain this consequence, the good American fortunes interact in a passionate pursuit of tax optimization. In 2007, Forbes estimated that the fortune of Amazon CEO Jeff Bezos jumped $ 3.8 billion. But that 12 months he declared “solely” $ 46 million in earnings. An quantity compensated by losses on investments, mortgage repayments, and many others. In 2018 he even claims to have misplaced cash, for related causes. He additionally claims and obtains a tax credit score of $ 4,000 for his kids. His fortune was then estimated at $ 18 billion.

The pricey legacy of a 1920 Supreme Court docket ruling

To know how this fiscal sleight of hand is feasible, a fast detour into American historical past is so as. Initially of the twentieth century, when social inequalities turned increasingly more obvious within the nation, Congress needed to change the Structure, and combine the 16e modification to have the ability to implement an earnings tax. Three years later, in 1916, Myrtle Macomber sued the federal authorities. His taxes have gone up, as a result of his shares have gone up. Nevertheless, she believes that she didn’t obtain the advantages of this improve since she didn’t promote her shares, so she didn’t obtain any earnings per se. In 1920 the Supreme Court docket dominated in favor of Myrtle Macomber. Since this judgment, the Court docket considers that solely the sale of an asset (share, bond, constructing) is taxable, making a gaping gap within the tax system.

Warren Buffett, the inspiration of Silicon Valley on tax

In line with ProPublica it was the multi-billionaire nonagenarian Warren Buffett who knew methods to greatest exploit this flaw, in a short time imitated by the brand new wealthy of Silicon Valley. The method, adopted by the GAFAM in full drive and Tesla, is, within the thought, easy. No dividends are paid to shareholders, as an alternative the quantities are reinvested to extend the worth of the shares. Thus the founders of firms see their wealth swell with the worth of the shares, with out drawing any direct earnings. A technique on which Jeff Bezos appears to have just lately returned.

Stay wages? Right here too, it is easy, simply do not overdo it. Jeff Bezos has lengthy touched “solely” $ 80,000 a 12 months on the head of Amazon, Steve Jobs on his return to Apple within the 90s, touched a greenback, identical for Mark Zuckerberg at Fb and Larry Web page at Google. Results of the races by simplifying a hair, no earnings, no earnings tax. CQFD.

To dwell, these penniless billionaires borrow closely from banks simply in confidence. Tesla, for instance, reported that Elon Musk pledged 92 million shares value $ 57.7 billion for a private mortgage. The IRS considers that with the cost of curiosity, compensation, borrowing doesn’t represent earnings. On this approach, multi-billionaires escape 37% earnings tax, and 20% capital beneficial properties tax.

Can the Biden administration’s measures actually restore the state of affairs?

Among the many 25 largest American fortunes, there are different optimization strategies and a few others that play the tax sport, however the issue is posed. Confronted with these injustices, conducive to social tensions, the Biden administration intends to extend the tax price for individuals incomes greater than $ 400,000, improve the utmost earnings tax price from 37% to 39.6%, with a corresponding price for long-term capital beneficial properties and improve company tax.

Encouraging, however in all probability inadequate to readjust the size. The wealth tax proposal proposed throughout the Democratic main by Senators Bernie Sanders and Elizabeth Warren was not taken up by the Biden administration. The proposal of Senator Ron Wyden, chairman of the Senate finance committee, to tax unrealized capital beneficial properties, and due to this fact to place an finish to the Macomber judgment of 1920, doesn’t appear destined for a greater destiny for the second. On the billionaire aspect, Warren Buffett and Jeff Bezos, amongst others, have mentioned they’re in favor of paying extra taxes.

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https://siecledigital.fr/2021/06/10/milliardaires-tech-impot-us/

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