Thread by @doctorow

Last June, @propublica announced that it was in possession of leaked IRS files detailing the tax affairs of America's richest people, and that #TheIRSFiles showed that taxes are - as Leona Helmsley famously quipped - for the little people:

pluralistic.net/2021/06/15/gui… 1/

If you'd like an unrolled version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

pluralistic.net/2022/04/13/tax… 2/

The initial reporting described how, for example, private equity raiders were able to debt-finance acquisitions of productive businesses, run them into the ground, pocket hundreds of millions of dollars, *and* avoid tax as they sprinted away from the wreckage. 3/

A key scam that enables this looting is the #CarriedInterest loophole, which most normies assume has something to do with not paying tax on the interest you earn from a loan or something. That's a reasonable assumption, but it's dead wrong. 4/

"Carried interest" is a doctrine invented to make things fairer for 16th century sea-captains, and it has nothing to do with interest on loans. 5/

How does a scam like that persist in the tax code for 500 years? Well, one thing the IRS Files showed is that lobbying for tax-breaks is an incredibly productive investment. 6/

Trump's "big, beautiful tax-cut" underwent a flurry of last-minute revisions that carved out the tax-evasion strategies of individual billionaires and their dynastic offspring.

These can be directly linked to campaign contributions to the GOP lawmakers who introduced them. 7/

Like @SenRonJohnson, who threatened the cuts to get an amendment for three of his major donors: Dick and Liz Uihlein (owners of @uline), and Diane Hendricks (roofing heiress). 8/

They gave $20m to Johnson's campaign and reaped $215m in the first year of the cuts (they're still getting hundreds of millions on that investment).

pluralistic.net/2021/08/11/the… 9/

You may have noticed the presence of an heiress among the Senator Johnson's owners: dynastic wealth plays an enormous role in shaping the US tax code and its policies. 10/

The American myth of the meritocracy has been extended to people whose "merit" consists of emerging from an extremely lucky orifice. 11/

Dynastic fortunes are normally shrouded in secrecy. 12/

But thanks to honorable heirs, like @abigaildisney, we've learned more about "family offices" and the ways they ensure that no matter how feckless and idiotic an heir may be, they will continue to influence the lives of millions who work for living:

pluralistic.net/2021/06/19/dyn… 13/

The tax code is a hairball of carve-outs and programs designed to benefit the middle-class like the ROTH IRA. The ultra rich use these as piggy-banks they can stuff with hundreds of millions in tax-free loot. Peter Theil's ROTH is worth *$5 billion.*

pluralistic.net/2021/06/26/wax… 14/

And REITs - intended to benefit mom-and-pop landlords who depend on a rental for their retirement - are now vehicles for offshore oligarchs to acquire hotels, smash their unions, and siphon off money needed for the local tax coffers:

pluralistic.net/2022/03/01/rei… 15/

Now, all work and no play make Steve a dull oligarch. The ultra-rich have figured out how to turn their hobbies and follies into tax-free money-pits, like Steve Ballmer's beloved LA Clippers. 16/

He evaded tax on $140m by buying the team - while his athletes (whose labor provides him with a handsome income) pay 30-40% income tax:

pluralistic.net/2021/07/08/tuy… 17/

"Find a tax-sheltered hobby you love and you'll never work a day": it's the motto behind fortunes in tax-evasion by the horsey set ($189m for Big Tobacco's Brad Kelley, $173m Big Soup's Charlotte Weber, $138m for hedge-fund looter Seth Klarman).

pluralistic.net/2021/12/08/req… 18/

But if you just haven't found your passion yet, you can still trouser hundreds of millions, through the simple and effective tactic of cheating on your taxes.

pluralistic.net/2021/06/20/la-… 19/

Don't worry, the IRS has slashed its budget for auditing wealthy people and focuses its firepower on families with annual incomes of $35k and under:

bloomberg.com/news/articles/… 20/

The IRS Leaks are a couple of years out of date now, and it's hard to know exactly how much worse it's gotten. 21/

One bellwether is the amount of elite debt - which is not like our debts, rather, it's part of a "buy-borrow-die" strategy where untaxed capital gains are used as collateral for cheap-as-dirt loans. The super-rich are levered up to their hairlines:

pluralistic.net/2021/08/03/fit… 22/

Meanwhile, @POTUS has proposed a billionaire wealth tax, designed to get around the various tax-evasion strategies used by American oligarchs. Unsurprisingly, the wealthy are fighting back, insisting that they do pay tax, and lots of it:

usatoday.com/story/news/pol… 23/

Today, Propublica's @paulkiel, @ashnguuu, @eisingerj and Jeff Ernsthausen offer a reality check on those claims, with an in-depth analysis of America's 400 top earners:

projects.propublica.org/americas-highe… 24/

The team start by observing that your effective rate of income tax *does* climb as your income does, but once you reach $29m, it plateaus - and then, it goes *down*, as extreme wealth unlocks access to tax evasion strategies that are beyond the reach of the merely rich. 25/

The main way that the super-rich avoid tax is by arranging their payouts so they come as capital gains and not salaries, which are taxed at 20% rather than the 37% top rate for income derived from *doing* stuff, rather than *owning* stuff. 26/

Note the 20% rate is only for long-term capital gains, and that means that nominally flippers who buy and sell assets quickly can't get it - but have no fear, private equity barons can LARP as 16th century sea-captains and avail themselves of the carried interest loophole. 27/

The US tax code has had special treatment for capital gains for about a century, but GW Bush's tax cuts in 2003 supercharged these breaks for the owning class. America's richest 400 people save an average of $1.9b/year thanks to ole GW. 28/

The American tax-code is especially kind to people who emerge from lucky orifices. If you're in the DeVos or Walton family, tax giveaways are the key to your ability to shower candidates, PACs and think-tanks with money. 29/

11 Walton orifice-emergers pocket $371m/year thanks to preferential treatment for dynastic fortunes. 30/

But the real winners are tech billionaires, those rapacious, mediocre monopolists who have denuded the internet into five giant websites filled with screenshots of text from the other four. 31/

Their "charitable contributions" of stock (which can simply be donations to their own family foundations) let them deduct the full value of the stock without any capital gains tax. 32/

The top 400 American earners make at least $110m/year. That's 2,750 times the average American annual wage. The richest 11 US earners make more than $1b/year. A typical American would have to work for 25,000 years to make that much. 33/

During those 25,000 years, you'll pay more of your income as tax than billionaires. While they nominally pay a higher rate than you, you're paying a much larger share of your income into Social Security and Medicare, goosing your tax rate over theirs. 34/

Now all of this is a little misleading. The rich are actually richer than this analysis suggests. As the authors describe, "the richest avoid income when they can." By using the buy-borrow-die method, the wealthy actually pay a true tax rate of 3.4%. 35/

That number shrinks even further when you consider America's top *15* earners who are singled out by name in a companion feature:

propublica.org/article/americ… 36/

Despite what you may have guessed, there are no celebs on that list. Even LeBron James and Taylor Swift don't approach the fortunes of the tech billionaires, hedge fund looters, and profession orifice-emergers atop the steep slopes of the American wealth-pyramid. 37/