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Taxation of the Rich

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RTH10260
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Taxation of the Rich

#1

Post by RTH10260 »

Billionaire Peter Thiel amasses $5bn tax-free nest egg in retirement account
  • ProPublica reveals files on other billionaires’ tax-free savings
    Roth IRAs were originally intended for middle-class Americans
Dominic Rushe
Thu 24 Jun 2021 19.22 BST

Billionaire Peter Thiel, one of the founders of PayPal, has used a retirement account designed to help ordinary Americans save for their golden years to amass a $5bn tax-free nest egg, according to records obtained by ProPublica.

Thiel, a vocal opponent of higher taxes, is one of a number of ultra-rich Americans to use a Roth individual retirement account (IRA) to amass a tax-free fortune.

Roth IRAs were established in 1997 to encourage middle-class Americans to save, tax-free, for retirement. In 2018 the average Roth IRA held $39,108. The proceeds of a Roth IRA are tax-free as long as they are not withdrawn before the account holder reaches 59.5 years old.

Records obtained by ProPublica show that Thiel, 53, placed 1.7m shares of then-private PayPal into a Roth IRA in 1999. At the time annual contributions to the plans were capped at $2,000. The shares were valued at just $0.001 per share.

Within a year, the value of Thiel’s Roth increased from $1,664 to $3.8m. Thiel then used his Roth to make highly lucrative investments in Facebook and Palantir Technologies, according to tax records and other documents obtained by ProPublica. By 2019, Thiel’s Roth held $5bn “spread across 96 subaccounts”.


https://www.theguardian.com/technology/ ... ee-savings
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Re: Taxation of the Rich

#2

Post by raison de arizona »

Just because it's legal doesn't mean it is right. These so-called men have no honor.

They exploit the system because they can, and then allow the little guy to pick up the tab for them.

Disgusting.
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Re: Taxation of the Rich

#3

Post by RTH10260 »

55 US Corporations Paying No Federal Tax Last Year Spent $450 Million on Political Lobbying and Campaigns: Report
"The lobbying, campaign contributions, and tax avoidance by these 55 companies is a never-ending cycle in which the companies spend to win tax breaks, then use the money saved from those breaks to try to get more."

BRETT WILKINS, STAFF WRITER
June 9, 2021

The 55 U.S. corporations that paid no federal corporate income tax last year have spent a combined $450 million on political campaign contributions and lobbying—including for lower taxes—according to a report published Wednesday by the progressive advocacy group Public Citizen.

"Using Uncle Sam's money to lobby against paying taxes is the perfect embodiment of how Washington works." —Mike Tanglis, Public Citizen
The report, entitled The Price of Zero, cites figures from the Institute on Taxation and Economic Policy showing that at least 55 U.S. corporations avoided paying any corporate income tax in 2020 on a combined pretax income of $40.5 billion.

"Had these companies paid a tax rate of 21%—the current federal rate—they would have owed the federal government $8.5 billion," the report notes. "Not only did these companies not pay taxes, but nearly all also got money back from the government, receiving $3.5 billion in tax rebates, bringing the total 2020 tax giveaways for these 55 companies to $12 billion."

Instead of paying taxes, the companies invested a combined $408 million in lobbying and $42 million in campaign contributions over the past three election cycles, according to data obtained from the Center for Responsive Politics.

According to the report, FedEx spent the most of any of the 55 companies—$71 million on lobbying and campaign contributions—between 2015 and 2020. Charter Communications ($64 million), American Electric Power ($42 million), Duke Energy ($37 million), and Textron ($22 million) round out the top five spenders.



https://www.commondreams.org/news/2021/ ... -political
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Taxation of the Rich

#4

Post by AndyinPA »

https://www.theguardian.com/business/20 ... -tax-davos
More than 200 members of the super-rich elite are calling on governments around the world to “tax us, the ultra rich, now” in order to help billions of people struggling with cost of living crisis.

The group of 205 millionaires and billionaires, including the Disney heiress Abigail Disney and The Hulk actor Mark Ruffalo, on Wednesday called on world leaders and business executives meeting in Davos for the World Economic Forum (WEF) to urgently introduce wealth taxes to help tackle “extreme inequality”.

“The current lack of action is gravely concerning. A meeting of the ‘global elite’ in Davos to discuss ‘cooperation in a fragmented world’ is pointless if you aren’t challenging the root cause of division,” they said in an open letter published on Wednesday. “Defending democracy and building cooperation requires action to build fairer economies right now – it is not a problem that can be left for our children to fix.

“Now is the time to tackle extreme wealth; now is the time to tax the ultra rich.”

In the letter entitled “the cost of extreme wealth”, the millionaires, from 13 countries, said: “The history of the last five decades is a story of wealth flowing nowhere but upwards. In the last few years, this trend has greatly accelerated …The solution is plain for all to see. You, our global representatives, have to tax us, the ultra rich, and you have to start now.”
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Taxation of the Rich

#5

Post by humblescribe »

The historic income tax does just that; it taxes income. You make $X; we collect $Y; you keep the difference. Simple in principle.

It does not really redistribute wealth. It merely reduces current disposable income so that the evil gubberment can pay its bills and recycle dollars.

Here in these United States the income tax code is used not only to collect taxes on income, but it is also used for economic stimuli, to change behavior, to bribe people to buy this or that, to jump start nascent industries because the pure capitalistic model won't bother, and other reasons.

A net worth tax, however, will redistribute wealth. It will force the ultra wealthy to sell off assets in many circumstances so that their wealth will not be as concentrated. Many people (like Musk) have their wealth tied up in stocks. Others have their wealth tied up in real estate or in illiquid partnerships or other investments. Others are beneficiaries of ginormous family trusts but might not necessarily own much outright but receive the use of trust assets and trust income.

I've heard stories that the owners of zillions of shares of stock in tech companies borrow funds to live on and use their stock as collateral. WTF? Is this really how the tax code was designed? Pledge 1 million shares with a market value of $300/share to get $300 million in tax-free dollars with interest only payable? Then when you die, your estate has a liability to pay off? It is legal, but games the system for all of us peasants.

While the estate and gift tax is an attempt to redistribute wealth, it is only payable upon death, and payable once.

Just how to go about calculating and assessing a net worth tax, and how often will be difficult. Will discounts be allowed for a minority interest or lack of marketability? How about valuing stock in large, privately held entities like Hallmark, Cargill, Koch Brothers :fuckyou: ?

Anyway, just my tuppence.
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Taxation of the Rich

#6

Post by Suranis »

This can go here. I ran across an interesting Article in the Humanist.com called "Was Adam Smith a marxist." This was back in 2012 when everyone was bieng called a Marxist.

https://thehumanist.com/magazine/july-a ... -a-marxist
Was Adam Smith a Marxist?
by C.W. Griffin • 29 June 2012

If political conservatives were to read the work of their economic mentor, Adam Smith, they’d be forced to apply the same Marxist label to Smith that they apply to President Obama. In fact, as the founder of free-market economic philosophy, propounded in his landmark 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations, Smith promoted progressive taxation of the rich more forcefully than our current president.

Here are Smith’s words from that book justifying higher tax rates for the rich: “The rich should contribute to the public expense, not only in proportion to their revenue, but something more than that proportion.”Denouncing vast differences in wealth and income, Smith praised a fellow economist’s tax proposal: “To remedy inequality of riches as much as possible, by relieving the poor and burdening the rich.”

In words almost as virulent as Karl Marx’s, Smith also expressed contempt for capitalists: “The interest of the dealers,” he wrote, “is always in some respects opposite to that of the public. To widen the market and to narrow the competition is always the interest of the dealers. To widen the market may frequently be agreeable enough to the public, but to narrow the competition must always be against it, and can only enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow citizens.”

Smith not only championed progressive taxation; he also advocated rigorous bank regulation. This may come as a surprise to the chief spokesman for the banking industry, JP Morgan Chase CEO Jamie Dimon, who displays his ignorance of Smith’s economic philosophy in his adamant opposition to bank regulation—notably in his recent denunciation of the Volcker rule, which would prohibit banks from gambling with taxpayers’ money. Dimon demands taxpayer-financed FDIC guarantees for bank deposits, despite the risk of banks gambling with depositors’ money. Bank regulation, according to Dimon and his ilk, constitutes a numerated intrusion into free-market enterprise.

Adam Smith demolishes this argument with an incontrovertible rebuttal: “Such regulation may, no doubt, be considered as in some respects a violation of natural liberty. But these exertions of the natural liberty of a few individuals, which might endanger the security of the whole society, are and ought to be restrained by … all governments. … The obligation of building party walls, in order to prevent the communication of fire, is a violation of natural liberty, exactly of the same kind with the regulation of the banking trade which are proposed here.”

Here, again from The Wealth of Nations, is Smith’s argument for rigorous bank regulation: “Though the principles of the banking trade may appear somewhat abstruse, the practice is capable of being reduced to strict rules. To depart upon any occasion from those rules, is consequence of some flattering speculation of extraordinary gain, is almost always extremely dangerous, and frequently fatal to the banking company which attempts it.”

If former Federal Reserve Chairman Alan Greenspan had read Adam Smith instead of Ayn Rand’s Atlas Shrugged (a diatribe against all forms of government regulation), we would probably have avoided the catastrophic loss of 4.5 million jobs and a 2.7 percent decline in the 2008 GDP, a financial meltdown that continues to plague the U.S. economy. Republican anti-regulatory zealots nonetheless persist in their colossal ignorance of their presumed economic mentor.

Published in the July / August 2012 Humanist
C.W. Griffin is a retired consulting engineer. This article is taken from his forthcoming book, "Fatal Fallacies: How Ideologues Repeal the Laws of Logic. "
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Taxation of the Rich

#7

Post by noblepa »

RTH10260 wrote: Fri Jun 25, 2021 8:37 am
Billionaire Peter Thiel amasses $5bn tax-free nest egg in retirement account
  • ProPublica reveals files on other billionaires’ tax-free savings
    Roth IRAs were originally intended for middle-class Americans
Dominic Rushe
Thu 24 Jun 2021 19.22 BST

Billionaire Peter Thiel, one of the founders of PayPal, has used a retirement account designed to help ordinary Americans save for their golden years to amass a $5bn tax-free nest egg, according to records obtained by ProPublica.

Thiel, a vocal opponent of higher taxes, is one of a number of ultra-rich Americans to use a Roth individual retirement account (IRA) to amass a tax-free fortune.

Roth IRAs were established in 1997 to encourage middle-class Americans to save, tax-free, for retirement. In 2018 the average Roth IRA held $39,108. The proceeds of a Roth IRA are tax-free as long as they are not withdrawn before the account holder reaches 59.5 years old.

Records obtained by ProPublica show that Thiel, 53, placed 1.7m shares of then-private PayPal into a Roth IRA in 1999. At the time annual contributions to the plans were capped at $2,000. The shares were valued at just $0.001 per share.

Within a year, the value of Thiel’s Roth increased from $1,664 to $3.8m. Thiel then used his Roth to make highly lucrative investments in Facebook and Palantir Technologies, according to tax records and other documents obtained by ProPublica. By 2019, Thiel’s Roth held $5bn “spread across 96 subaccounts”.


https://www.theguardian.com/technology/ ... ee-savings

To be fair, remember that Roth IRAs are funded with after-tax money. That is, Mr. Thiel paid taxes on the money he used to fund the Roth IRA before he put the money in. He is only avoiding tax on the income that the IRA might earn before he withdraws it.

A traditional IRA is funded with pre-tax money, meaning you don't pay tax when you earn the money that goes into the IRA, so you pay tax when you withdraw the funds, hopefully at a lower tax rate.

Now, we all know that billionaires often have ways to shelter from taxes what would be ordinary, taxable, income, so we have no way of knowing how much tax he paid on the money before he put it in his IRA.

Perhaps there should be a cap on the amount that one can contribute to a Roth IRA. That is a political question.
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Taxation of the Rich

#8

Post by June bug »

According to the Guardian article, Thiel put 1.7 million shares of then PRIVATELY held PayPal stock into the Roth IRA in 1999, then valued at $1700.00 - $300 below the maximum amount allowed. Within a YEAR, after going PUBLIC, the Roth was worth $3.8 million, but he only paid taxes on the original $1700 value. Don’t see how a lower contribution cap would fix that, but maybe a restriction on what type of asset can be used to fund the contribution might help.
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Taxation of the Rich

#9

Post by MN-Skeptic »

June bug wrote: Thu Feb 22, 2024 12:22 am According to the Guardian article, Thiel put 1.7 million shares of then PRIVATELY held PayPal stock into the Roth IRA in 1999, then valued at $1700.00 - $300 below the maximum amount allowed. Within a YEAR, after going PUBLIC, the Roth was worth $3.8 million, but he only paid taxes on the original $1700 value. Don’t see how a lower contribution cap would fix that, but maybe a restriction on what type of asset can be used to fund the contribution might help.
:yeahthat:

It's pretty astounding what you can do with just publicly traded stock. I'd be fine with restricting contributions to publicly available funds and stock shares.
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Taxation of the Rich

#10

Post by June bug »

MN-Skeptic wrote: Thu Feb 22, 2024 12:44 am
June bug wrote: Thu Feb 22, 2024 12:22 am According to the Guardian article, Thiel put 1.7 million shares of then PRIVATELY held PayPal stock into the Roth IRA in 1999, then valued at $1700.00 - $300 below the maximum amount allowed. Within a YEAR, after going PUBLIC, the Roth was worth $3.8 million, but he only paid taxes on the original $1700 value. Don’t see how a lower contribution cap would fix that, but maybe a restriction on what type of asset can be used to fund the contribution might help.
:yeahthat:

It's pretty astounding what you can do with just publicly traded stock. I’d be fine with restricting contributions to publicly available funds and stock shares.
:yeahthat: right back!
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