Tax dodging by the super rich

http://www.thetakeaway.org/story/two-tiered-taxes-one-system-rich-one-everyone-else/

This is a "no duh" story to end 2015, but the explicit details are interesting (more so than the typical corporate inversions we've recently heard about). During the Clinton years, the 400 highest income American households paid an effective rate of 27%. Now it's 17%. And because payroll taxes hit the less wealthy harder, that 17% rate means that the highest-income Americans are paying about the same tax rate as a family with $100K household income (80th percentile in the US). How can that be democratic and just?

Like their gated communities and hedge funds, there is an exclusive-access world of private tax dodging infrastructure that the super-rich pay millions in fees to access (including political contributions), but it saves them tens or hundreds of millions in taxes per household. These families span the political landscape, which is especially dismaying for the supposed "progressive rich." If they adopt the same practices as the Kochs, then they are just adding to the problem instead of fighting it.

Their biggest source of tax savings is of course that schlubs like us earn wages as income, while they earn the bulk of their money through complex investment vehicles, shell corporations, and trusts - and those barely get taxed. They need pricey lawyers and bankers to set up, but it pays off. The NYT article said that the rich treat it like a fun game - like an easter egg hunt to find all the possible loopholes to screw Uncle Sam and the 99%. But I'm sure they don't think of the impact that way - they "deserve" the rewards because they're just more clever/influential than the rest of us. Some of the arrangements are so complex that the underfunded and maligned IRS can't even keep track, and they are supposedly the custodians of the rulebook. But they don't craft the tax policy, they just do their best to interpret and enforce it.

The NYT article failed to state what the total tax losses are to the US due to these practices by the super rich. But I wouldn't be surprised if it numbers in the tens of billions. Maybe that is not a huge # vs. the total US income tax revenue (over a trillion per year), but it could buy a lot of road repairs and school programs. And besides the actual revenue, cracking down should send the message that the rich do not get to play by a different set of rules. They already enjoy vast socioeconomic advantages that enable them to grow their wealth, and maybe some of those advantages should be reduced too, but at least they should not weasel their way out of their patriotic and civic obligations.

Otherwise IMO they are more damaging to the country than all the deranged mass shooters and ISIS-inspired amateur terrorists, because the cheating rich are undermining US principles of equality, justice, and community, which hurts us all. Remember the old saying (paraphrase), an accepted injustice anywhere diminishes justice everywhere.