Billionaires, run for your rocket ships: the pitchforks are coming!

[image: La Prise de la Bastille, Jean-Baptiste Lallemand, Les musées de la Ville de Paris
 
 

Billionaires, run for your rocket ships: the pitchforks are coming!

PROPUBLICA SECRET IRS FILES SHOW HOW THE FILTHY RICH GET OFF TAX-FREE
By Toby Sanger and Darren Shore
12 June 2021
 
 
It turns out Donald Trump’s not the only stratospherically wealthy serial tax-dodger that everyone loves to hate. He’s got more company than we thought, whose egos are likewise dwarfed only by the size of the fortunes they don’t want to share. And his company, and their companies, are just a little ticked off that we just found out.
 
An extraordinary report from ProPublica, including leaked information from the IRS, reveals that some of the world's wealthiest billionaires regularly pay little to zero income tax. Jeff Bezos, Elon Musk, Warren Buffett and two dozen others got exposed.
 
It turns out that at most, these global oligarchs contribute a minute fraction of their constantly increasing wealth to public coffers. And they do it all legally. As Trump himself said: the system is rigged. He just didn’t finish the sentence. It’s rigged for the richest people on earth, who leave the rest of us paying their bills.
 
If the plutocrats are ticked that the info got leaked, just wait til they get a load of the uprising to come. People are mad as hell, and like Canadians for Tax Fairness, they’re not going to take it anymore.
 
And as public anger grows along with an awareness that many of these people have little more than contempt for the public good on which their obscene wealth depends, the tax man might become the least of their fears. (You might also see a few women looking over their shoulder, like New York real-estate tycoon Leona “only the little people pay taxes” Helmsley.)
 
Jeff Bezos didn’t pay a cent of his inconceivably vast fortune in tax in 2007 or in 2011. From 2014 to 2018, while his wealth increased by US$ 99 billion, he paid less than 1% of that in tax. He might need his new yacht that comes with its own yacht as an escape plan from the livid masses. (Did he order it on Amazon, where customers pay sales tax?)
 
If that doesn’t work, Bezos can modify his rocket ship to go to space for more than 5-minutes. Then again, when building it, he said going to space “changes you, changes your relationship with this planet.” He might even come down to earth, literally and figuratively, and pay his taxes for a change. (Or not.) Could the infrastructure and science on which space travel depends have been realized if everyone paid such a small portion of their income and wealth in taxes?
 
Also revealed: Tesla CEO Elon Musk got US$13.9 billion richer from 2014 to 2018, while he paid a mere 3.3% of that in tax. If the Bastille gets stormed, how much of his US$130 billion will fit on his spaceship for its upcoming trip to Mars? Let’s see, it would take someone earning $50,000, after the income tax us lowly wage-earners pay, about 2,600,000 years to save that much money. Use the force, Elon. Hope the Martians are as corrupt and complacent about intergalactic tax dodging as our governments here on Earth.
 
Until the revelations, some billionaires seemed more magnanimous, like the Oracle of Omaha, Warren “raise my taxes” Buffet. He has no plans for a space voyage - at least not yet. Instead, the world’s sixth-richest person laughs all the way homahahaha every year: From 2014 to 2018, for instance, when his wealth increased by US$24 billion, he reported less than 0.5% of that as income, and paid less than 0.1% of that as tax. Maybe “Avoider of Omaha” would be more appropriate. Looks like he served up a buffet of baloney. You gotta wonder how many pitchforks Nebraskan farmers have lying around.
 
All in all, ProPublica calculates that the 25 wealthiest Americans paid an average income tax rate of just 15.8% in the five years from 2014-2018. Meanwhile an ordinary American worker pays close to 20%. But that’s just the income - a tiny fraction of their wealth. The tax they paid on that increased massive wealth over this period? Just 3.4%. (No, we didn’t forget a digit.)
 
How is it legal, at a time of climate crisis, environmental catastrophe, massive public debts, billions of people on this Earth subsisting on barely enough, and millions of others dying every year from hunger, that people with unfathomable fortunes contribute a significantly lower share of those fortunes towards a better future for us all, even though doing so would have zero impact on their lavish lifestyle? Every last one of us knows it is wrong.
 
You could ask the government to do something substantial. But it seems our G7 leaders would rather do a taxpayer-subsidized schmooze of self-congratulations over largely ineffective tax tweaks instead.
 
The world has indeed gone mad. Maybe these billionaires ain’t so crazy to escape to outer space.

 
THE TRUE NORTH, STRONG AND TAX-FREE
 
Canadian billionaires have it even better. For the wealthiest, Canada’s personal income tax system is even less progressive than the US system. We have similar loopholes, allowing the wealthiest to reduce their taxes to insignificance, if not zero. And though we haven’t had an IRS-ProPublica-style leak yet, now and then we get a glimpse.
 
Remember when home-grown billionaire Guy Laliberté lived out his own star trek fantasy to the International Space Station? He tried blasting it off as a business expense, but that time our tax collectors weren’t clowning around. (That was a year after Guy took the liberté to rack up surprise charges for ‘non-taxable benefits’ in Tahiti. Turns out playing tax-avoidance is more fun than playing Cheech and Chong.)
 
We also know, from the CRA’s income tax statistics, that there are regularly over a thousand Canadians with income of over $250,000 who don’t pay a cent in tax, each year. Undoubtedly, this includes our own billionaires. And why would they pay (aside from a conscience)? Our governments are just as good at letting them use every trick in the tax code, and legalizing a code that’s full of tricks in the first place.
 
Historically, the situation wasn’t so backwards. As the ProPublica report points out, when income taxes were first introduced in the United States, they were only levied on the rich.
 
Also, in the good old days, the government actually published how much people earned, and the amount of tax they paid. If that were still the case, the US “justice” department could focus on giving some justice to tax-evaders, instead of trying to sound outraged that someone at the IRS had a big enough conscience to expose something really outrageous.
 
Some countries do better. A number of Scandinavian countries make such tax information public. And Australia publishes income and taxes paid for all larger businesses.
 
Meanwhile, in the true north, strong and tax-free for the truly rich, the rest of us have been financing pandemic wage subsidies used by profitable corporations to pad the pockets of millionaire CEOs, shareholders, and tax-dodging corporations.

 
BILLIONAIRE TAX-DODGING 101
 
How do they get away with it? It’s actually pretty simple.
 
Instead of paying themselves the enormous salaries their lavish lifestyles would require, since salaries are taxable, billionaires keep almost all of their mind-blowing fortunes in business interests and investments - some of which may be held in trusts. Their income from these investments is usually taxed at much lower rates than income from employment, if it’s taxed at all. The income and wealth of their corporations can be made essentially untaxable by using tax havens. Then, billionaires borrow money from the bank at very low interest rates, using their enormous wealth as collateral. And after all that, the interest they pay to the bank on those loans is actually tax-deductible. Voila! Zero to minimal taxable income, and use your “debts” as an “expense” to cancel out the rest.
 
With rigged rules like that, how easy it is to hop onboard your own spacecraft, and look down smugly at the pawns who do the work, and pay the taxes that finance the education, infrastructure, healthcare and legal systems on which your vast fortune depends.
 
Some billionaires have never had qualms about calling it what it is. As the 'Avoider of Omaha' said, “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”
 
For the most part, however, the super-rich employ an array of lobbyists to convince elected officials, and an array of public communicators in the media and nominally independent organizations they own, control or influence, to sing the praises of leaving their fortunes untouched.
 
For instance you'll hear their PR pundits, often masquerading as unbiased non-profit organizations, tell you that a wealth tax won't work, even though you already pay a wealth tax every year, based on the assessed market value of your biggest asset. It’s called property taxes. And if you’re renting your home, you’re just paying that wealth tax indirectly. But the wealthy pay no wealth tax on the bulk of their own vast assets, from fine art and collectibles to their yachts, jets, and spaceships. The truth is, a wealth tax just wouldn’t work for them. They’d rather it were you who keeps working for them.
 
You'll hear these same underlings pass on the message that corporate taxes are too high - again, omitting to add “too high for them.” But we know their corporations and businesses can pay little or no tax. And we know the corporate system serves them well, as companies are often used to nominally own many of the personal assets, including homes, of the super-rich, often through private and numbered corporations and trusts, to further reduce or eliminate their taxes.
 
Just after the ProPublica-IRS piece was published, Amazon ads came out about the company’s contributions to the Canadian economy. In other words, we should be happy with the cake they let us eat.

 
TIMES ARE A CHANGING
 
Ten years ago this fall, in the wake of the financial crisis and great recession, the first real chinks in the tax-avoidance armour of the super-rich began to show.
 
Activists occupied Zuccotti Park near Wall Street in New York City, where the robber barons couldn’t hide. They called for equality. They called for justice. They called on the government, whose salaries they paid, to change its course on wealth inequality, and work for the 99%.
 
A decade later, inequality has only gotten worse. The only group that increased their share of national wealth in Canada from 2010 to 2019 was the top 1%. Now they have more than a quarter of our total wealth. The wealth share of all other groups in Canada shrank over the past decade. And during this past pandemic year, billionaires have become far wealthier.
 
But more and more of them are beginning to see that change needs to happen, and soon.  Patriotic Millionaires, Millionaires For Humanity, Resource Movement and other groups of wealthy individuals who know the show can’t go on without major consequences for our planet and societies, are calling on the government to finally do what’s right, and tax the rich.
 
As for the rest of us, how long will it be until the 99% give up on protest, and take the pitchforks to the Bastille? The reaction to the ProPublica/IRS exposé is impressive. The level of anger is palpable. Will the poor and huddled masses really wait for their grandchildren to be as angry at them for their own inaction, as we are now livid at our governments for their hypocrisy and kleptocratic complicity?
 

Governments are also having to address tax injustice more openly. They have always known there is money for public services - that it's just not being paid by the wealthiest. They've know they don't have to make cuts to healthcare, education, social programs, help for the poor, veterans services, and more. But seldom has the tax justice community sensed so clearly that the winds have shifted, and the charade will have to end.

Our governments have a clear choice. They can fix the problem that they’ve always known exists. Or they can let it continue, let inequality continue to grow, let most people struggle with inadequate working conditions, healthcare, education, and public services, while the fallouts of poverty such as racism and extremism seep deeper into our society, and as the world as we know it comes to an end in an avoidable climate catastrophe, right before our eyes.
 

TAXING THE RICH
 
The remedies for our current tax system are as clear as the problems. 
 
ONE: Bring in an annual wealth tax on the ultra-wealthy. As Canadians for Tax Fairness has shown, a modestly progressive wealth tax of 1% on wealth over $10 million, 2% on wealth over $100 million and 3% on wealth over $1 billion would raise close to $20 billion annually in Canada. It would do a lot to pay for the costs of the crisis and help reduce extreme inequality and make our tax system a bit fairer.
 
TWO: Tax income from capital and investments at the same rate as income from employment. This would also generate about $20 billion annually.
 
THREE: Eliminate and restrict other tax loopholes, preferences and dodges, including trusts, that allow the wealthy and high incomes to significantly reduce and eliminate their taxes.
 
FOUR: Clamp down on use of international tax havens and ways of dodging their income, both through legislation and increased enforcement.
 
FIVE: Mandate greater transparency about who owns what, including in the corporate world, how much income they make and how much taxes they pay or don't pay.
 
 
PAY UP OR LIFT OFF
 
Will the government continue to speak out of both sides of its mouth? The Trudeau government promised to identify additional ways to tax extreme wealth in their Throne Speech last year, but there was nothing in Budget 2021. Finance Minister Freeland wrote a book about plutocrats, but our tax system continues to be rigged for the rich, and her negotiations at the G7 produced a fair tax flop.
 
A vast majority of Canadians now support a wealth tax. Even conservative economists now admit that wealth trickles up, not down. Wealth inequality is at an all time high. The emperors have nowhere to hide. Their minions have lost all their cred.
 
And given the public sentiment, it looks like unless the government ends its hypocrisy and complicity in maintaining our grossly unfair tax system, while the Earth is facing catastrophe, then when the Bastille finally gets stormed, there won’t be enough seats for the billionaire tax-dodgers to escape on those rocket ships our taxes built, from the pitchforks down below.