IRS Leaks

If you've been following the news in America this past week, you've seen the news about the IRS leaks that show how little taxes the richest individuals actually pay. The effective rate paid by the nation's richest billionaires scales from 0.1 to a whopping 3.8 percent, while average Americans pay an effective rate of nearly 15 percent.

What amazes me most about this, is the fact that there are still many people who actually defend this atrocious state of affairs. The standard right wing talking points in defense of these multi-billionaires consist of reminding us that they by far pay the most taxes in absolute terms, and that they operate within the law. Well, I say that the fact that they indeed break no laws is the most alarming aspect of all of this, because it means that the lawmakers, the corporate backed government, have fashioned an economy that solely benefits the ultra-wealthy to the detriment of the other 99 percent of the population. And it doesn't matter which party has the White House in this corporate duopoly as shown by both parties' immediate reaction to the news that billionaires pay next to nothing in taxes: both the Democrats and Republicans want an immediate investigation as to who and why the tax-returns were leaked, some even calling for the leakers to be thrown in jail. Not the billionaires, but the whistle-blowers are the criminals in their eyes...

Taken together, it demolishes the cornerstone myth of the American tax system: that everyone pays their fair share and the richest Americans pay the most. The IRS records show that the wealthiest can — perfectly legally — pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year.

Many Americans live paycheck to paycheck, amassing little wealth and paying the federal government a percentage of their income that rises if they earn more. In recent years, the median American household earned about $70,000 annually and paid 14% in federal taxes. The highest income tax rate, 37%, kicked in this year, for couples, on earnings above $628,300.
_{source: ProPublica}

And technically this is right: the billionaires break no laws in order to pay almost no taxes, and yes, their privacy has been violated. But come on, let's just call it how it is: lawfulness is not in question here, justice is. I'll refer you to the below linked video for the full scope on this not so surprising news; we already know that billionaires and corporations have bought the government to do their bidding. What I want to briefly expand upon is exactly how these billionaires manage to pay almost no taxes. The first reason is that these men have almost no income and therefore don't pay any income tax. This is also why you should not be impressed when a top business executive announces that he will accept a yearly salary of just one dollar. This one-dollar salary does nothing to diminish their wealth, it only increases it. The same goes for the many charitable foundations which effectively function as a tax-free storage for their wealth. Almost all of their wealth comes from the growth of their assets, their stocks, houses, land, factories and so on. This growth isn't taxable. Only when they sell an asset, that becomes a taxable event, so all they have to do is not sell.

Step two is to use these assets as collateral for huge loans, which they are granted against ridiculously low interest rates. So, when you earn a million dollars through labor, you have to pay income tax, with the highest rate of 37 percent kicking in at 600,000 dollar or thereabouts. But when you use your assets to take a loan of one million dollar, you only pay a 3 percent interest rate. And you use the loan to buy more assets. And the interest paid gives you a nice deductible on any regular income you do have. One of my uncles is a millionaire and I remember him saying to me when I was a young pre-teen that to hold on to his money he had to have debts. This is how it works. To top it all of, remember that new money comes into existence with every loan, with every debt, so these billionaires are also the main source of the devaluation of fiat money, of your and my dollars. But instead of an investigation of how this system is so fundamentally rigged against you and I, the powers that be want to investigate who leaked the documents...

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