Amid an eye-opening ProPublica report on how some of the wealthiest Americans legally avoid income taxes, a Bay Area lawmaker is pushing his measure that would place a wealth tax on people with at least $50 million in holdings. John Ramos reports. (6/9/21)
– When most of us get paid, so does Uncle Sam.
– That’s where it’s supposed to work. The majority of us see that line item right there on your paycheck. But according to a new report, the wealthiest Americans dodge income taxes legally. Nonprofit investigative journalism organization ProPublica obtained years of IRS information. It found the 25 richest Americans sometimes paid little or no federal income tax. That includes Warren Buffett, Elon Musk, Michael Bloomberg, Jeff Bezos, now the richest person in America. According to the report, he paid no federal income tax in 2007 and 2011. Now comes the debate, should we move away from the traditional income tax?
– KPIX5’s own John Ramos on those backing a wealth tax.
JOHN RAMOS: Most of us live in a world where you get taxed on the amount of money you make. But if you make enough money, you get to live in a whole different kind of world.
The ProPublica story is giving us a glimpse into that world. While most of us pay about 35% of our earnings in taxes, between 2014 and 2018, Warren Buffett saw his wealth grow $24 billion, but paid a total of $23.7 million, an effective tax rate of 1/10 of 1%. And Amazon’s Jeff Bezos, the world’s richest man, gained $127 billion from 2006 to 2018, but paid just $1.4 billion in taxes, only about 1.1%.
BARBARA SHAPIRO: If I do business at one of their companies, I’m creating more money for them, and they’re not being taxed on it. That’s not fair.
BARBARA LOEB: I think it stinks. You know, it’s like, they have billions and they don’t pay taxes. And I don’t know how they do it.
JOHN RAMOS: They can do it because most of their money isn’t traditional income. People, like Elon Musk, earn billions on the appreciation of stocks and other holdings, which aren’t taxed until they’re sold. So they never sell them. Instead they live lavish lifestyles by borrowing against their assets.
So California assembly member Alex Lee has introduced a bill AB310 that would place an annual 1% tax on the wealth of people with at least $50 million in holdings.
ALEX LEE: So this is only tackling on the assets, the fortunes, the wealth of people who are mega millionaires and billionaires. And it would potentially generate yearly $22.3 billion for the state.
JOHN RAMOS: And while that may sound fair, it may not be smart, said Jim Wunderman with the Bay Area council.
JIM WUNDERMAN: That would be completely out of sorts with any other state. No one does that. I’m certain it would cause an exodus of wealthy people from California who already pay a lot of tax here.
JOHN RAMOS: The ProPublica expose describes how much the system favors the super rich over everyday citizens. Or as Warren Buffett famously said in 2011, quote, “There’s been class warfare going on for the last 20 years, and my class has one.” In Walnut Creek, John Ramos, KPIX5.
– AB310 would amend the State Constitution. So it would require a vote of the people. A similar bill died in committee last year, but Assemblyman Lee says if that happens again, they may try qualifying it as a public generated initiative.