Billionaire owned yachts float on their ability to make public policy and garner government subsidies, direct and indirect.
Nearly four years ago a Reuters columnist wrote:
As the debate over wealth inequality rages, a paradox is expected to play out over the next five years: the share of people in the lowest strata will decline, while the wealth of the world’s richest will grow faster than any other group.
These projections from Credit Suisse’s Global Wealth Report will be seized upon by proponents of the view that the wealth gap is narrowing, however slowly, and those who argue that the ultra-rich getting richer is no cause for celebration.
The “Paradise Papers” leaks this month revealed the lengths to which some of the world’s wealthiest individuals and institutions go to minimize their tax payments, and re-ignited the debate over wealth inequality.
Whether it’s tax avoidance (technically legal but morally questionable) or tax evasion (outright illegal), the documents shone a light on the financial affairs of the rich and ultra-rich. “One rule for them and one for everyone else” was a common reaction to the revelations.
The richest 1 percent of the world’s population now owns half of its wealth. And there’s no sign of that receding. A rising tide lifts all yachts.
CommonDreams reported today:
Under pressure from well-heeled conservative advocacy organizations and donors, Republican senators have removed funding for IRS enforcement from an emerging bipartisan infrastructure plan, threatening to tank a proposed crackdown on rich tax cheats.
The scrapped provision would have increased the IRS budget—a frequent target of GOP cuts in recent years—by $40 billion over the next decade to help the agency combat tax dodging, which is depriving the federal government of trillions of dollars in revenue. An analysis released earlier this year by academics and IRS researchers estimated that 36% of unpaid federal income taxes are owed by the top 1%.
MarketWatch reported on the wealthy's use of debt to avoid taxes.
ProPublica’s investigation into billionaires’ tax returns has more people paying attention to the strategies wealthy Americans use to avoid paying taxes. As it turns out, one of those tactics involves the advantageous use of debt. There’s even a catchphrase for it — Buy, Borrow, Die.
You don’t pay taxes on an asset until it produces cash. That allows for the wealthy to build up their assets tax free. To most of us, it would seem that the problem with that method is that “sooner or later you’re going to have to sell,” he said. But that’s actually not the case. As long as someone is wealthy enough to live on a percentage of their assets, they never have to sell.
Instead, they can borrow against those assets at an interest rate that’s much lower than the rate at which the assets will appreciate over time, McCaffery said, and use those funds as spending money. But unlike the wages and salary most people use to pay for living expenses, the borrowing isn’t taxed, so they face a relatively low tax bill. Once they die, the assets pass to their descendents tax-free or with minimal tax treatment.
Private equity underwriters (PEU) are masters at the use of debt to minimize taxes. Politicians Red and Blue love PEU. While the rising tide lifts all yachts, the rest of us are treading water.
Update 8-2-21: Recently released wealth data reinforced the themes in this post. Yahoo Money reported "The share of wealth held by the top 1% continues to climb while those at the lower end lost ground … by that measure, inequality worsened.”
Update 8-14-21: Policy making billionaires ensured the Trump tax cuts benefited them in an outsized way.
Update 8-26-21: "Afghans did not reject us. They looked to us as exemplars of democracy and the rule of law. They thought that’s what we stood for. And what did we stand for? What flourished on our watch? Cronyism, rampant corruption, a Ponzi scheme disguised as a banking system, designed by U.S. finance specialists during the very years that other U.S. finance specialists were incubating the crash of 2008. A government system where billionaires get to write the rules."
Update 2-2-22: A historic bridge in Rotterdam will be dismantled so billionaire Jeff Bezos' super-yacht can pass through. Locals are livid given officials promised the bridge would never be dismantled again. Can't his spaceship lift the yacht over the bridge?
Update 3-1-22: Young workers understand how they are judged on their productivity and the never ending drive to squeeze more out of them. For executives and the PEU boys it is never enough.
Update 5-30-22: Billionaire Elon Mush tweeted it is morally wrong and dumb” to use the word “billionaire” as a pejorative, adding, “If the reason for it is building products that make millions of people happy.” What if the reason for that billionaire is decades of preferred taxation? What if that billion in wealth arose from surprise medical billing?
Update 10-5-22: Treasury Secretary Janet Yellen said the U.S. economy failed to live up to the nation's promise of equal opportunity for all."
