From the New York Times. I'm Michael about this today an explosive new story shedding light on the taxes paid by the Ultra. Well, then, there are the biggest billionaires in America behind Brands like Amazon and Tesla they're, paying little in income tax as compared to their fortunes, sometimes nothing at all secret documents obtained. I propose a cup inside the Iris NEWS, Flash John, the super rich there not like us, reigniting along simmering debate about why the ultra wealthy are taxed so differently, then those who earns far less now the scandal is what they're doing is perfectly legal Sabrina taverns spoke with our current Jonathan Weissmann about how that came to be and what it would take too long.

Engine it's Tuesday June, fiftieth, ok, Jonathan Talk, they threw exactly what we learned from this report last week. It was a shocker because what we saw were household names before Jeff Baisers, Michael Bloomberg. Alone. Mosque George Soros paid, virtually nothing in taxes and in some years they paid zero taxes, and what is remarkable is that they weren't breaking the law. They were using the tax code as com

road it and as the Internal Revenue Service interpreted, everything they did was perfectly legal. How is that possible? Well, Jeff basis is not like you and he doesn't make his money. The way we do, let's take a fire fighter. Afire fighter, maybe makes forty thousand fifty thousand dollars a year and all of that money is in the form of a paycheck and before that check even lands in the fire fighters bank account. The federal government baker. Man has already extracted its taxes, he's been taxed on his income and that fire fighters tax rate should be about twenty two percent. According to the current tax code basis also has an income. His salary is eighty one thousand eight hundred and forty dollars a year. Pretty modest. Ok, that is very

A very low number for the CEO of Amazon, that's right in its own purpose, right, so Jonathan, obviously basis is real. Income is a lot bigger than eighty one thousand dollars. So where does his income come from? If it's not a paycheck, and what does that have to do with how he gets taxed? So Jeff bases is vast, vast fortune, most of that is in assets, and most of those assets are stocks Remember when he first started Amazon, he would have gotten a lot of stocks right up front and those stocks are part of his pay. Now he is given certain stock options every year, so those stocks Cumuli worth as the value of Amazon rises in the stock market rises, and they are just sitting there gaining wealth, getting fatter more expensive

now for ordinary wealthy people for the for the merely wealthy people like dogs. During our lawyers. They also have a lot of money in stocks. and when they need a big chunk of change, let's say they want to go. Buy a car are put down money for a house. They need to go into those stocks, those assets and sell a big chunk of them and when they sell they actually do pay a tax. It is called the capital gains tax right now the capital gains tax. Is a less than an income tax for most people for a really really rich person. It's about twenty percent. So let's say you bought a stock for twenty dollars. You sold it for thirty dollars. You have to pay tax on the ten dollar gained, so you'd pay two dollars. If your tax bracket is twenty percent of capital,

now faces is different because he has so much money he doesn't have to sell anything to come up with a big chunk of change that he might need to purchase something like his eight house and that's why the pro publicly article was so interesting because we learned from that how he be buying all the things we see him buying and still pay zero in taxes. Okay. So why don't you walk me through that? How is Baisers actually doing it? So, let's Jeff Baisers needs a hundred million dollars to buy his next big house. No bigger easily, so a hundred million dollars in stocks or bonds to come up with that, but he doesn't want to pay taxes on the sale of any of those assets. So what a Jeff basis

got to do is go down days, bag and say hey. You know me, I'm good for this money. Could you give me a low interest hundred million dollar alone? I have the collapse. oh here it is, give me a hundred- in dollars and the banks are perfectly happy to give Jeff Baisers a hundred million hours. No problem and not we do not have to pay a tax, because you can sell anything to get two hundred million dollars. You actually get to write some of that loan off your taxes. That's the way the tax code words. Ok, so let me get this straight. So when basis wants to buy something expensive, he doesn't just sell some stocks. He takes out alone, backed by all of his rising assets. Is enormous wealth and banks happily give it to him because they know is good for it and then

that's his spending money? That's right! That's seems like a pretty big loophole in the tax system. It is not only by not selling. Is he avoiding capital gains tax on the sale? He also gets to keep his assets intact and those assets keep growing in value over a year a year over a year and his wealth rose and grows and grows and is never taxed as long as he doesn't sell it under the? U S tax code, you only pay taxes on you sell something so just don't sell anything, but he'd guys have to pay off that loan right for his hundred million dollar house. So how does he get the money to do that? Does he have to liquidate some assets? To do that and then wouldn't you need pay taxes on whatever money he gets from that remember, he does have some income coming in he's got that eighty one thousand dollar salary, so we can pay off.

On monthly instalment some of these loans, the other He does, which is what a lot of rich people do, you take out loans to payloads. So you he rolling over debt. So let's say your big loan bill do you go to a different back and they can I take it up. now, in fact, every time Do that you're actually decreasing your tax burden, that much more because all of these The lending transactions are, many of them are tax deductible, so is basis in an immense amount of debt. Now we don't really have a perfect picture of his balance sheet, but he probably holds a lot of debt, because rich people tend to hold a lot of debt is actually part of tax management, and I wouldn't be surprised if his debt is by human standards, probably a fairly large but by Jeff bases its standards against his assets against what he's worth it still probably a small sum rate, but how

How many says I mean is your average, while he financed guy doing us, or is this just Jeff basis? I think it really applies to the really mega rich, a doctor might be worth tens of millions of dollars, but for that doctor. A lot of these transactions would be quite expensive. You know every time you go down, the bank stuff free and your also paying lawyers who really know how to do this. Now that legal, Belpher Jeff basis is nothing, but that legal bill for a doctor would be probably prohibitive

and I dont think you see this as widely as one might think height sulphur bases. He think he to himself. Ok, I need only money to live. I can either pay myself a big salary from Amazon. My company and pay income taxes on that or I can sell off a bunch of stock that I own and pay capital gains. Tax is on that or I can ask the bank to give me the money untaxed based on this. That I have all of these growing assets. Kind of a no brainer me up. That's the U S tax code and it goes way back: There is a long history year after year, law after law that has created a tax system that lets the Super rich, off the hook. While you and I pay our taxes week in week out out of our paycheck-

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hey daily listeners, its Jane Christian, hosted the argument, a podcast from your chance opinion. I spent years, is a reporter talking to people from across the political spectrum. I've heard a lot of arguments to in person and online. Some are baseless and mean, but some of maybe think differently or helped me understand other both points of view that, with the argument is about each week on the show you'll hear people who disagree with each other respects all civil debate that gets Hind, the Big news stories and beyond party lives like powder reform, policing in America whether wish The student Dan raise the minimum wage or kill the filibuster. You might not agree with everything you there and that's the point you might even walk away some Europeans of your out. You can listen in Europe,

That's a very man. Every Wednesday were every year listening to the spot, guest, ok, Jonathan, where it is that long history of letting the super rich off the hook start well to understand how we got to Jeff Baisers, paying no income tax at all some years. You have to understand how taxation of investment broke off from the taxation of income and pay checks, and to do that, you really have to go back to the beginning of the federal income tax in nineteen thirteen and from the very beginning, the United States was not afraid to soak the rich. that first income tax included a six percent sir tax on incomes over five hundred thousand hours made. That is a very high tax rate on rich people.

considering today the highest income. Tax rate is thirty, seven percent right, I'm thinking of Vanderbilt Carnegie Rockefeller right in those guys were traditional moneymakers right. They had companies that made things so the Vanderbilt in the Rockefellers they sold oil, they sold steel, and the sales of those things came back to them as income and that income was taxed at high rates at the highest levels. That's amazing! In today's context I mean. Did everybody basically agree that that made sense to tax the wealthy at a much higher rate? Yeah? They basically did. You know the United States had a different attitude towards the rich than they do today. Remember we call them robber barons. We had a President Teddy Roosevelt, who can

pain, untruss busting? It was politically popular to go after the rich. You know in nineteen forty four during World war to the highest marginal Freight was ninety one percent, while in fact, when John Kennedy came in, he talked about it eyes tied lifting all boats and that we need to do something to courage wealth, while you nobody, Daddy cut that I as tax rate from ninety two percent, to seventy seven percent, like I, that is still extremely high by today's standards extremely and its That way, basically until Ronald Reagan, I'd like to say a few words about where these countries been and where will be going from here. The last time I is to the New York Stock Exchange was in nineteen. Eighty in the mood sure was different them.

but in the last five years we move from malaise to hope, confidence and opportunity, So in Oregon comes in at a time when the other. old war is right. Jane is that go go eighties. We're foolish the american praying for the New York Stock Exchange? The nerve centre of american Capital Finance AIDS is keen. Point is, ladies and gentlemen. At three is good. Gordon gecko is proclaiming the reed is good and the DOW Jones causing index one from seven hundred fifty nine to a high quality Seven. Ninety one, the image of the rich has changed. Business lose business goals were in the NBA with a degree of a decade ceo corporate writers became celebrities, and there was a point.

Where Ronald Reagan is trying to reform the tax code and he's talking to Bill Bradley. The senator from New Jersey had been a professional basketball player and Reagan, tells Bradley. You know the income tax so high. I didn't want Another movie, it didn't make any sense economically to make another movie and Bradley says yeah. You know I didn't want to play for the NBA anymore. What's the point- and I was Just- can be taxed away and they come up with a nineteen eighty four tax reform that lowers the highest income tax rate. all the way down to twenty eight percent. I feel like we just played the world Series of tax reform and the american people one What a century of soaking, the rich goes down to the rich

hang not a whole lot more in income tax there anyone else. So, instead of this pervasive feeling that the rich should be taxed and should be taxed heavily to pay for things, the government needs now is shifted to rich guys are actually good for the country and for the economy, and they should be punished with a bunch of taxes, because, after all, we're Americans, Capitalist spirit, that's right so by the ninety nineties. The economy is really transforming. America makes its money off money. Finance is spinning off all sorts of wealth, the stuff market begins to boom their day traders and we had the beginning of the internet. The economy is turning into something completely different and its being driven by investment and risk. Ok, so Oh! It's no longer rich people like the Vanderbilt making things it's p

all involved in finance on a mass scale. That's right. Remember all comes Newt Gingrich in the republic, revolution of ninety. Ninety four we're here, because we are taking the first steps and we're taking them in a contract with the american people and Gingrich begins a mantra that we need to treat income from investment differently from income from work. We want to make sure that people who create jobs by saving and by investing have a tax break to increase economic growth is a broad agreement now not and that, in fact, we need to favour income from investment. You know, as Gingrich was actually trying to balance the budget with Bill Clinton. He said we favour abolishing the tax on savings and job creation. We favour, I favours zero tax on savings and job creation. That was ninety ninety seven, which meant he didn't want attacks

investment income at all explained the idea behind that. Why would Gingrich say something like that because, first of all, of course he did have a lot of rich benefactors, but there was a sense that if people invest money in the stock market, if their give companies their money. Those companies would use it to innovate to make new company to find new products to buy new services, and that, grow the economy as well. There is an idea that we don't want people just sit on their money, we want them to invest it. We love the stock market and in order to do that,

we don't want to tax the gains that their seeing the same way we tax the money coming from their paycheck. We want to favour investment, and this gave rise to a push for special treatment of capital gains tax. As those taxes that you pay off the sale of stocks, mainly but also other assets. So Jonathan was that the moment that was really the beginning of this thing we ve been talking about, which is effectively the separation of investment and income right. Yes, you know at this point: investment income is considered better than regular income, its tax at a lower rate, the people with the most investments, the ridge are raking in money off the stock market, its not being taxed very heavily they're, getting richer and richer and richer the gap between rich and poor

or is getting wider and wider until it a chasm. Denmark that's our arguing over capital gains raids that keep going up or down or up and down, considering whatever the polluter winds. Are meantime nobody is talking about how to tax this growing wealth had a cat sure the value of these huge piles of assets. Nobody dares talking about what the pro public article was talking about. That is nobody until Elizabeth Warren in twenty nineteen, it's time for a wealth tax in America. Furthermore, in says, we need to rethink the way we tat in America and we need to begin taxing wealth, your first.

million dollars is very unclear. I see some Folkestone, but your fifty millionth and first dollar you gotta pitch in two cents. An reply has been through a bunch of innovations, but essentially this down to something like this. If you worth at least fifty million dollars, you need to pay a two percent, Sir Tax, on the value of your wealth above that threshold each year, whether you sold any of it or not, you ve been paying wealth, tax forever. They just call it a property tax, I'm just saying for the brazilian ears, the top one tenth of one percent. How about? We include, in addition to the real estate, the stock portfolio, the diamonds, the Rembrandt's and the yachts? That's all!

Plan would start with stocks, but eventually it wouldn't compass, all kinds of wealth taxed at two percent, above that fifty million dollars threshold, and then there be an additional one percent tax on wealth above a bit billion dollars. May we all do in some ways, pay taxes order assets because we pay property taxes. every year so he comes around from my city and tells me my house has gained a certain amount of value and my property tax goes album.

Amount, because of that rising value. That's what she saying we should do for everything so when she proposes this, that's kind of a radically new way of thinking about what we tax in our country, but clearly it wasn't persuasive enough because we don't have a wealth tax. Now right, yes, you're right, it did not have the political firepower to win her had the nomination for the poor and then see- and it is not gotten through Congress, but democratic law makers that I've talked to in the last week, especially since that pro public article came out are saying, They really want to do this. The tax writing committees, the finance committee in the ways and Means Committee are taxed to pay for all of these things. That Democrats, especially job we want to do. They want to spend a lot more money on infrastructure. They want universal preach

they want universal access to community college is all of these things. Cost money and, while republicans are trying to avoid raising taxes, Democrat suddenly see a real reason to do something about wealth, to tax wealth because they see it a big political winner, especially now that we know that the richest of the rich don't pay taxes In your mind, is there any reason to think that this might actually happen? You know, I think it really might of the biggest impediment to it happening might be, ironically, the democratic desire to work with the Republicans on a bipartisan bill, because,

public and are never gonna go along with anything like a wealth tax. If the Democrats decide to forget about by partisanship and pass say a grand infrastructure bill on their own, they all use some kind of wealth tax to help pay for that. So, in the end, partisanship is the thing that war push. This issue forward by partisanship will be the thing that kills it interesting ha I mean if they can get you

payments to vote for it. You know they could do with fifty votes in the Senate and they certainly will be through the house, so it still longshot, but it's not a pipe dream because they can do it with just democratic votes as long as they have the presidency in both houses of Congress. So this idea of a wealth tax, its political of course, but it's all so. It seems to me very foundational to how we think about wealth in this country, and our economy and how our economy grows. You can make the argument that a task code that favours investment that doesn't tax wealth, leads to more innovation. More risk taking there is enormous reward in our tax code for for the risks that an open have made an inner alone. Musk

is in the United States for reason, that's why we have Tesla Jeff basis. created Amazon and the roaring war enormous on the perhaps you could say, look how much incentive does Elon musk need if Jeff Baisers was going make a hundred billion dollars off of Amazon instead of a hundred and forty billion dollars. Would he have not bother would alone must really not have invented Tesla if he had to pay two percent. Sir tax, on some of the wealth gain to that, and I think that you also have to look at what is happening in the broader society as we fabulous gains in a wealth of the Super rich, the vast majority, of american workers are pretty stagnant. We're not the kind of class mobile that we once did. The american dream

is not as palpable as it once was, an as the gap grows between. the very super rich and the No class There is a real risk here of political instability, of societal instability and those of the kind of things that policy makers need to look at from right and from the left, and you know this public article, has just come out. We don't know where this is heading. We need to watch it. But honestly, I think we're just at the beginning of this chapter,

Thank you. Jonathan you're welcome, we'll be right. Back well, Spargo its power to be by this of women and diverse small business owners leading the way to recovery there, Dr Deposit, their business showing others the way. Well, Spargo is donating roughly four hunter twenty million dollars and grants through the open for business fund to provide support to non profit organisations that support small businesses impacted by covert nineteen find out more and Wells Fargo dot com, slash together. Here's. What else you need to know the truth?

maker Novak's said that its vaccine against covered maintain is highly effective in clinical trials potentially giving Americans of fourth choice providing the virus, the company said the two dose vaccine offers over advocacy of ninety eight point, four percent, on a par with the vaccines made by Pfizer by intact and Madeira. and higher than the vaccine made from Johnson and Johnson. But because the? U S, vaccine supply is high, regulators me encouraged over facts to first distribute its doses to other countries, It's more needed, and on Monday a day after I was doing, Benjamin Netanyahu, as Prime Minister is real. New government sought to choose, its image overseas and relations with the pine and administration. In a speech

when Minister you're you're looking said it had been quote reckless and dangerous of many off, to build alliances with Republicans, while waiting Democrats who he needed now, control the? U S: government tidies episode was produced by us, the charter baby, neither potluck any Brown and Robert Jemison. It was edited by each coward and Dave. Shod engineer I Chris would in contains original music fight in power.

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