Tax Avoidance Quotes

“A frequent refrain of those defending the status quo is that the income tax system already heavily burdens the rich because the top 1 percent of earners pay 40 percent of all income taxes while 40 percent of Americans pay no income taxes at all. This is partially true: Individuals with the most taxable income do pay the most income tax. However, this statistic is about people who have high incomes, typically from work; it tells us nothing about the tax liability of those with the most wealth. Studies have shown that there is only about a 50 percent overlap between America’s wealthiest people and those who earn the most income. Moreover, as the leaked tax returns of several of the wealthiest Americans reveal, the ability of wealth owners to avoid taxable income means that they are just as likely to be among the 40 percent of nonpayers as they are the top 1 percent of earners.”
― Ray D. Madoff, The Second Estate: How the Tax Code Made an American Aristocracy

“The tax system benefits these wealthy heirs in another way as well: by hiding these tax benefits from the public. Gifts and inheritances are not only received free of income tax; but their receipt is also free of reporting requirements. This lack of reporting helps perpetuate the myth that the tax liability of the wealthy is more burdensome than it is.
To illustrate: a person with a $1 million salary (subject to about $325,000 in income taxes) also receives a $10 million inheritance. Under current reporting rules, only the $1 million salary is reported on the taxpayer’s return, giving the impression—to the taxpayer, the IRS, and the public—that the taxpayer is paying income taxes at a rate of 32.5 percent. On the other hand, if the taxpayer were required to report the $10 million inheritance (even if it weren’t subject to tax!), it would be easier to see that the actual tax burden is less than 4 percent of the income acquired in that year. If we add more zeros to the inheritance, the tax liability shrinks even more.”
― Ray D. Madoff, The Second Estate: How the Tax Code Made an American Aristocracy

“By concealing their highly lucrative paths to tax avoidance, wealthy people have succeeded in maintaining secrecy about what their actual tax liabilities are. If one wished to find out how much tax those with high wealth (as opposed to those with high income) pay—or don’t pay—the information would be surprisingly difficult to find. One reason is because the most accurate source of information about how much people pay—actual tax returns—are protected from public scrutiny by strict privacy laws. This stands in sharp contrast to a brief period in the early part of the twentieth century, when the richest individuals and corporations had their names and tax liabilities published on the front page of The New York Times.
This modern secrecy was at least partially lifted in 2022, when the IRS employee Charles Littlejohn leaked data to journalists, giving them access to a vast cache of tax returns of the richest Americans. The series of ProPublica stories that followed revealed how many of America’s wealthiest citizens—including Michael Bloomberg, Jeff Bezos, George Soros, and Elon Musk—paid little or nothing in taxes. While these stories should have been enough to shift people’s understanding about who does and does not pay taxes, the response to the ProPublica leak was muted by a barrage of articles about the propriety of ProPublica’s actions in publishing the tax information and by statistics around income taxes paid by those with high incomes. These responses, which inaccurately conflated the tax burdens of those with high incomes and those with great wealth, sought to portray the ProPublica stories as deviations from some larger norm in which the rich were doing their part.”
― Ray D. Madoff, The Second Estate: How the Tax Code Made an American Aristocracy