How the super rich pay lower taxes than you – National & International News – WED 9Jun2021

Billionaires Jeff Bezos, Warren Buffett and Elon Musk probably pay lower tax rates than you.

 America’s wealthiest pay almost nothing in tax. Senate waters down House bill to lower drug prices. Deadly attack on landmine clearers in Afghanistan.

 

NATIONAL NEWS

How the super rich pay almost no income tax

News organization ProPublica has obtained leaked documents revealing income tax data for some of the wealthiest Americans. Reports indicate that the documents may have leaked from the IRS itself. The Biden administration has said the leaks are “illegal” and that the FBI is investigating the source of the leak.

The reporters say they were astonished to learn that some of the 25 wealthiest Americans, including multibillionaires, were able to get their yearly income tax down to zero. These include Jeff Bezos, founder of Amazon, and Elon Musk, CEO of SpaceX and Tesla. Bezos paid no tax in 2007 and 2011, while Musk paid nothing in 2018.

Overall, ProPublica says their documents show that the 25 richest Americans pay lower income tax rates than most working Americans – an average of 15.8% of adjusted gross income. More astonishing still is that while the collective wealth of the 25 richest Americans increased by $401 billion between 2014 and 2018, these individuals collectively paid only about $13.6bn in income over that period. That’s only about 3.4%.

How do they do it?

America’s wealthiest are able to reduce their taxes down to nothing or near nothing using various accounting strategies, which are perfectly legal. These include charitable deductions or drawing on investment income rather than wage income.

According to ProPublica’s Jesse Eisinger, the super rich can also claim “aggressive tax deductions” by borrowing heavily against owned or inherited assets to fund their lifestyle. Banks allow wealthy Americans to borrow against these assets at a relatively low interest rate. They can then live off those loans and claim the interest as deductions. 

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Senate wrangles over plans to lower prescription drug prices

In 2019, the House of Representatives passed a bill that aims to lower prescription drug prices in the US, which are about three times the prices paid in other wealthy countries. One of the key components of this bill is giving Medicare the ability to negotiate drug prices with pharmaceutical companies.

The plan has 81% support among Americans. This includes a majority of Republican voters (61%) and 97% of Democratic voters. With strong and bipartisan support among the electorate, one might assume that such an initiative couldn’t fail. However, the Senate is increasingly becoming a place where even wildly popular legislation comes to die.

Apart from the now-infamous hurdle of the filibuster, Senate Democrats are having trouble consolidating support within their own camp. For example, Sen. Bob Menendez (D-NJ) hails from a state where pharmaceutical companies are major economic and political powerhouses.

Competing plans

Sens. Ron Wyden (D-OE) and Chuck Grassley (R-IA) are planning to revive their bipartisan legislation from 2019 as an alterative to the House bill. Wyden and Grassley’s legislation does not currently have any provision for negotiation with drug companies. The Senators are looking for a way to incorporate some form of negotiation into a Senate bill. But, they and others have criticized the House bill’s emphasis on international reference pricing, which would cap prices at those paid in other wealthy countries.

Another point of debate between the House and Senate is whether to apply the same pricing to private insurers as well as Medicare and Medicaid. While the House bill does include private insurers in the plan, Sen. Wyden says there is no consensus on that in the Senate.

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INTERNATIONAL NEWS

Afghanistan landmine clearers shot dead “in cold blood”

With the withdrawal of US troops from Afghanistan having passed the halfway point, many question marks remain as to Afghanistan’s post-withdrawal future. In recent months, hostilities between Taliban and Afghan government fighters have escalated. The Taliban and US-backed government are also no closer to finding common ground on brokering a peace deal, part of which would include a transitional government with Taliban representation.

A tragic incident yesterday further illustrates the divide. On Tuesday evening, unknown assailants killed 10 people who work to clear landmines in the area. At least a dozen others were wounded. The workers were part of the Halo Trust, a British-American NGO that aims to safely dispose of landmines in war zones all over the world. Halo Trust CEO James Cowan says the assailants entered the group’s compound after dark and went “bed to bed” shooting people “in cold blood”.

The Afghan government was quick to blame the Taliban for the cowardly attack. However, Halo Trust CEO James Cowan says that “the local Taliban… came to our aid and scared the assailants off”. The Taliban has also denied any involvement in the attack, saying “We condemn attacks on the defenseless and view it as brutality. We have normal relations with NGOs. Our Mujahideen will never carry out such brutal attacks.”

However, the Taliban’s claim of denouncing attacks on the defenseless is less than credible. In recent weeks, Taliban attacks on school girls have escalated in various provinces they control.

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