What To Make Of The Secret IRS Files

A week ago, ProPublica, an independent, non-profit newsroom that produces investigative journalism in the public interest showed how the wealthiest Americans pay little in income tax compared to their wealth in “The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax”.

Pro big business libertarians were outraged at ProPublica’s decision to release private tax information of people who, in their view, have contributed disproportionately to the public good.

The extremely well written report left many others shocked by the findings and gleeful that the billionaire class was exposed.

Long story short, most Americans pay 14% of their income in taxes, billionaires pay 3+% on average. That’s because we tax income and not wealth and billionaire’s wealth grows much, much faster than their income.

Everyone concedes that the highlighted billionaires haven’t done anything illegal, which leaves many wanting to make our tax system much more progressive.

A few thoughts:

  1. As long as we tax income and let wealth slide, the Great Tax Divide will only widen. At some point, billionaires’ physical safety may very well be threatened. It is in their self-interest that we have a more egalitarian society. Therefore, it is in their interest to pay more in taxes.
  2. We need to invest a whole lot more in the Internal Revenue Service. Specifically, we need more, better trained agents who understand of how the ultra-wealthy avoid taxes sometimes illegally. Right now the ultra-wealthy are emboldened by the ridiculously low rate at which they are audited.
  3. Conservatives often defend things like video surveillance by asking, “Well, what do you have to hide?” In that same spirit, when it comes to personal income taxes, maybe we should go the way of Norway.
  4. Debates about the ethics of ProPublica’s decision-making will continue especially since they’ve said this is just the first of several related reports. As will debates about the implications of the data and related policy questions.

socialism-socialism-socialism

Let The Ultra-Rich And Influential Skip The Line For Covid-19 Vaccines

“Donations would come from five tiers. For each tier, the mechanism is the same. People (or businesses on behalf of their people), donate money to get to the front of the Covid-19 vaccine line. There are limited available slots and getting the vaccine must be publicly documented so others can be motivated by these influential figures.

In the first tier, 100 of the wealthiest Americans each donate $100 million to be first in line for a vaccine, getting it within the first weeks of availability. This raises $10 billion.

In the second tier, 1,000 people each donate $10 million to get vaccinated within the first month. This raises another $10 billion.

You can see where this is going: The third tier requires a $1 million contribution for up to 10,000 people. The fourth, $100,000 for up to 100,000 people. The fifth and final tier requires a $25,000 donation from up to 400,000 people. Everyone participating in the program is vaccinated within the first two months of vaccine availability. The bigger the donation, the further toward the front one goes.

All told, this raises $50 billion for the cause by vaccinating just 511,000 people.”

Levine goes on to say he doesn’t “pretend to know the optimal ways to spend this money,” but knows there are a lot of places it can help, ultimately arguing “it can help get past the multitude of barriers to vaccine access, big and small, that exist in the U.S.”

Levine is a bold, clear-headed thinker, but damn, are we really ready to throw the towel in on the (dis)United States being a tax payer funded democracy that aspires to greater equality? Is social mobility so anemic we’re ready to officially acknowledge we’re more of an aristocracy than a democracy?  Are people ready to drive on the Jeff Bezos Highway and live in Apple Incorporated affordable housing?

I’m definitely not ready to throw in the towel on our longstanding democratic ideals, but I can’t disagree with Levine about this:

“My proposal is neither conservative or liberal — or it can be portrayed as both. For conservatives, it is a free-market solution: People and businesses are making a choice on how they use their money. Liberals can view it as a wealth tax: People who can afford it pay for early access to a vaccine and, in doing so, pay for others to get vaccinated. I believe that the concept is inherently nonpolitical. Instead it is a solutions-oriented approach to concerns that have been raised about U.S. vaccination programs.”

How To Stay Together

My amazing playwriting aside, the Jeff Bezos/MacKenzie Scott divorce is an illuminating tale for people committing to one another for the long haul.

The conventional wisdom is that a lack of money and related money fights explain why so many relationships fail. That’s certainly true, but not the whole story. Even people with money can have devastating money disagreements because everyone has a unique money history and no two people will ever think about it the same way.

The bottom line. Couples don’t explore their “money compatibility” nearly carefully enough in the early stages of their relationships. The key is to figure out whether you and your partner are more similar in your thinking about saving, spending, gifting, and investing than not. No, that’s not particularly sexy, but do you want to measure your relationship by decades or not?

One little complication, by which I mean, huge complication. People change over time. Maybe MacKenzie didn’t know Jeff wanted to be the richest person in the world because he may not have wanted to be until his first or one hundredth billion.

What to do about the unknown? Anticipate that your thinking about money will change over time, not radically, but moderately. Similarly, anticipate that your partner’s thinking will change too. Meaning “money compatibility” is always a work-in-progress. Talk about saving, spending, gifting, and investing with some regularity or run the risk of serious differences creating dangerous cracks in the foundation of your relationship.

A One Act Play

The setting: Jeff Bezos’s and MacKenzie Scott’s Medina, WA kitchen. After working together to make Kraft macaroni and cheese with hot dogs, they serve themselves, grab two cans of Mountain Dew, and sit down at their formica dinner table. It’s one of their last dinners together as a married couple. A few days following this meal, they decide to pull the plug on their marriage. 

Jeff: Mac and cheese with dogs never gets old. [laughs uncontrollably] 

MacKenzie: No, it doesn’t. [inner voice. . . but your laugh has sure started to] 

Jeff: What did you do today?

MacKenzie: I spent most of it journaling. Which helped me realize I don’t want to help you turn Amazon into the world’s retail store anymore. I think $182 billion is enough money. I want to make the world a better place through writing and giving my share of our money away.

[All the while, Jeff texts Lauren Sanchez under the table.]

MacKenzie: [Softly, sadly, and with a deep sense of resignation.] Did you hear me?

Jeff: Yes, you said you want to help me make Amazon into the world’s retail store. 

[MacKenzie stares at Jeff in silence]

Jeff: [Head in his lap.] Can you pass the applesauce? 

 

My Person Of The Year

A New York Times primer for anyone who doesn’t know MacKenzie Scott, the eighteenth wealthiest person in the world.

“Ms. Scott, who was formerly married to the Amazon founder Jeff Bezos, the world’s richest person, has pledged to give away most of her wealth. Her shares in Amazon were valued at about $38 billion last year but would have gained value during the coronavirus pandemic.”

Scott isn’t letting the pandemic stop her from making true on her pledge. Quite the opposite. Last week she revealed she was “the one behind the donations to dozens of colleges and universities, part of nearly $4.2 billion she had given to 384 organizations in the last four months.”

As impressive as the amount Scott’s given away is is how her team did it.

“The money came after weeks or months of hush-hush conversations in which Ms. Scott’s representatives reached out to college presidents to interview them about their missions, several of the presidents said on Wednesday. When they learned who was behind the effort, it was a surprise to them, too. But it could not have come at a better time — when the pandemic was hitting their student bodies hard, they said.

‘I was stunned,’ Ruth Simmons, president of Prairie View A&M University, a historically Black college in Prairie View, Texas, said of learning that Ms. Scott was giving $50 million, the biggest gift the university had ever received. She thought she had misheard and the caller had to repeat the number: ‘five-zero.'”

Scott is the antithesis of most ultra wealthy philanthropists who almost always give to their alma maters, most of which are already flush with nine or ten figure endowments.

“Ms. Scott’s latest gifts bring her charity to almost $6 billion this year, an extraordinary amount. In another unorthodox touch, she announced them in a Medium post on Tuesday. ‘This pandemic has been a wrecking ball in the lives of Americans already struggling,’ she wrote. ‘Economic losses and health outcomes alike have been worse for women, for people of color, and for people living in poverty.'”

Experts on philanthropy were surprised to see Scott associate herself with institutions that were “much more humble and, indeed, needy.”

“To these institutions, a $20 million donation was the equivalent of several times that to a Harvard or Yale, and could have a disproportionate impact.

‘One of the things that’s so incredible about this massive grouping of gifts is that she does not have a personal connection to most, if any, of these universities,’ said Kestrel Linder, chief executive of GiveCampus, a fund-raising platform that works with colleges and universities.

Ms. Scott made gifts to more than a dozen historically Black colleges and universities, as well as community and technical colleges and schools serving Native Americans, women, urban and rural students.”

Dare to be different. And hella generous.

Being A Billionaire Is Hard

No, I don’t have first hand experience, I’m basing that conclusion on this headline.

Jeff Bezos is getting slammed for his donation of $690,000 to the Australian wildfire recovery, which is less than he made every 5 minutes in 2018.

The critics are forgetting that Bezos went through a divorce last year, so in 2019, it probably took a lot more time, maybe 7-8 minutes of work.

I wonder how many of the critics have given to the recovery.

One woman said she raised nearly twice what Amazon pledged by selling nude photos online.

To which I have no comment.

Most Americans Support Warren’s ‘Ultramillionare Tax’

The title of a FiveThirtyEight feature:

“Sixty-three percent of Americans believe ‘upper income people’ pay too little in taxes, according to a new survey from Morning Consult. The poll also found that 61 percent of Americans either “strongly” or “somewhat” favor 2020 Democratic presidential candidate Elizabeth Warren’s tax plan, which would levy a new tax on households with a net worth of $50 million or more.”

More generally:

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Fund those Roth IRAs friends, like the ocean surface, taxes are going to rise.

“Warren’s tax plan has been described as an “ultramillionare tax” that aims to make the rich pay taxes on accumulated wealth. It would place a 2 percent tax on households whose net worth exceeds $50 million and then an additional 1 percent (so 3 percent total) on those worth more than $1 billion. The plan has faced some criticism, including claims that it’s unconstitutional. Interestingly, however, the support for the plan appears to be somewhat bipartisan, according to the Morning Consult poll: 74 percent of Democrats and 50 percent of Republicans said they strongly or somewhat favor the proposal.”

However, as Paul Sullivan explains here, Warren’s proposal will be very difficult to implement. Just to be safe though, I’m going to do everything in my power to keep my net worth under $50m.

Semi-related. As those who know me even a little can attest, I’ve done a lot of stupid things in my 56 years, but I’ve never threatened the world’s richest person with legal action. That’s next-level stupid.

Sentence To Ponder

From The Guardian. The report is from Oxfam, a British-based charitable organization:

“The growing concentration of the world’s wealth has been highlighted by a report showing that the 26 richest billionaires own as many assets as the 3.8 billion people who make up the poorest half of the planet’s population.”

Oxfam says between 2017 and 2018 a billionaire was created every two days. And then there’s this. Just 1% of Jeff Bezos’s (pre-divorce) fortune is equivalent to the whole health budget for Ethiopia, a country of 105 million people.

Related.

What Endures?

Thomas C. Corley asks why are some people rich and some people poor? Following a five-year long research project, he concocted a supposed blueprint for becoming wealthy. Unsurprisingly, his findings have found a large audience.

Most interesting to me about his methodology is what he doesn’t do or ask. He never tells any wealthy individual’s story; consequently, they remain mythical superior beings. Corley’s work contributes to the myth that wealthy people’s lives are way better than everyone else’s. It’s as if the wealthy have no experience with negative emotions; failed relationships; existential crises; health challenges; and even death. Jeff Bezos, Bill Gates, and Warren Buffett will live forever won’t they?

People need a philosophy of wealth more than a blueprint. How much is enough? Wealth towards what ends? What endures?