>> A BOMBSHELL REPORT FROM
ProPublica BASED ON A TROUGH
OF LEAKED TAX RETURNS OF THE
SUPER WEALTHY REVEALED SOME OF
THE RICHEST PEOPLE ON THE PLANET
PAY LITTLE TO NO INCOME TAX.
THE REPORT FOUND THE 25 RICHEST
AMERICANS INCLUDING THE LIKES OF
AMAZON'S JEFF BASES AND TESS
LONE'S ELON MUSK COLLECTIVELY
PAID A TRUE TAX RATE OF 3.4%
EVEN AS THEIR WEALTH GREW BY
BILLIONS.
SENATOR BERNIE SANDERS WAS NOT
SHOCKED AS HE REACTED TO THE
REPORT WHEN IT WAS RELEASED LAST
WEEK.
>> WE HAVE A REGRESSIVE AND
UNFAIR TAX SYSTEM WE HAVE A
CORRUPT POLITICAL SYSTEM IN
WHICH THE WEALTHIER ARE ABLE TO
MAKE HUGE CAMPAIGN CONTRIBUTIONS
AND HAVE LOBBYISTS HERE ON
CAPITOL HILL.
AND THEN IF YOU ARE RICH, UNLIKE
AN ORDINARY WORKING PERSON, YOU
HAVE DOZENS OF LAWYERS AND
ACCOUNTANTS HELPING YOU TAKE
ADVANTAGE OF EVERY LOOPHOLE THAT
IS OUT THERE.
>> JOINING US NOW TO DISCUSS THE
U.S. TAX SYSTEM AND HOW
BILLIONAIRES CAN PAY SO LITTLE
IS NORTHWESTERN UNIVERSITY LAW
PROFESSOR AND TAX SPECIALIST,
PROFESSOR CHARLOTTE CRANE.
FROM WHAT I UNDERSTAND THERE IS
NOTHING TO SUGGEST THAT THE
LIKES OF JEFF BEZOS AND MIKE
BLOOMBERG AND WARREN BUFFETT
HAVE DONE ANYTHING TO BREAK THE
LAW, BUT EXPLAIN HOW SOME OF THE
RICHEST MEN ON THE PLANET HAVE
BEEN ABLE TO AVOID PAYING TAXES
ON THAT WELL IN?
>> THE RICHER YOU ARE THE EASIER
IT IS TO AVOID PAYING TAXES AS
YOUR WEALTH INCREASES.
BECAUSE THE FEDERAL INCOME TAX
ONLY REACHES WEALTH THAT IS
TRANSFORMED BY SELLING YOUR
ASSETS NOT WEALTH AS IT GROWS.
SO IF YOU CAN LIVE BY NOT
CASHING IN YOUR WEALTH, YOU
NEVER OWE ANY INCOME TAX.
WELL, HOW DO YOU DO THAT?
WELL, THE EASIEST WAY TO DO THAT
IS BY BORROWING AGAINST THAT
WEALTH.
SO IF YOU HAVE $500 MILLION,
SOMEBODY WILL READILY LEND YOU
$10 MILLION AND CAN SPEND THAT
$10 MILLION ON WHATEVER YOU WANT
AND NEVER PAY TAXES ON THE CASH
THAT YOU ARE USING TO SUPPORT
YOUR CONSUMPTION.
>> ProPublica CALCULATED THE
25 RICHEST AMERICANS ARE PAYING
THE ARTICLE CALLED A TRUE TAX
RATE OF 3.4% BASED ON THEIR
WEALTH NOT THEIR INCOME.
BY YOUR UNDERSTANDING HOW THEY
CAME TO THAT NUMBER IS THAT A
FAIR CALCULATION?
>> WELL, IT MAY BE.
I HAVE NOT HAD A CHANCE NONE OF
US HAVE TO LOOK AT THE DATA THAT
THEY HAVE USED.
BUT I BELIEVE THAT WHAT THEY DID
WAS USE THE INCREASE IN THEIR
WEALTH AS A MEASURE OF WHAT
COULD HAVE BEEN SUBJECT TO TAX
AND COMPARE THAT WITH THE AMOUNT
THAT WAS ACTUALLY PAID INTO TAX.
SO THEIR CALCULATION EXPANDED
THE INCOME TAX BASE TO INCLUDE
NOT JUST THE CASH FLOW STREAMS
THAT WE EXPECT TO BE INCLUDED IN
THE INCOME TAX, BUT ALSO THE
SIMPLE INCREASES IN VALUE THAT
THESE VERY RICH PEOPLE HAVE
ACCOMPLISHED.
THERE IS THE POSSIBILITY THAT
THE INCOME TAX COULD BE EXPANDED
TO REACH THOSE INCREASES.
BUT THAT IS NOT WHAT THE TAX WE
HAVE NOW DOES.
>> AND HOPEFULLY I WANT TO COME
BACK TO THAT.
BUT FOR NOW, WHY ARE WEALTH AND
IN PARTICULAR INVESTMENT INCOME
WHY ARE THEY TAXED DIFFERENTLY
FROM OTHER INCOME LIKE WAGES?
>> SO WAGES ARE TAXED AS YOU
EARN THEM.
AND YOU HAVE VERY LITTLE CHOICE
BUT TO PAY THEM BECAUSE MOST
PEOPLE WHO ARE RECEIVING WAGES
FROM AN EMPLOYER THEIR EMPLOYER
IS OBLIGATED TO WITHHOLD AND PAY
OVER THOSE TAXES OR PAY OUT OF
THEIR OWN POCKETS.
SO THOSE OF US WHO ONLY GET
WAGES HAVE VERY LITTLE
OPPORTUNITY TO AVOID THOSE TAXES
WHETHER OR NOT WE WOULD BE
WILLING TO BREAK THE LAW IN
ORDER TO DO IT.
THE VERY RICH CAN ARRANGE THINGS
SO THAT THEIR CASH FLOW IS
HARDER TO FIND EITHER BY HAVING
OFFSHORE BANK ACCOUNTS OR BY
BEING INVOLVED IN FAIRLY
COMPLICATED FINANCIAL
ARRANGEMENTS WHEREBY THE INCOME
THEY RECEIVE AS PARTNERS AND
RECEIVED BY OTHER PARTNERSHIPS
AND RECEIVED BY OTHER
PARTNERSHIPS IN WAYS THAT IT'S
VERY HARD FOR THE GOVERNMENT TO
FIND THOSE INCOME STREAMS AND
NOBODY IS OBLIGATED TO COLLECT
TAX ON THE PEOPLE WHO ULTIMATELY
HAVE THE INCOME.
BUT HANG ON.
WHAT THE VERY RICHEST
ProPublica REPORT WAS
OBSERVES WASN'T ANYTHING NEFIOUS
IT WAS JUST THE FACT THAT THE
INCREASE IN WEALTH, THE RISE IN
STOCK PRICES, ISN'T INCLUDED IN
THE TAX BASE AT ALL.
INTEREST AND DIVIDENDS ARE.
CAPITAL GAINS WHEN THEY ARE
TAXED ARE.
WHEN YOU ACTUALLY SELL YOUR
CAPITAL GAINS ARE TAXED.
ADMITTEDLY AT LOWER RATES BUT
THE RATES ARE STILL 20% WHICH IS
NOT --
>> FROM A POLICY STANDPOINT
REPUBLICANS ARGUE THIS TAX
PROMOTES INVESTMENT AND HELPS
GROW THE ECONOMY BY NOT
INCLUDING THAT WEALTH IN THE TAX
BASE.
>> THAT PROBABLY IS TRUE.
THERE CERTAINLY IS A GOOD
ARGUMENT THAT YOU DON'T WANT TO
BURDEN INVESTMENT TOO MUCH OR
PEOPLE WILL JUST NOT BOTHER TO
INVEST.
THERE IS A MORE DIFFICULT
PROBLEM THAT IS A TECHNICAL
PROBLEM THAT DOESN'T GET TALKED
ABOUT AS MUCH, WHICH IS IF WE
WERE TO EXPAND THE TAX BASE SO
THAT THESE INCREASES IN WEALTH
WERE INCLUDED, FOR INSTANCE BY
TAXING PEOPLE ON THE INCREASE IN
THE VALUE OF THE STOCK THEY HOLD
THAT'S THE COMMON ONE.
IT WOULD BE EASY TO DO BUT IT
WOULD ONLY BE EASY TO DO WITH
RESPECT TO PUBLICLY TRADED
STOCKS.
IT WOULD PUSH PEOPLE INTO
INVESTMENT STRUCTURES THAT WERE
LESS EASILY VALUED AND THAT
WOULD COMPLICAT FINANCIAL
STRUCTURE CAL STRUCTURES AND
CAPITAL MARKETS WERE SUFFER.
SO THE PROBLEM IS A DIFFICULT
ONE IF YOU THINK THE PROBLEM IS
NOT TAXING INCREASES IN WEALTH.
BECAUSE THE MORE YOU TRY TO TAX
MERE INCREASES IN WEALTH, THE
MORE DISRUPTIVE YOUR TAX LAW IS
GOING TO BE OF THOSE CAPITAL
MARKETS AND IN FACT --
THE RICH WILL HAVE AN ADVANTAGE.
>> SORRY.
SORRY WE'RE OUT OF TIME BUT WE
KNOW THE DEMOCRATS ARE SAID TO
BE LOOKING AT A TAX PACKAGE SO
THERE COULD BE CHANGES.
OBVIOUSLY ALL EYES ARE ON
WASHINGTON TO FIND OUT HOW THAT