United States Senators Elizabeth Warren (D-Mass.) and Sheldon Whitehouse (D-R.I.)sent a letter to Finance Committee Chair Ron Wyden (D-Ore.) calling for an investigation into last month’s deeply troubling ProPublica report describing how the nation’s wealthiest individuals are using a series of legal tax loopholes to avoid paying their fair share of income taxes.
The lawmakers are getting support for their probe from progressive leaders here in New Jersey, who are organizing at the grassroots level to inspire a popular demand for justice.
ProPublica obtained a trove of tax data for the nation’s wealthiest individuals and estimated that some paid just an effective tax rate of 3.5% on their growing fortunes, well below the typical rates paid by middle class wage earners.
The ProPublica investigation reported that the vast majority of the tax avoidance is legal even though billionaires like Jeff Bezos, Elon Musk and Warren Buffett pay little in income tax compared to their massive wealth — sometimes, even nothing.
“This tax avoidance by the nation’s wealthiest individuals is profoundly unfair,” wrote the two lawmakers. “The Finance Committee has an obligation to investigate these matters, hold hearings, and develop legislative policies that address the methods and strategies used by ultra-millionaires and billionaires to avoid paying taxes, and its impact on the nation’s finances and ability to pay for investments in infrastructure, health care, the economy, and the environment.”
Warren and Whitehouse also requested that the Finance Committee investigate the role of the nation’s largest financial institutions and wealth management firms that have helped develop these tax avoidance strategies and provide the financial infrastructure that allows them to be effective.
“Because the majority of tax avoidance loans and other tax avoidance tactics are not disclosed to the IRS, an effective investigation of these tactics must involve the institutions that aid and abet them.
The committee should open an investigation of the role of these financial institutions in tax avoidance, seeking information on how certain lending activities allow individuals to avoid claiming taxable income and the precise methods used by these institutions to do so,” Warren and Whitehouse wrote.
Earlier this year, Warren introduced the Ultra-Millionaire Tax Act. Senator Whitehouse is an original cosponsor.
The bill includes robust anti-evasion and avoidance measures and would level the playing field and narrow the racial wealth gap by asking the wealthiest 100,000 households in America, or the top 0.05%, to pay their fair share.
Revenue generated from the Wealth Tax could be invested in child care and early education, K-12, and infrastructure.
“The Ultra-Millionaire Tax would bring in at least $3 trillion in revenue over 10 years – without raising taxes on the 99.95 percent of American households that have net worth below $50 million,” said Lisa McCormick, a progressive Democratic organizer in New Jersey. “The ultra-rich and powerful have rigged the rules in their favor so much that they pay a lower effective tax rate than 99 percent of us, including many who are struggling to make ends meet.”
McCormick also said billionaire wealth is 60 percent greater than before the COVID crisis began.
“Over the last 16 months, the combined wealth of 713 U.S. billionaires has increased by $1.8 trillion,” said McCormick. “The total combined wealth of U.S. billionaires grew from $2.9 trillion on March 18, 2020 to $4.7 trillion on July 9, 2021.”
“A wealth tax is popular among voters because they understand the system is rigged to benefit the wealthy and large corporations,” said McCormick. “The incredible concentration of wealth among America’s 719 billionaires is a crisis for capitalism and threat to the American Dream.”
“Wealth inequality is at its highest level since the Gilded Age because of misguided policies based on discredited ‘trickle down economic theories,” said McCormick, who has been advocating a reversal of ‘Reaganomics’ — a series of tax cuts that left six Americans each with net worth at least $100 billion, yet they have paid a smaller share of total U.S. taxes.
Those six Americans hold combined fortunes worth more than the total wealth of the poorest half of Americans:
- Amazon’s Jeff Bezos, almost a “double-centi-billionaire” with a net worth of nearly $197 billion, is up 74% over the last 13 months. If he was still married to his ex-wife, MacKenzie Scott, together they would be worth another $60 billion or so—giving the couple a net worth of a quarter trillion dollars.
- Elon Musk, founder of Tesla and Space-X, with $172 billion, up an astounding 599% during the pandemic.
- Bill Gates, founder of Microsoft, worth $130 billion, up 33% since March 2020.
- Mark Zuckerberg, CEO of Facebook, has $113.5 billion, a fortune that more than doubled (up 108%) in 13 months.
- Berkshire Hathaway’s Warren Buffett is worth $101 billion, an increase of 50% during the pandemic.
- Larry Ellison, founder of Oracle, is also worth $101 billion, up 71% since March 2020.
Wealth across all U.S. households is $136.9 trillion. The wealthiest 1 percent of Americans controlled about $41.52 trillion, while the other 99 percent of Americans only owned about $95 trillion collectively.
America’s top 1 percent holds more than half the national wealth invested in stocks and mutual funds. Most wealth of the Americans in the bottom 90 percent comes from their homes — the asset category that took the biggest hit during the Great Recession.
These ordinary Americans in the bottom 90 percent also hold about three-quarters of the nation’s debt.
President Joe Biden and Congressional progressives