Elizabeth Warren calls out Jeff Bezos in her latest wealth tax campaign: ‘I’m looking at you’

Sen. Elizabeth Warren and Amazon CEO Jeff Bezos.
Sen. Elizabeth Warren and former Amazon CEO Jeff Bezos.

  • In a CNBC interview on wealth taxes, Sen. Elizabeth Warren again called out Jeff Bezos.
  • Warren has repeatedly criticized Bezos over how much he pays in taxes, especially following his space adventure.
  • Under Warren’s proposed measure, Bezos would have paid $5.7 billion in taxes in 2020.
  • See more stories on Insider’s business page.

In an interview with CNBC’s Squawk Box, Sen. Elizabeth Warren again took aim at now-earthbound billionaire Jeff Bezos in her latest push for a wealth tax.

When it comes to taxing the assets of America’s wealthiest, Warren said, “it shouldn’t make a difference whether you have real estate, or whether you have cash, or whether you have a bazillion shares of Amazon.”

“Yes, Jeff Bezos, I’m looking at you,” she said.

Warren has repeatedly taken aim at billionaire Bezos over how much he pays in taxes. ProPublica recently revealed that Bezos reportedly did not pay income taxes for two years, and that he received a $4,000 tax credit in 2011 meant for families earning under $100,000.

Earlier this week, Warren tweeted that “the richest guy on Earth can launch himself into space while over half the country lives paycheck to paycheck, nearly 43 million are saddled with student debt, and child care costs force millions out of work. He can afford to pitch in so everyone else gets a chance.”

She also criticized his comments thanking every Amazon employee and customer for funding his foray, where Bezos said “you guys paid for all of this.”

“Jeff Bezos forgot to thank all the hardworking Americans who actually paid taxes to keep this country running while he and Amazon paid nothing,” Warren tweeted.

Amazon did not immediately respond to Insider’s request for comment.

Warren has repeatedly called for a wealth tax

Warren campaigned on a wealth tax in her failed 2020 presidential run, and continues to push for legislation that targets America’s highest earners.

Under her most recent proposal, the Ultra-Millionaire Tax Act, households with a net worth of $50 million or more would see at least a 2% tax on their assets. Those with over $1 billion would have a 3% tax – what Warren called a “tiny little tax” on CNBC.

“But notice, if we put that tiny little tax in place, that would be enough to pay for universal childcare, enough to pay for our kids to be able to go to college, enough for us to pay for all of those roads and bridges and bring them into the 21st century,” Warren said.

Wealth taxes, and taxes on high-earners, have recently claimed the spotlight amidst a push to fund President Joe Biden’s infrastructure package. While Biden did not propose an outright wealth tax, some of his measures would target America’s highest earners. He also proposed increasing IRS funding, which could raise an additional $700 billion over 10 years. Those proposals came after a study from IRS researchers and academics found the top 1% of Americans fail to report about a quarter of their income to the IRS.

Per an analysis from Americans for Tax Fairness and the Institute for Policy Studies Project on Inequality found that, Bezos would have ponied up $5.7 billion in taxes in 2020 under Warren’s wealth tax.

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5 data points show the career-stifling decisions working moms had to make over the last year

working mom
  • Working moms polled by Morning Consult and the New York Times turned down career opportunities this year.
  • From forgoing new responsibilities to quitting altogether, the pandemic hit working mothers hard.
  • Turning down those opportunities could also impact their future earnings and quality of life.
  • See more stories on Insider’s business page.

The pandemic revealed just how thin the line between work and life is for American parents. Without adequate childcare, women in particular were forced to make some tough decisions this year that could harm their careers for years to come, according to new data out from the New York Times.

Throughout the pandemic, women have had to step back from professional life, with many exiting the labor force altogether, as childcare – and lack thereof – became an even greater issue across the economic spectrum. As Insider’s Ben Winck reported, JP Morgan said that a full economic recovery may not be enough to fully address gender gaps that the pandemic worsened. UBS said that school closures – alongside COVID fears – are the primary drivers behind labor shortages.

In a poll of 468 working moms the NYT and Morning Consult found:

  • 16% “did not pursue a promotion”
  • 23% didn’t apply for any new roles
  • 28% turned down new work responsibilities
  • 33% clocked fewer hours due to childcare issues
  • 20% went part-time

Moms of all economic classes worked less due to lack of childcare

Whitney Pesek, director of child care policy at the National Women’s Law Center, told Insider that the pandemic has been unique in impacting women across the board – previously, lower-income women were disproportionately impacted by childcare availability because they would generally have more unpredictable schedules or live in areas with less childcare available. While the issue of childcare was felt differently along income lines, “now we’re seeing more middle and high-income women also sounding the alarm about childcare because of the lack of slots.”

A study from the NWLC and Columbia University researchers found that making affordable childcare accessible to all who need it would boost the number of full-time working women with young kids by 17%.

An impact on future earnings could leave women further behind

Pesek said that women getting pushed out of the workforce, or having to take time off, doesn’t just impact them in the short-term: They’re also accumulating less income and savings for later in life.

“The double edged sword of that is that, while women end up with less retirement income than men, they also tend to usually need more retirement savings because women tend to live longer than men,” Pesek said. “Women are more likely to be single later in life and have higher health costs than men as they age.”

Women opting out of opportunities, or leaving the workforce altogether, could exacerbate already-persistent wage gaps. Those wage gaps also have their own share of inequity, with women of color facing even lower wages than many of their white counterparts.

“I think that we’re going to be studying the outcomes of this pandemic on women in the workforce for decades,” Pesek said.

While the fall of 2021 has loomed as a potential return to “normalcy” and work – especially as schools and childcare centers prepare to reopen – the rise of the Delta variant could also be threatening that.

“Women are having to rethink the plans again that they possibly laid for the fall thinking that there was light at the end of the tunnel and that they were going to be able to get back on track,” Pesek said.

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A new McKinsey study shows that inclusion isn’t just compatible with economic growth – it’s absolutely necessary

business owner using laptop in store
McKinsey’s new report unveils the high price of economic discrimination against minorities and women in the US.

  • Paul Constant is a writer at Civic Ventures and cohost of the “Pitchfork Economics” podcast with Nick Hanauer and David Goldstein.
  • In the latest episode, they spoke with JP Julien, head of McKinsey & Company’s Institute for Black Economic Mobility.
  • Julien says eliminating racial wealth disparities and unlocking women’s economic potential could add trillions to the US GDP.
  • See more stories on Insider’s business page.

Most Econ 101 classes teach that an economy is a zero sum game – that it’s impossible to win without some other economic actor losing at the same time, and that one group’s gains must result in another group’s losses. Not only is this trickle-down theory completely wrong, but it’s also dangerous: Nationalist leaders around the world have played on voters’ fears by threatening that the economic progress of immigrants and minorities under progressive leaders will result in losses for everyone else.

Those claims couldn’t be further from the truth. A growing body of evidence proves that inclusion and economic growth march hand in hand.

How inclusivity aids economic growth

On this week’s episode of “Pitchfork Economics,” JP Julien discusses a report that he co-wrote in his capacity as a leader of global management consulting firm McKinsey & Company’s Institute for Black Economic Mobility.

Julien says his paper, “The case for inclusive growth,” finds that economic “growth is actually at its best when it’s most inclusive.” When people from all races and backgrounds are “able to meaningfully engage and participate as workers, entrepreneurs, and consumers,” Julien explained, the economy “is stronger and more resilient.”

There’s already plenty of evidence for this in the American economy as it stands right now.

“We know that 40% of GDP growth between 1960 and 2010 can be almost directly tied to the greater participation of women and people of color in the labor force,” Julien explained. “The data speaks quite clearly that the more we get people to participate, the better outcomes we produce.”

Eliminating economic inequality could unlock trillions in annual GDP

The paper that Julien coauthored puts an eye-popping price tag on the economic discrimination against minorities and women in America. They found that “eliminating disparities in wealth between Black and white households and Hispanic and white households could result in the addition of $2 trillion to $3 trillion of incremental annual GDP to the US economy. Furthermore, unlocking women’s economic potential in the workforce over the coming years could add $2.1 trillion in GDP by 2025.”

It’s important to point out that the gains Julien is discussing are not zero-sum, winner-take-all numbers. Specifically, that 5 trillion dollars or so doesn’t come at the expense of the economic value of white men – it’s in addition to it. America’s economy is missing out on trillions of dollars of economic activity because whole populations of people have been systematically prohibited from fully participating as consumers, workers, and entrepreneurs.

Julien has been encouraged by the fact that over the past year “many Fortune 1000 companies are really leaning into the idea that being good corporate citizens actually creates opportunities.”

“We’ve done quite a bit of research on the benefits of more diverse boards and more diverse leadership teams,” Julien continued, “and they actually do financially outperform their peers.” The economic benefits of inclusion are becoming impossible to ignore, which is likely why “we’ve seen $66 billion from the Fortune 1000 in racial equity commitments between May and the end of last year.”

Why community participation is needed and ‘commitment’ isn’t enough

For centuries, our economy has been constructed around exclusionary policies, and simply making a commitment to inclusion isn’t enough to overcome those institutional barriers. Julien doesn’t believe this is a problem that can be overcome with a set of policies. He thinks it would be better for communities to “actually go through a focused process in which those that have been historically excluded are in the decision-making seat.”

It’s only by empowering excluded people to identify where they’ve been let down “and designing a set of strategies and investments that reflect both those needs and their strengths that we get to a set of outcomes that really work locally, because economic development is hyper-local,” Julien said. To tear down monolithic systems of inequity, it’s vital to begin by addressing the injustices in your own backyard.

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Women and people of color are missing out on June’s celebrated wage and job growth

Unemployment benefits line
People line up to receive unemployment benefits.

  • June’s jobs report showed promising signs of recovery, with gains exceeding expectations.
  • But women and people of color are still seeing a different story as recovery continues.
  • More women rejoined the labor force, but the vast majority are unemployed.
  • See more stories on Insider’s business page.

June’s jobs report brought some surprisingly optimistic figures. The economy added 850,000 jobs, healthily beating expectations and signaling that recovery may be on the horizon.

But, as with much of the pandemic recovery, the economic benefits are still uneven. For women and people of color, the unemployment situation is much more disparate – and it signals who might still be getting left behind amidst recovery.

‘We’re still in a crisis’

Insider’s Joseph Zeballos-Roig reported that June’s unemployment rate for Black Americans increased from May. Latino unemployment also remains far higher than the national average of 5.9%.

Those elevated unemployment rates come as 26 states move to end federal unemployment benefits ahead of their scheduled September expiration, which will impact about four million workers around the country.

“I do think we’re still in a crisis, we’re still looking at really high unemployment rates, especially for Black women and Latinas again, and for Black men, it’s back in the double digits. So it’s 10% for Black men in June,” Jasmine Tucker, the director of research at the National Women’s Law Center, told Insider. “If white men were at a double-digit unemployment rate, we would not be talking about ending these unemployment benefits in these states. We just 100%, we would not be doing it.”

Broadly, 148,000 women rejoined the labor force in June, and, according to an analysis from the NWLC, women made up 47.6% of jobs gains. But rejoining the labor force doesn’t mean that all of those women have a job – it means that those women are actively working or looking for work. In fact, the NWLC found that 97% of the women who rejoined the labor force are unemployed; the same is true for just 12% of the 232,000 men who rejoined. Tucker attributes that to sexism, and women potentially being judged harshly for leaving the labor force to be caregivers.

According to Tucker, women will need to see gains at this rate for nine months to reach pre-pandemic employment.

“That’s only going to get us back to February 2020. That’s not going to account for all of the people – just population growth – all of the people who would have entered the labor force between February and now,” Tucker said of those hypothetical nine months of gains. She added: “It would get us where we were, but not where we should have been.”

Those unemployed female and Black workers may also be missing out on the wage growth workers have seen in the past few months; it’s growth that’s likely temporary, according to a note from a Bank of America research team led by Michelle Meyer. That could only exacerbate pre-existing wage gaps.

Black families were also already at an economic disadvantage coming into the pandemic, according to new research from the JPMorgan Chase Institute. They had 44 cents to every dollar white families held in January 2020; Latino families had 58 cents. Throughout the pandemic, people of color were disproportionately impacted by the virus itself – which came with its own economic burden.

The inequities that still persist are on the radar of the Biden administration. Labor Secretary Marty Walsh told Insider that “our work has to be more focused, more intentional” in creating opportunities for people of color.

“Certainly, the unemployment rate for communities of color and women remains essentially unchanged in this report,” Walsh said. “I think, and the president feels, that we have a potentially once in a lifetime opportunity to make some significant changes to the unemployment system, as far as for people of color.”

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The Cost of Inequity: How and why inequity persists in the institutions that govern daily life in America

A receipt with the words "The Cost of Inequity" written on it on on a blue background.

Inequity, not to be confused with inequality, is the result of injustice and cultural exclusion. Cost of Inequity explores how and why inequity persists in the institutions that govern daily life in America while illustrating the real economic cost to society.

From education to the workplace, banks, healthcare and more, this series examines the historical causes, current policies and societal norms that perpetuate unfair, avoidable differences for marginalized groups.

Insider also conducted a survey of over 1100 American workers to examine the challenges businesses face in fulfilling DEI programs. Detailed results of the survey will be published in the coming weeks.

Read the original article on Business Insider

4 unhealthy aspects of the current US economy, according to Janet Yellen

janet yellen fed
  • Treasury Secretary Janet Yellen discussed “destructive forces” in the economy in Senate Finance testimony.
  • They include wage inequality, racial inequality, the climate crisis, and the labor force participation rate.
  • All of those factors existed before the pandemic, but many have been exacerbated.
  • See more stories on Insider’s business page.

The coronavirus pandemic has thrown into relief some of the hidden realities of the American economy, from low wages to income inequality.

But in testimony in front of the Senate Finance committee, Treasury Secretary Janet Yellen highlighted four structural problems that plagued the economy even prior to the pandemic – although they may have intensified or grown more visible throughout the past year.

She cited wage inequality as a prime example. “In healthy economies,” she said, we see wage growth across the distribution – for workers making the highest incomes and those making the lowest. But over the past several decades, that has not been the case in our economy.”

Here are the four “destructive forces” that Yellen highlighted in her prepared testimony.

(1) Wage inequality

Wages have been trending down for years prior to the pandemic. As Insider’s Andy Kiersz and Ben Winck reported, wages have been declining for the past five decades. While recent economic data shows wages growing at the fastest rate since the 1980s, the lowest-wage workers still see average hourly wages that are nearly half of the overall average hourly wage. That might be driving a high quit rate.

“While the highest earners have seen their income grow, families at the bottom end of the distribution have seen their pay stagnate,” Yellen said. she also noted that disparities have widened between traditionally richer and poorer areas.

(2) People dropping out of the labor force, especially women

Yellen also noted that labor-force participation has dropped, with women leaving at a higher rate than comparable nations even before the pandemic.

From February 2020 to May 2021, the number of women in the labor force declined by 2.4% – meaning there were 1.79 million fewer women.

Following the May jobs report, Jasmine Tucker, the director of research at the National Women’s Law Center, told Insider it will take 13 months for women’s employment to reach pre-pandemic levels. That number doesn’t include the never-realized gains women would have seen in a pandemic-free world.

(3) Climate change and its cost on the economy

“Climate change adds a fresh layer of crisis on top of this – the average cost of climate-related disasters is expected to double every five years,” Yellen said in her prepared testimony.

Investors have said that the climate crisis is a “systemic threat” for the economy. In 2019, a New York Fed official said that climate events had cost over $500 billion in the past five years alone. Some Democratic senators have said that they’d oppose any bipartisan infrastructure deal that foregoes addressing the climate crisis.

(4) Racial inequality

“When I started studying economics in 1963, the average Black family’s wealth was about 15% of the average white family,” Yellen said in her prepared remarks. “Maybe that isn’t surprising: Jim Crow laws were still in effect. But what is surprising is that it’s almost 60 years later, and that ratio has barely changed.”

Throughout the pandemic, Black Americans were disproportionately impacted on multiple levels. Black Americans saw higher unemployment rates than white peers, and lower labor force participation rates.

The racial wealth gap has also widened over the years – even before the pandemic. Using data from the 2019 Survey of Consumer Finances, the Federal Reserve found that white families had a median wealth of $188,200. For Black families, it’s $24,100.

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3 secrets that America’s richest family dynasties use to hang onto their money, from a report on their breakaway wealth during the pandemic

money 3
  • America’s wealthiest family dynasties have held onto and grown their fortunes for decades.
  • A new report from the Institute for Policy Studies dives into how they amass and keep their fortunes.
  • The methods range from strategic charitable giving to forming family offices and special trusts.
  • See more stories on Insider’s business page.

America’s richest family dynasties had a lucrative pandemic year.

The top 10 richest saw their net worths grew by a median 25%, while family dynasties’ wealth grew at a rate 10 times greater than that of a typical family, according to a new report from the left-leaning Institute for Policy Studies (IPS).

The thing is many of these are true dynasties, with wealth dating back much further than relatively recent upstart billionaires like Mark Zuckerberg and Elon Musk. Thirteen of the top 20 wealthiest families were in the top 20 in 1983.

“Dynastically wealthy families remain wealthy for the long haul,” the report’s authors write. “The ranks of America’s dynastic fortunes have remained largely unchanged for decades, and are becoming increasingly persistent over time.”

The methods by which America’s wealthiest individuals hang onto their wealthy – without paying much in taxes -have become increasingly clear in the past few weeks. A bombshell ProPublica report showed just how little America’s billionaires paid in taxes proportional to their wealth; all of those methods are legal – and have been known by experts for years – but the exposure of the numbers themselves could kickstart tax reform.

Titled “Silver Spoon Oligarchs,” the report looks at at the top 50 dynastically wealthy families from Forbes’ inaugural ranking of America’s wealthiest clans, published in December 2020, as well as data from the Federal Reserve‘s Survey of Consumer Finance.

The IPS report breaks down the main ways family dynasties ensure their wealth lasts for so long, and here are three of the most notable ones.

(1) Fight against tax increases by pouring money into PACs and lobbying

The report notes that taxes on America’s wealthiest have sunk over the past few decades as wealth ballooned at the top. In fact, today’s wealthy Americans pay just one-sixth the rate of their 1953 counterparts.

Family dynasties may have held onto their own coffers through everything like funding lobbying efforts, donating money to candidates who are anti-tax, or even setting up their own corporate PACs.

“In-house PACs ensure that corporations are in an excellent position to influence public policy in ways that are favorable to them,” the report said.

(2) Give just the right amount to charity

There’s also an art to charitable giving, according to the IPS report: “Today’s family dynasties understand that if they want to remain at the top, they must not give too many of their assets to charity.”

The dynasties need to strike the right balance between giving and retaining their assets (presumably so they can continue to grow). For instance, the report notes that only four members from Forbes’ top 50 families have signed on to the Giving Pledge, where billionaires pledge to give away half of their wealth to charity either during their lifetimes or at death.

And, as Insider’s Mattathias Schwartz reported, some of the signatories of that pledge are moving slowly in disbursing that money. One mechanism that the wealthiest use for donations are donor-advised funds (DAFs); as Schwartz reported, philanthropists who utilize those funds can put assets in there, immediately see a tax write-off, and then actually disburse the funds in it whenever they want.

As the IPS report says, dynastic families funneling giving “through closely-held private family foundations
provides them with not only an immediate tax deduction, but also the ability to maintain family control over those charitable assets into perpetuity.”

(3) Set up trusts and family offices

Dynastic families are increasingly setting up family offices to maintain and build their wealth, and shore it up for generations to come. According to the IPS report, about half of the nearly 10,000 family offices around the world were founded in the last 15 years.

Family offices are infamously secretive entities devoted to handling wealth. They’ve drawn attention in recent months after the fall of Archegos Capital Management – which reportedly lost $8 billion – as it was technically structured as a family office, according to Insider’s Harry Robertson. As Insider’s Hayley Cuccinello and Rebecca Ungarino reported, family offices were gearing up for new regulations following Archegos.

Another mechanism the wealthiest use are dynasty trusts. Those are long-term trusts, as Insider’s Hillary Hoffower reported, and they have transfer taxes at their creation – essentially meaning they never incur estate or gift taxes when beneficiaries receive money from the trust.

“Because the super-wealthy are avoiding or reducing their taxes, they are shifting the obligations to pay for society’s investments onto lower and middle-income households,” the IPS authors write. “Dynasty trusts also entrench existing levels of wealth inequality and facilitate the formation of dynastic concentrations of hereditary wealth and power.”

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How the wealthy hanging onto their money actually makes everyone else poorer, according to a new study

finance money bank banking banking credit card credit score investment payment american express
  • A Chicago Booth Review report looks at the link between the wealthiest saving their money and inequality.
  • Wealthy people’s savings are used to finance household debt for everyday Americans.
  • As debt grows for the lowest-earning Americans, the wealthy having more savings just fuels the cycle further.
  • See more stories on Insider’s business page.

The wealthy sitting on their savings may be helping finance the debts of poorer Americans and therefore play a role in rising inequality, according to the Chicago Booth Review.

Researchers Amir Sufi, Ludwig Straub, and Atif Mian looked at the growing savings of America’s wealthiest residents, and found it isn’t going into what they call “productive” investments, like building roads or new research. Instead, the stockpile is going toward financing debt from everyone not in the top 1%.

Prior to the financial crisis in 2008, such savings financed “almost a third of the rise in household debt owed by the bottom 90%.” After the housing crash, they began to take on a greater role in subsidizing government debt (although the continued debt from lower-earning Americans is still financed from those savings).

How does that work, exactly? Rebecca Stropoli at Chicago Booth Review uses the hypothetical of a corporation issuing equity to a wealthy shareholder, but the proceeds don’t go on research or equipment but into a deposit at a bank, which in turn uses it to fund a mortgage for a less-affluent household. The wealthy are financing bank lending to average Americans, in other words.

When the poorer take on more debt – especially when they’re incentivized by low interest rates – that’s less money they have to spend on other things.

During the pandemic, wealthy savings climbed, along with their fortunes

On the whole, the personal saving rate – the amount that Americans have left over from their income after paying off bills – has climbed during the pandemic, although it shot down in April 2021. But, as Time’s Alex Gailey reports, an increased savings rate may not show the whole story. Poorer Americans, Time reports, continued to spend at levels just a little below pre-pandemic rates, while their wealthier counterparts held on to more money.

The wealthiest Americans saw their net worths grow during the pandemic as widespread economic devastation and unemployment ravaged the country. From March 18 to December 30, 2020, the world’s billionaires added $3.9 trillion to their net worths; that’s enough to pay for the world’s vaccines and to keep everyone out of poverty.

In the US, billionaires got 44% richer throughout the pandemic, Insider’s Lina Batarags reported. That stands in marked contrast to the millions of Americans facing down unemployment and poverty.

The researchers note that the pandemic has cleaved an even deeper divide between the top 1% and the bottom 99%. Low-wage workers and workers of color were disproportionately impacted by the pandemic’s economic devastation, which took the shape of a K – high-earning workers saw jobs and incomes grow, while those at the bottom experienced the opposite.

“Mian, Straub, and Sufi see in the data a widening wealth gap and more saving by the rich, thus more money being turned into loans and lent out to consumers,” Stropoli writes.

The methods by which the ultrawealthy hang onto that wealth have come into greater relief this week, too, as a bombshell ProPublica investigation revealed that the wealthiest Americans are paying an incredibly low rate of taxes proportional to their wealth. That’s all legal, but it could finally kickstart reform targeted at America’s highest earners.

In the meantime, the savings of the wealthy will sit in bank accounts, fueling more debt for the rest of the country.

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It’s perfectly legal for billionaires to pay so little in taxes. Democrats say they could finally change that after the bombshell ProPublica report.

Felipe Castro holds a sign advertising a tax-preparation office for people who still need help completing their taxes before the IRS deadline on April 14, 2010, in Miami.
Felipe Castro holds a sign advertising a tax-preparation office for people who still need help completing their taxes before the IRS deadline on April 14, 2010, in Miami.

  • A ProPublica report based on secret IRS files showed billionaires pay relatively little tax.
  • Inequality experts have been warning for years that the wealthy pay relatively low taxes.
  • The details added impetus to a push by Democrats to ramp up taxes on the country’s highest earners.
  • See more stories on Insider’s business page.

On Tuesday morning, ProPublica published a bombshell report showing how little America’s wealthiest pay in taxes, based on leaked documents from the Internal Revenue Service (IRS).

The report shows in detail how billionaires like Jeff Bezos and Warren Buffett have seen billions added to their net worth with little impact on their tax bill. It’s totally legal, and for many, not all that surprising.

“It’s not surprising at all, I think,” Chuck Collins, who works at the left-leaning Institute for Policy Studies, an organization dedicated to highlighting wealth inequality, told Insider.

Collins recently wrote a book on the ways the ultrawealthy hide their money and avoid taxation. In it, he uses the term “wealth defense industry” for the cottage industry that’s grown around helping the rich hold onto their money.

“It’s going to be very hard for ordinary people to decipher these tax transactions because they’re purposefully complex,” Collins said. “The wealth defense industry, their bread and butter is complexity, and opaqueness.”

Chuck Marr, the director of federal tax policy at the liberal-leaning Center on Budget and Progressive Priorities, said “we’ve been making this case for a long time.” He pointed to a paper from 2019 that outlines many findings similar to those in Tuesday’s report.

Still, it’s one thing to know something is likely happening, and another to see the details laid bare, and the figures involved. For example, ProPublica found that Warren Buffett paid 0.1% in “true tax rate,” which compares how much he paid each year in taxes to how much his wealth grew.

ProPublica’s report could draw widespread attention – and scrutiny – to certain intricacies of the tax code just as President Joe Biden moves to reform taxes to pay for his infrastructure proposals.

Already, Democratic lawmakers are seizing on the public report as a way to kickstart tax reform.

The report “should make it very hard for the Congress to not address it,” Marr said. “I think it really underscores, again, that very wealthy people do not pay tax on much of their income. And so this tax bill is a clear opening to address that.”

Jeff Bezos
Amazon CEO Jeff Bezos, the world’s wealthiest man.

America’s wealthiest make most of their money from assets, not income

As the 2019 CBPP paper lays out, a good amount of the income that the wealthiest bring in isn’t technically income – or at least it’s not taxed that way.

If you work a job where you receive wages in a paycheck, you’re probably familiar with the income tax, which taxes the money you get for going to work. Those wages would be income, and you’d be taxed under the income tax.

But, as both the CBPP and ProPublica note, the wealthiest Americans get most of their wealth from assets like stocks, and therefore pay taxes on capital gains.

As Marr and coauthors Samantha Jacoby and Kathleen Bryant write, capital-gains taxes are “effectively voluntary to a substantial extent: High-wealth filers may accumulate capital gains every year as their investments appreciate, but they don’t owe tax on those gains until – or unless – they ‘realize’ the gain, usually by selling the appreciated asset.”

So if you hold onto your stock assets, you’re not seeing that capital gains rate. Goldman Sachs estimated last month that the wealthiest Americans possessed between $1 trillion to $1.5 trillion in unrealized capital gains at that time. Some argue that those unrealized gains should be taxed, since the wealthiest could be sitting on valuable stocks, making money, and not paying taxes. Meanwhile, researchers at the right-leaning Tax Foundation argue that a progressive consumption tax would be a better way to tax the rich.

ProPublica reported that the ultrawealthy can also borrow hefty sums of money to pay off their bills as they sit on stocks and take in little income. “They’ll borrow money and they’ll use the stock as collateral,” Marr said. That means the wealthy are essentially using these loans as a form of income, but aren’t taxed as such.

As Marr, Jacoby, and Bryant write, “this is often a much cheaper strategy than selling stock and paying capital gains taxes, particularly when interest rates are low.”

Joe Biden
President Joe Biden.

The report could add flame to the fire for tax reform

Even before the ProPublica report, tax debate had been brewing. In particular, a provision called the “step-up basis” had been facing scrutiny.

Let’s say you’ve held onto stock for your whole life, and it’s only grown in value. If you die and leave it to someone else, the stock takes on the value at which the recipient gets it, meaning neither the original owner nor the inheritor are taxed on those gains.

For very wealthy people, Marr said, that “wipes out a lifetime of tax liability.”

Biden wants to do away with the step-up basis and he wants to tax capital gains for those making over $1 million at a rate equivalent to income.

“Broadly speaking, we know that there is more to be done to ensure that corporations, individuals who are at the highest income are paying more of their fair share,” White House Press Secretary Jen Psaki told The Washington Post in response to the ProPublica report. “Hence, it’s in the president’s proposals. His budget and part of how he’s proposing to pay for his ideas will go ahead.”

“The principle here is to equalize the treatment of ordinary income and capital gains, and that is a principle that’s neither new or particularly novel,” Brian Deese, the director of the National Economic Council, said in an April briefing. “In fact, the last president to enact a reform to equalize the treatment of ordinary income and capital gains was President Reagan, who did so while raising capital-gains taxes as part of the 1986 tax reform.”

The White House did not respond to Insider’s request for comment.

There’s been GOP resistance to further alterations to the tax code following their 2017 tax cut, especially any increase in rates. But the new reporting already ramped up the tax debate within Congress on Tuesday.

Sen. Bernie Sanders, who chairs the Senate Budget Committee, told reporters on Capitol Hill, “To the surprise of nobody I know, the rich and powerful aren’t paying their fair share, what else is new?” He urged lawmakers to approve Biden’s tax proposals.

“I do want people to understand the bottom line,” Sen. Ron Wyden, chair of the Senate Finance Committee, told reporters. “What ProPublica is revealing is, again, some of the country’s wealthiest taxpayers [that] profited handsomely during the pandemic are not paying their fair share.”

He said he’s in the process of crafting a proposal to change that. Asked by Insider about the timeline of its introduction, Wyden responded: “I’ll have it ready to go shortly.”

“Often solutions to this are portrayed as radical, but what’s radical is the current situation,” Marr said. “What’s radical is that wealthy people, a lot of their income never gets taxed. That’s radical.”

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The US shouldn’t prioritize vaccinating teens over donating shots abroad if it wants to get back to normal, experts say

pfizer administered to a teenager
A teen ‘COVID-19 student ambassador’ received a dose of Pfizer at Ford Field on April 6, 2021 in Detroit, Michigan.

  • The US is expected to expand its vaccine rollout to teens as soon as Thursday.
  • Meanwhile, low and middle income countries haven’t vaccinated their most vulnerable people.
  • To get back to normal, the US need to both immunize teens and send doses abroad, experts told Insider.
  • See more stories on Insider’s business page.

In January, Dr. Tedros Adhanom Ghebreyesus, the director-general at the World Health Organization (WHO), warned that the world was on the “brink of a catastrophic moral failure” by not giving enough vaccines to poorer countries. “It is not right that younger, healthier adults in rich countries are vaccinated before health workers and older people in poorer countries,” he said.

Five months on, more than half of Americans have had at least one COVID-19 vaccine dose, US vaccine supply has outstripped demand, and 12-year-olds could be offered Pfizer’s shot as early as Thursday.

Meanwhile, vaccines remain scarce in low- and middle-income countries and many of the most vulnerable people in those nations haven’t yet received a shot, a WHO spokesperson told Insider. In India, where millions are dying and the virus has mutated, less than 10% of people have had at least one vaccine dose, according to Oxford University’s Our World in Data.

Some experts see this disparity as a moral dilemma. “You don’t need to vaccinate all the way down, say, to your teen population … before you send out vaccine doses to COVAX,” Melinda French Gates, co-chair at the Gates Foundation, said May 9. COVAX is the WHO-backed initiative that aims to get more vaccines to low and middle-income countries.

To get itself – and the world – back to normal, the US needs to both vaccinate its young people and send more shots abroad, some experts told Insider. Others went further, and said that it doesn’t make sense to vaccinate low-risk populations, such as kids, when vulnerable people abroad are at risk abroad.

Fauci: We need to do both

Dr. Anthony Fauci, President Biden’s chief medical advisor, has said that immunizing young people is essential to achieve herd immunity, which is when enough people are vaccinated that the virus can no longer spread from person to person.

But Fauci has also advocated sending doses abroad to curb the virus’ spread.

“[India has] got to get their resources, not only from within, but also from without, and that’s the reason why other countries need to chip in to be able to get either supplies for the Indians to make their own vaccines or to get vaccines donated,” Fauci told ABC News Sunday.

A spokesperson from US President Joe Biden’s administration told Insider that it had committed 60 million AstraZeneca doses to countries in need, once cleared by the Food and Drug Administration (FDA).

Read more: How coronavirus variants called ‘escape mutants’ threaten to undo all our progress

Kathleen Neuzil, professor in vaccinology at the University of Maryland School of Medicine, told Insider that vaccinating teens and sending doses abroad via COVAX were not “necessarily mutually exclusive.”

Neuzil said that she’d witnessed more younger people from ethnic minorities and with chronic conditions getting sick with COVID-19 in the US, who needed access to vaccines. But she said a coordinated response was required between nations. “No single country alone can beat this pandemic.”

Dr. Erlinda Ulloa, a pediatrician studying the safety and efficacy of COVID-19 vaccines in kids at the University of California, told Insider that fair vaccine distribution and immunizing teens in the US were separate issues.

Ulloa said that 12 to 15 year-olds should get vaccines if and when it’s recommended. “It’s remarkably safe and effective in this age group,” she said. But from an ethical perspective, if there’s opportunity to support vaccination efforts abroad then the US should do it, Ulloa said.

Getting back to normal

coronavirus hug
Jacquie Carney runs to hug her grandma, Donna Vidrine, upon arrival in Los Angeles, California on November 23, 2020.

Janet Englund, professor of pediatric infectious diseases at Seattle Children’s Hospital, told Insider that if US teens weren’t immunized the virus would continue to spread in younger age groups. “To get back to ‘normal,’ we need to immunize our younger people,” she said.

“But if we don’t take care of the rest of the world, it’s going to be a temporary fix,” she added. “All these variants will eventually escape our vaccine and the best way to handle that is to vaccinate [the US and the rest of the world].”

Englund said the coronavirus vaccine co-developed by Pfizer and BioNTech – the shot that has been authorized for US teens – might be technically difficult to use in low and middle income countries right now as it requires very cold storage temperatures, although the groups are working on a vaccine that can be stored in a normal fridge. Other vaccines from AstraZeneca and Johnson & Johnson (J&J) could be more useful as they can be stored at normal temperatures already, and J&J’s shot is just one dose, she said.

Prioritize vulnerable adults abroad, two experts say

Russell Viner, professor of adolescent health at University College London, told Insider in a statement that the “key risk” for society was the “diversion of vaccines” to low risk groups while vulnerable adults in other countries remain unvaccinated.

Viner said very few children and teenagers ended up in intensive care with COVID-19 disease, and almost all of these were the same children that are vulnerable to winter viruses every year. It’s difficult to argue that vaccination benefits healthy teens, given our current knowledge, he said.

Viner said there was undoubtedly a very small group of teenagers who were clinically extremely vulnerable and should be vaccinated. Teenagers also play a role in transmission so if they remain unvaccinated they could act as a reservoir of infection, he said.

Adam Finn, professor of paediatrics at the University of Bristol, told Insider in a statement that giving vaccines to adolescents wasn’t a priority, at least for now.

Finn explained that most children who catch coronavirus don’t get seriously ill. “Indeed, most don’t get sick at all,” he said.

Finn said that at this point in the pandemic, when there are global shortages of vaccines, and lots of vulnerable people who haven’t got a shot, the priority was to prevent large epidemic waves, like the one in India.

“Those outbreaks pose a global threat as they drive the evolution of vaccine-resistant variants and their dissemination around the world,” he said.

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