A lot of the ultra rich’s wealth is theoretical. They don’t have a big hoard of gold or a huge bank account. It’s usually in the form of unrealised capital gains: they own assets such as real estate and stock portfolios. These may appreciate in value depending on the market (i.e.: how much people would be willing to pay to buy these assets from them at a specific moment). So long as they don’t sell, they have “wealth”, but they don’t have “income”. And most countries only tax income, not wealth. There can be a lot of fluctuations in the value of these assets! Look at how much theoretical wealth Elon Musk has lost in the past few weeks; but he still retains the same assets, and they could go back up in value in the future.
One common trick that the ultra rich do is that they will borrow money from the bank at low interest, by using their assets as collateral. That way, they get to access some of their wealth without having to sell them and create a capital gains revenue that would be taxable.
And then off course, these guys have the means to hire a small army of accountants, lobbyists and lawyers to find, create and exploit legal loopholes.
The goal of tax breaks is to encourage the rich to part with their money. Donating to charity, investing in businesses, hiring employees…it’s all there to encourage spending. Spending goes to you, taxes do not. A big chunk of taxes goes to Medicaid, most goes to paying the debt and military spending,
Many have come to believe that rules and laws don’t apply to them, and where’s the evidence that they’re wrong. Look at all the criminality that Trump has bought his way out of.
And, they’re greedy and selfish. What should “I” have to pay taxes like all the serfs?!?!?
It’s not that it’s hard. They just don’t want to share. You would think at some point they’d go “I have everything material I could possibly want with enough money to buy two backups, think I can be a bit civic-minded and charitable” but for some reason, no.
Flat tax would help solve that. Get rid of the entire tax code (personal, business, investment, deferred, etc) and tax everything at the same rate. No go arounds, no tax exemptions, nothing. Entire tax code should fit on one page of paper and be simple enough a 3rd grader could understand.
Their accountants and pet Congress Critters make sure the percentage they pay in taxes is as small as possible. But their income is so high, the total amount is painful. How would you like to pay a million in taxes, even if you make 10 times that?
Part of it is because most ultra rich do not have incomes as you or I do. To ELI5 it, someone like Elon Musk (or, more likely, his account) walks into a bank and shows the bank all his financial assets. Based off that, the bank agrees to give Musk a huge loan – like millions of dollars. That’s what ultra rich people live off of to avoid income tax. No income, no tax. They then take their financial assets and move them to banks in countries which do not tax their assets. And then they use their dividends from their assets to pay off the loan. That’s really simplified but that’s what happens. Essentially, from a ledger perspective, they have nothing to tax so they pay nothing in tax.
I think the sticker shock makes it harder. I pay 30k a year in taxes and that seems like a lot, imagine how a tax bill of 200k+ would feel. I think the sticker shocks makes them more inclined than the regular person to find ways around it.
I’m not saying it’s not fair. Obviously the more you make the more they should take.
they have enough money to afford the best lawyers and accountants to work out how to pay as little as possible.
most of them have the mindset that they would rather pay an accountant £1,000,000 a year to pay 0 tax than pay £900,000 of tax.
most of their earnings and wealth doesn’t come from wages, it comes from interest, assets and stocks.
some of them have worked out that rather than sell their stock to pay for something, you can take out a loan, use your stock as collateral, and get someone else to buy the thing you want for you. You still own and increase wealth from the original asset while owning and increasing wealth from new assets.
because politicians have also become part of the ultra wealthy, they have no reason to crack down on the loopholes being used to avoid paying taxes. In fact, they intentionally make policy with loopholes baked in. (In the UK, the Conservatives made a law to increase taxes on people who owned more than one home, but also put a loophole in that anyone who owned more than 7 homes was exempt).
the ultra wealthy own enough of the media to make sure that regular folk know “if you tax the rich, they’ll leave, and that’s bad”. Making sure you vote for the people who make the decisions that favour the ultra wealthy.
It’s a broken system, and it’s not going to get better. It’s going to continue to get worse until the bottom falls out.
What I learned a while ago is that for true hardcore capitalists, the only goal is to make as much money as they can as fast as they can. It’s not some dollar amount that once they get there they’re like “ok I’m set for life”, nor is it earning $x dollars a year. They are obsessed with optimizing their income forever. They’re cursed.
I remember a saying by a mid-size company CEO when asked why he didn’t grow his company further. He said that to do so, he would have to sacrifice some of his humanity just for more profit. That the ultra rich do nit become ultra rich without sacrificing their humanity. Which is in large part empathy, which I believe in central in wanting to contribute to society and help those poorer than thou.
The ultra rich like to justify their tax cuts by saying they’re reinvesting in their business and plan to grow/expand. In reality, they’re just stretching the amount of time they have to legally deposit that money into their personal accounts. This includes family members, subcontractors, and agenda initiatives (said with both a positive and negative connotation, it goes both ways). This includes nonprofits, philanthropy and lobbying.
In my line of work, I deal with a lot of high networth individuals. And what people like you don’t realize is that, rich people didn’t get rich by spending money the way you spend money. They are cheap. Super cheap. Cheaper than you can imagine. Things you’ll buy that you won’t even think about, they won’t buy.
They’ll spend on things that you dont’ think about spending. Investments. Houses, stocks, bonds, futures etc.
And they’ll also spend on the things that you wish you could spend on. Private flights, nice cars, nice clothes, but, at a percentage basis, you spend more on those things as a percentage of your income than they do.
Most of the rich people I know give away millions to charities every year. Millions. Certainly dwarfs you 1k a year.
You’re other problem is you have this idea that if rich people paid more in taxes, you’d pay less. Rich people know better than that. You, the average person, will pay the same amount of tax or more every year no matter how much taxes the rich pay. The extra money the rich will pay would disappear in the pockets of politicians, government contractors etc.
The question you should be asking is “why is there no accountability, and jail time for politicians who misuse taxpayer money?”.
They have other people do the paperwork and it is the job of those people to take advantage of the loopholes available to them. You can write off your earnings as a business loss too. All you need to do is have your business become worth less.
If you’re ultra rich, you are likely paying at least tens of thousands of dollars to get your taxes figured out because of how complicated estates can be
The 1% hold 99% of all wealth. Look at what we have accomplished with the 1% we hold. Schools, interstate freeways, power grids, the internet. Imagine if we had 5% or 10%. I dare say we might have flying cars and everyone could love to be 100 years old in great health.
The tax code is 70,001 pages. The first page says if you make income, you owe taxes. The other 70k pages are ways to NOT do that. They have the money to pay someone to read those pages.
You can also read those pages. Or watch some youtube, etc.
I’d say most societies try to exploit the ultra rich by trying to force them to pay more. In a fair society, there should be no percentage based taxes and everyone would just pay the exact same fixed sum because how could you justify some people paying more just because they earn more?
After all, every taxpayer gets the same from society and would get mad if some people would get special treatment, like better healthcare or preferential treatment from law enforcement etc.
Other than that though, governments have to make make exceptions for them simply because of free market. IF they don’t the ultra rich would take their business else where and pay taxes into a country that taxes and regulates them the least.
Any government either gets something in taxes from them.. or they get nothing because almost any country would gladly accept them (and tax money they contribute) because any kind of socialist BS would just make them take their business elsewhere.
A lot of factors, but at the simplest level I think it’s these:
First – you don’t get rich by spending money you don’t have to. If something has a cost, you do what you can to minimize or eliminate it.
Second – you may pay people a lot of money to reduce or eliminate that cost. If you spend $100,000 on avoiding a tax bill for $150,000, you’ve saved $50k, even though it cost a lot of money.
Third – when you’re rich enough, you also exert direct and indirect influence to ensure you have a work around. Others may benefit too, but the important thing is that you can avoid spending. And I don’t mean in the cliche, villain method of “I paid a senator to pass a bill that said Billionaires don’t pay taxes”, I mean the arguably more sinister “I paid a lobbyist to conduct a study that appears to show that this tax rule will benefit lots of people, when in reality it will likely only benefit a few people including me. Then the lobbyist up showed that to the senator who thought they did the right thing by passing this rule because the study misled them.”
Combine all this and you end up with people that are willing to spend a lot to avoid spending even more, and they’re working to make sure they get rules that favor them.
Who says they don’t? They follow the rules… that’s why when they all wanted Trumps tax returns and some criminal stole them and published them… nothing happened. Why aren’t you asking how all the politicians got rich (very rich) on a politicians salary? They don’t all give high paying speeches every week or write bestselling books. Many of them need looking into and they are trying to do that while you and many other can’t see the benefit of doing this. That makes it seem to many that you’re all being paid to be disruptions.
The easiest explanation in my mind is this. I don’t know if it’s right it makes sense. But they have assets that they own, like stocks, property, loaning people money (bonds) etc. the value of those go up over time, but they never actually have the “cash” because they still own it. In most economies, you are taxed on income not wealth.
The big issue, is that they can then use these assets as collateral to take out a loan and buy stuff. Loans aren’t income either. So they are effectively “selling” the stock, but not actually so it’s not taxed.
Whether wealth should be taxed, or if asset collateralized loan for individuals should be taxed is the question at hand. But you can’t tax people on money they don’t have, or it would force you to sell them.
Some lower income own homes. I know there is property taxes, but that’s not technically the same. Let’s say you owned a house. You bought it for $200K and it’s worth $400K. Should they be able to tax you on that incremental $200K? You haven’t sold the house, and you are still poor. Unless you sell it, and realize a capital gain, you don’t get taxed.
Lower than billionaires use this collateral strategy too. When you have equity in your home, you can do a HELOC ( home equity line of credit ) to take a loan against the equity you have in the house. This isn’t taxed (I think).
Its because most “rich” people don’t actually have any money. By money, I mean liquid assets, it’s all tied down in things that don’t generally exist in tangible reality, like stocks etc.
Comments
I don’t like paying taxes. I imagine they don’t either.
It’s not hard, it’s just cheaper for them to exploit loopholes to not do so or not pay as much.
If you won a million in the lottery, would you legally minimize your taxes or fork over 40% for the hell of it.
Greed
A lot of the ultra rich’s wealth is theoretical. They don’t have a big hoard of gold or a huge bank account. It’s usually in the form of unrealised capital gains: they own assets such as real estate and stock portfolios. These may appreciate in value depending on the market (i.e.: how much people would be willing to pay to buy these assets from them at a specific moment). So long as they don’t sell, they have “wealth”, but they don’t have “income”. And most countries only tax income, not wealth. There can be a lot of fluctuations in the value of these assets! Look at how much theoretical wealth Elon Musk has lost in the past few weeks; but he still retains the same assets, and they could go back up in value in the future.
One common trick that the ultra rich do is that they will borrow money from the bank at low interest, by using their assets as collateral. That way, they get to access some of their wealth without having to sell them and create a capital gains revenue that would be taxable.
And then off course, these guys have the means to hire a small army of accountants, lobbyists and lawyers to find, create and exploit legal loopholes.
Other than being greedy and shitty you mean?
Because its cheaper for them to lobby your politicians to make it legal that they don’t have to pay.
The goal of tax breaks is to encourage the rich to part with their money. Donating to charity, investing in businesses, hiring employees…it’s all there to encourage spending. Spending goes to you, taxes do not. A big chunk of taxes goes to Medicaid, most goes to paying the debt and military spending,
There are about 140 million people in the US who pay individual income taxes.
There are about 1.4 million people in the top 1%, IOW those with an adjusted gross income (AGI) of >$663,164.
Those 1.4 million people accounted for 40.2% of the $2.1 trillion in individual income taxes collected in 2022, the last year available.
Because their lives are so empty that the only thing that brings them joy is making more money.
Many have come to believe that rules and laws don’t apply to them, and where’s the evidence that they’re wrong. Look at all the criminality that Trump has bought his way out of.
And, they’re greedy and selfish. What should “I” have to pay taxes like all the serfs?!?!?
Think of how much you’d like to keep a dollar for tomorrow.
Now multiply that by a billion.
Mo money mo problems
It’s not that it’s hard. They just don’t want to share. You would think at some point they’d go “I have everything material I could possibly want with enough money to buy two backups, think I can be a bit civic-minded and charitable” but for some reason, no.
Because of the greed.
Flat tax would help solve that. Get rid of the entire tax code (personal, business, investment, deferred, etc) and tax everything at the same rate. No go arounds, no tax exemptions, nothing. Entire tax code should fit on one page of paper and be simple enough a 3rd grader could understand.
Their accountants and pet Congress Critters make sure the percentage they pay in taxes is as small as possible. But their income is so high, the total amount is painful. How would you like to pay a million in taxes, even if you make 10 times that?
The problem is not that it’s hard for them to do, but that’s easy for them not to.
Part of it is because most ultra rich do not have incomes as you or I do. To ELI5 it, someone like Elon Musk (or, more likely, his account) walks into a bank and shows the bank all his financial assets. Based off that, the bank agrees to give Musk a huge loan – like millions of dollars. That’s what ultra rich people live off of to avoid income tax. No income, no tax. They then take their financial assets and move them to banks in countries which do not tax their assets. And then they use their dividends from their assets to pay off the loan. That’s really simplified but that’s what happens. Essentially, from a ledger perspective, they have nothing to tax so they pay nothing in tax.
How do you think they became ultra rich?
Oh it’s not hard for the ultra rich to pay taxes. It’s hard to MAKE them pay taxes.
I think the sticker shock makes it harder. I pay 30k a year in taxes and that seems like a lot, imagine how a tax bill of 200k+ would feel. I think the sticker shocks makes them more inclined than the regular person to find ways around it.
I’m not saying it’s not fair. Obviously the more you make the more they should take.
Theyre selfish
Because they think they are better than us, plain and simple. They think of taxes as a form of charity.
To most of the responses, you can just change the laws
Most Americans are illiterate about politics is the real answer
It’s a broken system, and it’s not going to get better. It’s going to continue to get worse until the bottom falls out.
What I learned a while ago is that for true hardcore capitalists, the only goal is to make as much money as they can as fast as they can. It’s not some dollar amount that once they get there they’re like “ok I’m set for life”, nor is it earning $x dollars a year. They are obsessed with optimizing their income forever. They’re cursed.
The more you have, the less you want to part with it.
I remember a saying by a mid-size company CEO when asked why he didn’t grow his company further. He said that to do so, he would have to sacrifice some of his humanity just for more profit. That the ultra rich do nit become ultra rich without sacrificing their humanity. Which is in large part empathy, which I believe in central in wanting to contribute to society and help those poorer than thou.
The ultra rich like to justify their tax cuts by saying they’re reinvesting in their business and plan to grow/expand. In reality, they’re just stretching the amount of time they have to legally deposit that money into their personal accounts. This includes family members, subcontractors, and agenda initiatives (said with both a positive and negative connotation, it goes both ways). This includes nonprofits, philanthropy and lobbying.
Hard? It’s not hard.
In my line of work, I deal with a lot of high networth individuals. And what people like you don’t realize is that, rich people didn’t get rich by spending money the way you spend money. They are cheap. Super cheap. Cheaper than you can imagine. Things you’ll buy that you won’t even think about, they won’t buy.
They’ll spend on things that you dont’ think about spending. Investments. Houses, stocks, bonds, futures etc.
And they’ll also spend on the things that you wish you could spend on. Private flights, nice cars, nice clothes, but, at a percentage basis, you spend more on those things as a percentage of your income than they do.
Most of the rich people I know give away millions to charities every year. Millions. Certainly dwarfs you 1k a year.
You’re other problem is you have this idea that if rich people paid more in taxes, you’d pay less. Rich people know better than that. You, the average person, will pay the same amount of tax or more every year no matter how much taxes the rich pay. The extra money the rich will pay would disappear in the pockets of politicians, government contractors etc.
The question you should be asking is “why is there no accountability, and jail time for politicians who misuse taxpayer money?”.
A dislike of taxes is not unique.
They have other people do the paperwork and it is the job of those people to take advantage of the loopholes available to them. You can write off your earnings as a business loss too. All you need to do is have your business become worth less.
Wow, there are so much mental gymnastics going on here defending ultra wealthy people. This is why the middle class is struggling.
Having money is an addiction. The more you have, the more you need.
It’s not hard. They just have their wealth in things that don’t attract taxes.
They do pay taxes, way more than you do
Good good question????
If you’re ultra rich, you are likely paying at least tens of thousands of dollars to get your taxes figured out because of how complicated estates can be
The 1% hold 99% of all wealth. Look at what we have accomplished with the 1% we hold. Schools, interstate freeways, power grids, the internet. Imagine if we had 5% or 10%. I dare say we might have flying cars and everyone could love to be 100 years old in great health.
The tax code is 70,001 pages. The first page says if you make income, you owe taxes. The other 70k pages are ways to NOT do that. They have the money to pay someone to read those pages.
You can also read those pages. Or watch some youtube, etc.
It reduces their feelings of specialness.
That’s a misleading question.
I’d say most societies try to exploit the ultra rich by trying to force them to pay more. In a fair society, there should be no percentage based taxes and everyone would just pay the exact same fixed sum because how could you justify some people paying more just because they earn more?
After all, every taxpayer gets the same from society and would get mad if some people would get special treatment, like better healthcare or preferential treatment from law enforcement etc.
Other than that though, governments have to make make exceptions for them simply because of free market. IF they don’t the ultra rich would take their business else where and pay taxes into a country that taxes and regulates them the least.
Any government either gets something in taxes from them.. or they get nothing because almost any country would gladly accept them (and tax money they contribute) because any kind of socialist BS would just make them take their business elsewhere.
They’re cunts.
A lot of factors, but at the simplest level I think it’s these:
First – you don’t get rich by spending money you don’t have to. If something has a cost, you do what you can to minimize or eliminate it.
Second – you may pay people a lot of money to reduce or eliminate that cost. If you spend $100,000 on avoiding a tax bill for $150,000, you’ve saved $50k, even though it cost a lot of money.
Third – when you’re rich enough, you also exert direct and indirect influence to ensure you have a work around. Others may benefit too, but the important thing is that you can avoid spending. And I don’t mean in the cliche, villain method of “I paid a senator to pass a bill that said Billionaires don’t pay taxes”, I mean the arguably more sinister “I paid a lobbyist to conduct a study that appears to show that this tax rule will benefit lots of people, when in reality it will likely only benefit a few people including me. Then the lobbyist up showed that to the senator who thought they did the right thing by passing this rule because the study misled them.”
Combine all this and you end up with people that are willing to spend a lot to avoid spending even more, and they’re working to make sure they get rules that favor them.
It’s not.
Greed is one hell of a drug.
Because they don’t want to, and they own the government, so they don’t have to.
Nobody likes to pay taxes, rich or poor. But tax evasion is an expensive service that only rich people can afford
Easy. Greed.
Tax Evasion is illegal. Tax Avoidance is not.
Who says they don’t? They follow the rules… that’s why when they all wanted Trumps tax returns and some criminal stole them and published them… nothing happened. Why aren’t you asking how all the politicians got rich (very rich) on a politicians salary? They don’t all give high paying speeches every week or write bestselling books. Many of them need looking into and they are trying to do that while you and many other can’t see the benefit of doing this. That makes it seem to many that you’re all being paid to be disruptions.
The easiest explanation in my mind is this. I don’t know if it’s right it makes sense. But they have assets that they own, like stocks, property, loaning people money (bonds) etc. the value of those go up over time, but they never actually have the “cash” because they still own it. In most economies, you are taxed on income not wealth.
The big issue, is that they can then use these assets as collateral to take out a loan and buy stuff. Loans aren’t income either. So they are effectively “selling” the stock, but not actually so it’s not taxed.
Whether wealth should be taxed, or if asset collateralized loan for individuals should be taxed is the question at hand. But you can’t tax people on money they don’t have, or it would force you to sell them.
Some lower income own homes. I know there is property taxes, but that’s not technically the same. Let’s say you owned a house. You bought it for $200K and it’s worth $400K. Should they be able to tax you on that incremental $200K? You haven’t sold the house, and you are still poor. Unless you sell it, and realize a capital gain, you don’t get taxed.
Lower than billionaires use this collateral strategy too. When you have equity in your home, you can do a HELOC ( home equity line of credit ) to take a loan against the equity you have in the house. This isn’t taxed (I think).
Its because most “rich” people don’t actually have any money. By money, I mean liquid assets, it’s all tied down in things that don’t generally exist in tangible reality, like stocks etc.
You need to learn about holding assets long term and what creates a taxable event. They aren’t luckier than you, only smarter.
They don’t want to and it’s not hard for them not to