YOU’RE GONNA NEED A BIGGER BLOG: What ProPublica Gets Wrong About the Wealthy and Taxes.
ProPublica obtained the tax returns of the richest Americans and discovered what every informed person already knew: They don’t pay as much in income taxes as some people would like them to. This is being called a great scandal by many Democrats and liberal journalists.
Meanwhile, that these returns were almost surely leaked by someone at the IRS seems not to bother a lot of the same people. There’s no way ProPublica got this information from dozens of high-priced accountants and attorneys. Barring the possibility that this was a computer hack—which itself would be a monumental scandal—this is outrageous. Weaponizing the IRS for political purposes is not just a crime, it is a long-term political disaster.
But I want to focus on the fake scandal.
Billionaires often pay little in income taxes because billionaires don’t typically make their money from a salary. Billionaires exist for the most part because they own assets—stocks, businesses, commodities, property, etc.—and the paper value of those assets amounts to the bulk of their wealth. And in America, we do not tax wealth.
Nor should we.
Let’s say you collect baseball cards. On paper, your collection is worth a bundle. But its real value is realized only when you sell it. Do you think the IRS should tax you every year for what your collection could be worth if you sold it? Do you want the IRS to tax you for the value of your wedding ring—not at purchase, but forever—even if you’re never going to sell it?
The same principle applies to other unrealized gains. If your stock portfolio increases in value, you get taxed on your gains when you sell.
ProPublica ignores all this. “We compared how much in taxes the 25 richest Americans paid each year to how much Forbes estimated their wealth grew in that same time period,” they explain. “We’re going to call this their true tax rate.”
Except it’s not a true tax rate.
Read the whole thing.
Related: Return of the IRS Scandal. “This still leaves the real scandal, which is that someone leaked confidential IRS information about individuals to serve a political agenda. This is the same tax agency that pursued a vendetta against conservative nonprofit groups during the Obama Administration. Remember Lois Lerner? This is also the same IRS that Democrats now want to infuse with $80 billion more to chase a fanciful amount of uncollected taxes. As part of this effort, Mr. Biden wants the IRS to collect ‘gross inflows and outflows on all business and personal accounts from financial institutions.’ Why? So the information can be leaked to ProPublica? The IRS says it has begun an investigation into the tax-return disclosure, and by all means send the guilty to prison. But Congress should also not trust the IRS with any more power and money than it already has.”