After looking into the top tax-avoidance strategies that give billionaires substantial benefits and the tax manipulations used by the ultra-wealthy, ProPublica published a study on how these individuals cheat taxes through means not available to regular taxpayers. A working poor individual in the United States who makes $20,000 or $30,000 a year is more likely than a person who makes $500,000 a year to be audited. That is the result of the severe budget cuts implemented by the Republicans as a result of the earned-income tax credit. This two-part article provides a concise summary of common sense measures that provide large tax savings.
THE $5 BILLION IRA
Billionaires used unconventional strategies to evade paying taxes and The $5 billion Roth IRA that tech billionaire Peter Thiel has amassed shields income from taxes and helps middle-class and lower-class investors plan for retirement. When Thiel stuffed low-value PayPal business shares into the account in 1999, he broke the law. The government was unaffected by this move even though it violated IRS laws. He gets billions in untaxed earnings.
THE ULTRA WEALTH EFFECT
Despite paying relatively little tax relative to their vast wealth, billionaires such as Elon Musk, Jeff Bezos, and Warren Buffett amassed immense personal fortunes, partly through delaying the sale of their massive stock holdings. The primary goal of the American tax system is income. They avoid income as defined by the system because they make money from the sale of shares. Nonetheless, billionaires frequently utilize their wealth as collateral for loans because borrowing is tax-free. Buffett made the legal decision to give his money to charity.
THE MAGIC OF SPORTS OWNERSHIP: MAKE MONEY WHILE (LEGALLY) REPORTING LOSSES
Buying a sports franchise is one of the easiest ways for business owners to deduct expenses under IRS restrictions. Former Microsoft CEO Steve Ballmer bought the Los Angeles Clippers. It might still be deductible for tax purposes regardless of the team’s profitability or value growth. When a player’s contract is deducted twice, the owners benefit. Deductions are like manufacturing equipment depreciation, even though teams always gain value. Owners pay a lot less in taxes than athletes or people who work as beer waiters in stadiums. The Clippers facility employs a $45,000 annual salary worker who pays higher tax rates than billionaire Ballmer. Ballmer says he has paid his taxes.
TURNING HIGH-TAX-RATE TRADING INTO LOW-TAX-RATE INCOME
Tech billionaires who disclose their income on their tax returns pay relatively low income taxes because of the type of income, such as earnings from long-term holdings (from stock sales), which are taxed at a reduced rate. If short-term trading generates the bulk of your $1 billion or more in revenue each year? Are you subject to a higher rate because of that income? Under the direction of Wall Street entrepreneur Jeff Yass, Susquehanna International Group devised creative means of converting the wrong kind of money into the correct kind, resulting in a six-year tax savings of over $1 billion. In court, Susquehanna asserted that it complies with the law.
CAN YOU SPARE A STIMULUS CHECK?
The millionaires who professed to have extremely low salaries and were actually qualified for government assistance were the most notable. In 2020, more than eighteen billionaires received stimulus payments as a result of their tax returns being less than the $150,000 married couple level.
