The .047% that don’t pay taxes

Remember when Mitt Romney strapped Fido on top of the family minivan station wagon (admittedly, better than the head of a decapitated whale), and went on a listening tour of America, where he learned that 47% of the US population are freeloaders, who don’t pay any taxes? This turned out to be a serious misapprehension, since poor and working class people pay a big effective percentage of their income in federal payroll taxes (Social Security and Meditax are 15.3% combined if you count the employer contribution, which you should because it’s a straight pass through of employee comp to the Feds), plus state taxes, sales taxes, and so forth. What Mitt was referring to, in the Bain Capital version of communism, was that a lot of people don’t pay any net federal income tax, in large part because of the Earned Income Tax Credit, which was the only good part of Newt Gingrich’s and Bill Clinton’s welfare “reform” 30 years ago now.

You know who really doesn’t pay taxes? Yeah: (gift link)

Then there are the superrich. They live by another set of rules. The wealthiest people in the United States pay taxes on a minuscule proportion of their income, and some avoid the income tax and payroll tax entirely, says Ray Madoff, an expert on taxes at Boston College Law School. Much of their staggering wealth — assets including cash, stock, bonds, gold, art collections, homes, yachts and every other valuable thing they have already accumulated — is barely taxed, she says.

Professor Madoff has written a persuasive book, “Second Estate: How the Tax Code Made an American Aristocracy.” She says billionaires in the United States can be virtually exempt from taxes, like the French aristocracy before the revolution of 1789.

Some billionaires manage to bypass the income tax entirely, she says. And they are all barely touched by the payroll tax because the income captured by that tax is capped at $184,500.

“There are two classes of people in the United States today,” she said in a long phone conversation. “Those who pay taxes, which is most of us, and the ‘wealth class’” — a self-perpetuating elite that passes on riches that are barely taxed, from generation to generation.

The tax code, she said, has helped create a new “hereditary class,” which is taking advantage of arcane rules that are hard for most people to fully understand.

A key aspect of all this is the virtual destruction of the estate tax, via esoteric dodges that were banned in the Maoist Peoples’ Republic known as 18th century England, but are now legal in Calvinball land because Wealth Is the Surest Sign of Election, and also fuck you, we don’t care and we don’t have to care.

I was talking with a Chicago friend of mine about the presidential aspirations of JB Pritzker, and he noted only half-facetiously (I think) that Pritzker isn’t really all that rich, since he’s scraping along with something like just three or four billion dollars, which is now a petty sum compared to the Smaug-like hordes of Musk and Ellison and Bezos and Zuckerberg, and a bunch of other people who represent absolutely catastrophic failures of politics and culture.