Why don’t the rich pay taxes?

BY SOUMYA RANA

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More money means more taxes to be paid? Not really.

Jeff Bezos, the world's richest man in 2007 and 2011, paid nothing in the federal income taxes. Elon Musk, the second richest man in 2018, did not pay

a penny in income taxes either. These examples demolish the myth of the tax system: that everyone pays their fair share and the wealthiest Americans pay the most.

So, how do the rich conveniently dodge income tax?

To understand this, learning the history of taxes is crucial. The concept of taxes wasn't prevalent before the 1990s. It started as a way for the government to collect funds during war times. It soon became a norm as it was an effective way for the government to generate revenue and invest it towards the betterment of the public.

The richest effectively avoid paying the taxes. They either pay very little compared to the massive amount of wealth they have or sometimes even nothing because the only show a small percentage of their “wealth” as “income”. On the other hand, many Americans live on paychecks with little wealth--paying a portion of their income in taxes to the government, which increases if they earn more. It comes down to the working class, who must bear the majority of the federal income taxes.

Some ways that help the richest avoid income taxes are:

The rich DO NOT get paid

Regular working-class people get paid wages, salary, income, etc. The rich don't get paid anything like that. Larry's basic salary is $1. How can that be taxed? The middle class have an income. However, the income of the rich is just a buffer, and they can afford to have their salary as low as they want because they really don't need it. So, income tax never gets to the rich.

The rich keep their income in the system or are indirectly encouraged to do so

When an individual has an enormous amount of money, the government is more interested in making them keep the money in the economy. If the rich move their money, there will be an impact on the economy, which will also be left for the government to figure out. Thus, the government encourages the rich to keep their wealth in the system and takes a small percentage from it (a tax loophole).

The rich pay the middle-class

Those that really feel the impact of taxes are middle-class workers. And this is also leverage for the rich. The incomes the middle-class have is provided by the rich. The rich have the platforms, companies, corporations that offer the middle class with income. This means that if the government interferes with the rich, they will probably have no middle-class to fall back on. In fact, they help the government in collecting taxes from the middle class.

Is money power?

The rich have no allegiance to any country. When someone has millions of dollars, every country would be open to them (as long as they are not a criminal).

If a country tries to interfere with the work of the rich, the rich can simply move their money elsewhere. After all, it's their money and not the government. So, they have options. The rich also take advantage of countries like Switzerland and Ireland which have a lenient tax system by creating bank accounts there.

So are they rich if their salary is $1?

A definite yes! Even with a $1 salary, they are "wealthy". Their money is worth billions because it is not tangible; it is invested in companies, projects and stocks. Rather than taking large amounts of cash, the rich take an equity stake. They may prefer stocks or capital gain, which are also taxed more favourably. Lastly, the rich also invest in charities. The Jeff Bezos foundation gives a large share back to Jeff Bezos--bringing us back to the beginning.