ProPublica misleads public over ‘explosive’ tax report
Over the past few days, the headlines have been dominated by a story that is seen by many as a historic revelation of tax evasion by the world’s billionaire class. The reality, however, is much less sensational.
The report, published by ProPublica, was billed as a ‘bomb’ which, upon closer examination, leads to a flawless conclusion: Rich Americans pay much more that their fair share of taxes, no less.
Progressive lawmakers and advocates have lamented the supposed inequalities in the U.S. tax system for years, saying those at the top pay far less tax than they should. Corn ProPublicaThe report distorts the truth of tax law to make its case to the public. The reality is that rich Americans are paying their fair share, and they are paying more than the bottom half of the nation’s taxpayers. This is confirmed in the graph below, created by the National Taxpayers Union Foundation (NTUF) analyzing data for the 2018 tax year.
Looking at the NTUF’s analysis, it can be clearly seen that for the 2018 tax year, the richest 1% of taxpayers paid more than 40% of total federal income taxes, despite having generated just under 21% of total adjusted gross income (AGI).
According to the analysis, in the same tax year, the richest five percent of earners owned about 36.5 percent of AGIs, but paid more than 60 percent of total federal income taxes.
On the other hand, the lowest 50 percent of earners had an AGI share of 11.6 percent but paid just under three percent of federal income tax.
Despite this, ProPublica and other sources devised a new calculation to fit the narrative they subscribed to: that everyone above the 1% escapes federal income tax.
The association decides to correlate the growth of its wealth over the course of a year to its taxable income, in relation to the taxes it pays that year. They call it the “real tax rate” when all it is, of course, is nonsense.
The way the US tax system works is to tax achievements gains, not latent gains. Most of the billionaires at the top of the wealth pyramid have a lot of assets in illiquid media: stocks, property, retirement accounts, etc. As with any other American, any increase in the value of these assets is not taxed until the asset is sold.
The reasoning behind such a policy is sound. Having money in, say, a stock will not benefit the holder until he sells it, at which point the capital gains on that stock are taxed.
The same works with land, a house, a car, a retirement account, or any other type of investment that can increase in value. The point is, no one is supposed to pay tax on any increase in value until it actually turns into income.
It is not tax evasion; it’s just the way the country’s tax system works, and for good reason.
ProPublicaThe deceptive and misguided campaign to convince the American electorate that billionaires are not paying their fair share of taxes has been completely debunked. Perhaps that explains why the outlet said it was looking to hire tax experts to join their team after they released their bogus report.
Do you know tax law?
Wealth management ?
We may need your help with our future reports. https://t.co/RLVuOHrrgM
– ProPublica (@propublica) June 9, 2021