and have been the main beneficiary of Trump's tax cuts, made permanent in the "One Big Beautiful Bill Act". The authors cited mention Medicare tax being avoided, but it seems like what they discuss would also apply to Social Security (which is regressive, as capped payroll tax): "Business owners can classify their earnings as profits, rather than a salary, to avoid paying the tax that funds Medicare." Of course the idea of collective social ownership of the means of production, ending the private profit system (rather than just more equitable taxation of the profits), doesn't merit a mention. The Rich People Democrats Aren’t Talking About
| | | | | | | | | | | The Rich People Democrats Aren’t Talking About As billionaires become a popular political target, a new book urges Washington not to lose sight of a much large... | | | Excerpts: As Mr. Zidar and Mr. Zwick describe, these millionaires are everywhere, serving in Congress, forming lobbying groups and presenting themselves as the sympathetic, familiar small businesses in your city or town. Raising taxes on a small, world-shaping set of billionaires may be politically easier than revoking a deduction for the nation’s manufacturers of garage doors and electric toothbrushes. The rhetorical preoccupation could become a substantive one, which would, at the very least, leave lots of tax revenue on the table. Through a painstaking examination of tax records and a series of entertaining anecdotal portraits, they present a very different profile of the 21st-century American capitalist. the key characteristic of these “stealthy wealthy,” another moniker the authors use for this group, is how they structure their businesses and pay their taxes. The largest, most powerful companies, like Walmart or Exxon Mobil, are generally structured as corporations, legal entities that owe the corporate income tax and distribute profits to shareholders through dividends. Not the legion of prosaic companies at the center of “The Everywhere Millionaire.” These businesses — commercial aluminum heat-treating firms and food redistributors — are often set up as a limited liability company, a partnership or an S-corporation. Despite the name of this last type, these companies do not owe the corporate income tax. Instead, business earnings show up on an owner’s tax returns and are subject to the individual income tax. Among tax nerds, these companies are called “pass-throughs,” because the firm’s profits pass onto an individual return. Pass-throughs have relatively few owners, compared with the millions who can buy and sell shares in a publicly traded corporation. But, as the book details, this type of company is deeply intertwined with the growing wealth of the ultrarich. Since the 1980s, pass-through businesses have been responsible for more than half of the additional share of income claimed by the top 0.1 percent. In 2017, during Mr. Trump’s first term, Mr. Zidar and Mr. Zwick were among a group of economists called to Washington to meet with the Republicans who were preparing a generational rework of the tax code. At that point, the pair were already considered the foremost experts on pass-through businesses, and lawmakers were getting ready to create a generous new write-off for the owners of these companies. Mr. Zidar and Mr. Zwick told Republicans not to do it, since the benefits would overwhelmingly accrue to the wealthy. But the G.O.P. plowed ahead. The party was already committed to cutting taxes for large corporations, and members of Congress told the economists that they needed to include a tax cut for “the little guy.” The result was a deduction for pass-through business profits that, in effect, lowered the top marginal income tax rate these “Main Street Millionaires” have to pay by seven percentage points. At first only a temporary tax cut, Republicans last year voted to make it a feature of the code indefinitely, at a cost of roughly $800 billion in lost tax revenue over a decade. That’s nearly as much money as Republicans cut from Medicaid. Mr. Zidar and Mr. Zwick’s list of problematic tax benefits for these business owners goes on. Republicans have not only repeatedly narrowed the number of people who, theoretically, owe the estate tax, but legal maneuvering has also made the tax largely optional. Business owners can classify their earnings as profits, rather than a salary, to avoid paying the tax that funds Medicare. While a highly paid executive at a major corporation has his pay automatically reported to the I.R.S., pass-through company owners often report only a fraction of their profits to the tax collector. Michael Novick 323-636-7388https://www.antiracist.org http://www.change-links.org CONFIDENTIALITY NOTICE: The contents of this email message and any attachments are intended solely for the addressee(s) and may contain confidential and/or privileged information and may be legally protected from disclosure. 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