Public Notice: Wealth, and How to Grow It
The rich are accumulating astounding wealth, while paying shockingly little in taxes
This Tuesday, the news organization ProPublica published "The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax," based on "a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation's wealthiest people, covering more than 15 years" – including Jeff Bezos, Warren Buffett, Bill Gates, Rupert Murdoch, Elon Musk, and Mark Zuckerberg – all leaked to them by an anonymous source.
The report is surprising only in that it's not really surprising at all: The rich are accumulating astounding wealth, while paying shockingly little in taxes. Examples abound: Several of them often paid no federal taxes; as Bezos' net worth ballooned by $120 billion over a 12-year period, he paid 1.09% of that in federal taxes.
Nor are the reasons a mystery, or out of our control: The top tax rates are very low; corporate taxes are even lower; and taxes apply only to income, not to wealth – and you can accumulate a staggering amount of wealth without ever having much taxable income. Particularly if you borrow against that wealth and never touch the principal until you pass it down to your heirs, a strategy one tax expert calls "buy, borrow, die." We could increase those corporate tax rates or start taxing wealth accumulation, but we don't. Like I said, no real surprise ... but a good read at propublica.org.
Another good read: Austin Sanders on the City Council debate last week on whether to double the city's homestead exemption from 10% to 20% of appraised value. Best guess is this will help the median homeowner by about $141 a year (remember, this is just on the city portion of the tax bill, a relatively small part of most people's total). And that's nothing to sneeze at, and lots of homeowners really need help ... but because it's proportional, based on the home's value, by far the biggest share of the benefit goes to the wealthiest people, in the most expensive homes. And the exemption does nothing for renters, in fact shifting $27 million in tax burden onto the owners of rental and commercial property.
Council has resisted this temptation before but is now poised to bite the bullet, swayed by new state regulations that allow the exemption to not count against our tax cap (it's complicated), so they can tell themselves that the move won't cost the city any revenue. But the fact remains that this is a hugely regressive tax, and the $100 that the poor homeowner hanging on by a thread is going to save next year will be passed on in increased fees and costs elsewhere, as surely as trickle-down economics flow downhill.
At the June 3 meeting, the exemption passed unanimously on two readings, and it will be coming back this week for its third and final. On the dais, several Council members moaned about how they didn't really like to do this but felt as if their hands are tied: The state says all homestead exemptions have to be proportional, and lots of homeowners are hurting, and yeah we have to give everyone in Tarrytown $500 in order to give poor-homeowner-hanging-on-by-a-thread her $100, but the state says this is what we can do, so I guess I have to vote yes. Well, actually, you don't. You can pass the pending renters assistance package on its own, and if you want to help the struggling homeowner, you have other options besides giving her the short end of another regressive tax policy. (Utility rate structures come to mind, but that only leads to another snide reference about shit flowing downhill, so I'll stop here.)
"Rogers-Washington-Holy Cross: Black Heritage, Living History" is Preservation Austin's 2021 Virtual Homes Tour, celebrating Austin's first historic district honoring Black heritage, including the homes of Tuskegee Airman Norman Scales, former Huston-Tillotson President Dr. John Quill Taylor King, Ira Poole "and his iconic collection of yard art Americana," and more. It's a video tour event, premiering Thursday, June 17, at 7pm; $20 for PA members, and $25 for nonmembers. See preservationaustin.org for full info, and read more on Austin's new Historic Preservation Plan and the effort to diversify the history that gets preserved.
It's My Park Day is back this Saturday, June 12, following city COVID protocols, and there are still in-person volunteer opportunities available at some 20 parks around town – mulching, painting, picking up trash, clearing out a pond, or just helping the organizers hand out tools. The weather's supposed to be nice, so why not? See austinparks.org/impd for details.