10 tax dodges that help the rich get richer
Have you read about the billionaire who pays a lower income tax rate than his secretary and gives advice for how much income tax other people ought to pay? You might want to ask: “How does he do it? ”
We don’t know the complete answer to that question. No doubt, only his army of tax advisers does. What we’d instead like to share are 10 ways the current tax code allows the rich to accumulate vast fortunes, subject to little or no tax. And, unlike the offshore account tax fraud that gets so much press and regulatory attention, many of the most egregious tax avoidance scams are perfectly legal.
1. No income means no tax. Imagine two men living in the same town. Joe owns an oil exploration corporation. Pete, a geologist, works for Joe. Pete finds oil, billions of dollars worth, and when he does, Joe gives him a $1 million bonus.
Pete pays income taxes on $1 million and keeps looking for oil. Joe, the boss is now a billionaire. Although he has not sold any oil yet, the bank lends him money against the find and he builds a mansion, buys a nice car and lives it up. Even though Joe has become richer by billions of dollars, he pays no income tax. Why? He has no income.