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Juan Cole | How the Palestinian Muslim Brotherhood Saved Israeli Democracy From Netanyahu
Juan Cole, Informed Comment
Cole writes:
ervat Oaf writes for al-Jazeera on how Mansour Abbas and his Muslim Brotherhood-inspired United Arab List became unlikely kingmakers in Israeli politics.
Israelis of Palestinian heritage comprise a little over 20 percent of the Israeli population, and most of them are Muslims. Their politics, however, has skewed toward leftist parties. In contrast, a minority supported Muslim fundamentalism, inspired by the Muslim Brotherhood. Sheikh Abdallah Nimr Darwish founded the Islamic Movement in 1971. In 1996 the leadership decided to run for seats in the Israeli parliament, which caused the movement to split. The northern branch headed by Sheikh Raed Salah rejected entering Israeli politics and adopted a radical stance, sometimes openly expressing sympathy with the Hamas Party over the Green Line, though there is no evidence it engaged in violence. It was ultimately banned. The southern branch, guided by Darwish and headed by Sheikh Hamad Abu Daabs, was determined to enter the Israeli civic sphere, and condemned Holocaust denialism. So you had rejectionist fundamentalists and accommodationist fundamentalists.
This pattern of some on the religious Right rejecting the status quo while some cooperate with it can be seen throughout the Muslim world. In Egypt, the Muslim Brotherhood was driven underground after the 2013 military coup and they reject the al-Sisi government, whereas the Salafi fundamentalists are quietists and happy to support the state (Salafis also run for parliament in Egypt). Like the US religious Right, the Muslim religious Right cooperates with political parties in hopes of shaping legislation in a conservative, fundamentalist direction– fighting back against women’s rights, against projects of the Left, against government interference with private property.
Mansour Abbas, born 1974, was trained as a dentist at Hebrew University and practiced before entering politics. He joined the southern branch of the Islamic Movement, got elected to parliament, and ultimately came to head a small parliamentary block of Muslim fundamentalists. His party joined with the Joint Arab List (JAL), which includes leftists and Palestinian nationalists, and which won an astounding 15 seats in an Israeli parliament of 120 seats in 2019. The Jewish parties, however, refused to deal with the UAL and froze it out of their coalitions.
In early 2021, some leaders of the United Arab List, such as Ayman Odeh, expressed support for gay rights. Mansour Abbas and his colleagues were outraged, and they withdrew from the JAL, forming what they called, confusingly enough, the United Arab List. In the recent round of elections, The leftist Joint Arab List won 6 seats, and the fundamentalist United Arab List won 4 seats.
Before the election, Mansour Abbas gave a prime time address to the Israeli public in which he argued for the coexistence in the Holy Land of Jews, Christians and Muslims. Being a Muslim fundamentalist, he abandoned the rhetoric of Palestinian nationalism, which made him seem less threatening to the Israeli political establishment.
After the last election, neither the far right wing Binyamin Netanyahu nor his main rival, centrist Yair Lapid, could put together a 61-seat majority with the Jewish parties. Abbas made it clear that his United Arab List was available for coalition-building. Natanyahu toyed with the idea, but his coalition includes far right Jewish religious parties who vowed never to form a government with the help of Muslim Palestinian-Israelis.
So then the centrist and thriller writer Lapid was able to pick up the United Arab List as one of eight diverse parties in his coalition, with those four seats getting him to 61. He wooed the right wing extremist Naftali Bennett and his small Yamina Party with an offer to rotate the prime ministership, letting Bennett go first, for two years.
Israeli politicians have fulminated against the Muslim Brotherhood for decades as a dire threat to Israel, so it is ironic, to say the least, that this Israeli government would depend on a Brotherhood-inspired party for its very existence.
The tale of how we got here is also inn some ways not very edifying. The United Arab List split from the other Arab parties in Israel because its members are bigoted toward gays. They were rejected as a coalition partner by Netanyahu’s allies because those are bigoted toward Arabs. Lapid’s eight-party coalition of leftists, Jewish estremists, and Muslim fundamentalists is driven by a visceral hatred of Netanyahu, who in his 12 years as prime minister has made successive power grabs and deeply wounded Israeli democracy.
From another point of view, if the new government takes power, it would be a sign of Israel being integrated further into the Middle East. Pro-Muslim parties in Tunisia and Morocco have also been in coalition with leftist and nationalist parties. If Libya can emerge from its civil war, that will also require a big tent coalition of Muslim fundamentalists and Libyan nationalists. This time, at least, Israeli politics looks much more Middle Eastern than Central European.
Merrick Garland is shown during a hearing on his nomination to be attorney general, on Capitol Hill in Washington, on Feb. 22. (photo: Demetrius Freeman/The Washington Post)
Ryan Bort | Biden's Justice Department Is Now ... Defending Trump
Ryan Bort, Rolling Stone
Excerpt: "E. Jean Carroll's case isn't the only instance of Merrick Garland and the DOJ looking out for the former president."
hile campaigning last year, then-candidate Joe Biden didn’t seem very enthusiastic about his prospective Justice Department prosecuting prospective civilian Donald Trump. It’s “a very, very unusual thing and probably not very … good for democracy, to be talking about prosecuting former presidents,” the future president said in August.
But it would have been hard to imagine that Biden’s Justice Department would wind up defending Trump in court, which has become a strange theme of the first few months of Attorney General Merrick Garland’s tenure. The latest example came Monday night, when the DOJ filed a brief with a federal appeals court in New York claiming that Trump could not be sued for defamation by E. Jean Carroll, who has accused Trump of raping her, because the defamatory comments in question were made while Trump was president.
“Elected public officials can — and often must — address allegations regarding personal wrongdoing that inspire doubt about their suitability for office,” the brief read. “Officials do not step outside the bounds of their office simply because they are addressing questions regarding allegations about their personal lives,” the lawyers for the Justice Department added.
Carroll’s lawyer said the brief was “truly shocking,” according to The New York Times. Carroll herself criticized the move, as well. “As women across the country are standing up and holding men accountable for assault, the D.O.J. is trying to stop me from having that same right,” she said in a statement.
In 2019, Carroll wrote that Trump raped her in a department store dressing room in the mid-1990s. Trump not only denied he raped Carroll, saying she was not his “type,” he denied ever having met her. Months later, Carroll sued Trump for defamation in state court, which is where the case sat until last September, when then-Attorney General Bill Barr transferred the case to federal court after a state judge rejected Trump’s attempt to halt the case. Trump, who was then in the heat of his re-election campaign, now had the Justice Department at his back, as well as the fact that federal law also happens to prohibit government employees from being sued for defamation.
The Justice Department is apparently still at his back, and not just on the Carroll case. Paul Butler pointed out a few examples recently in The Washington Post.
Biden’s DOJ is also fighting to conceal information Barr used to mischaracterize the Mueller report before it was released to the public. Barr argued the memo he used fell under attorney-client privilege, but a federal judge disagreed, as did a group of Democratic senators who wrote a letter to Attorney General Merrick Garland urging him to release an unredacted version of the memo. This did not happen.
Then, late last month, the DOJ asked a judge to throw out a lawsuit against Trump, Barr, and other officials for the violent manner in which protesters were cleared away from Lafayette Square in Washington, D.C., last June, so that Trump could have a photo op at an adjacent church. At the time, Biden criticized Barr for ordering the protesters cleared, bashing how the Justice Department “deployed the U.S. military, tear gassing peaceful protesters” in service of Trump’s reelection.
Biden also criticized Barr for transferring Carroll’s case from state to federal court, accusing Trump of using the Justice Department as his “own law firm.”
“Can you remember any Republican president going out there, or former Democratic president: ‘Go find that guy and prosecute him’? You ever hear that? ‘By the way, I’m being sued because a woman’s accused me of rape: Represent me. Represent me,’ Biden said during a town hall event last October. “What’s that all about?”
It’s a good question.
Some of America's richest people, including, from left, Jeff Bezos, Michael Bloomberg, and Elon Musk, avoided paying federal income taxes in recent years. (photo: AFP/Reuters)
The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax
Jesse Eisinger, Jeff Ernsthausen and Paul Kiel, ProPublica
Excerpt: "In 2007, Jeff Bezos, then a multibillionaire and now the world's richest man, did not pay a penny in federal income taxes. He achieved the feat again in 2011."
ProPublica has obtained a vast cache of IRS information showing how billionaires like Jeff Bezos, Elon Musk and Warren Buffett pay little in income tax compared to their massive wealth — sometimes, even nothing.
n 2007, Jeff Bezos, then a multibillionaire and now the world’s richest man, did not pay a penny in federal income taxes. He achieved the feat again in 2011. In 2018, Tesla founder Elon Musk, the second-richest person in the world, also paid no federal income taxes.
Michael Bloomberg managed to do the same in recent years. Billionaire investor Carl Icahn did it twice. George Soros paid no federal income tax three years in a row.
ProPublica has obtained 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. The data provides an unprecedented look inside the financial lives of America’s titans, including Warren Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg. It shows not just their income and taxes, but also their investments, stock trades, gambling winnings and even the results of audits.
Taken together, it demolishes the cornerstone myth of the American tax system: that everyone pays their fair share and the richest Americans pay the most. The IRS records show that the wealthiest can — perfectly legally — pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year.
Many Americans live paycheck to paycheck, amassing little wealth and paying the federal government a percentage of their income that rises if they earn more. In recent years, the median American household earned about $70,000 annually and paid 14% in federal taxes. The highest income tax rate, 37%, kicked in this year, for couples, on earnings above $628,300.
The confidential tax records obtained by ProPublica show that the ultrarich effectively sidestep this system.
America’s billionaires avail themselves of tax-avoidance strategies beyond the reach of ordinary people. Their wealth derives from the skyrocketing value of their assets, like stock and property. Those gains are not defined by U.S. laws as taxable income unless and until the billionaires sell.
To capture the financial reality of the richest Americans, ProPublica undertook an analysis that has never been done before. We compared how much in taxes the 25 richest Americans paid each year to how much Forbes estimated their wealth grew in that same time period.
We’re going to call this their true tax rate.
The results are stark. According to Forbes, those 25 people saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%.
It’s a completely different picture for middle-class Americans, for example, wage earners in their early 40s who have amassed a typical amount of wealth for people their age. From 2014 to 2018, such households saw their net worth expand by about $65,000 after taxes on average, mostly due to the rise in value of their homes. But because the vast bulk of their earnings were salaries, their tax bills were almost as much, nearly $62,000, over that five-year period.
No one among the 25 wealthiest avoided as much tax as Buffett, the grandfatherly centibillionaire. That’s perhaps surprising, given his public stance as an advocate of higher taxes for the rich. According to Forbes, his riches rose $24.3 billion between 2014 and 2018. Over those years, the data shows, Buffett reported paying $23.7 million in taxes.
That works out to a true tax rate of 0.1%, or less than 10 cents for every $100 he added to his wealth.
In the coming months, ProPublica will use the IRS data we have obtained to explore in detail how the ultrawealthy avoid taxes, exploit loopholes and escape scrutiny from federal auditors.
Experts have long understood the broad outlines of how little the wealthy are taxed in the United States, and many lay people have long suspected the same thing.
But few specifics about individuals ever emerge in public. Tax information is among the most zealously guarded secrets in the federal government. ProPublica has decided to reveal individual tax information of some of the wealthiest Americans because it is only by seeing specifics that the public can understand the realities of the country’s tax system.
Consider Bezos’ 2007, one of the years he paid zero in federal income taxes. Amazon’s stock more than doubled. Bezos’ fortune leapt $3.8 billion, according to Forbes, whose wealth estimates are widely cited. How did a person enjoying that sort of wealth explosion end up paying no income tax?
In that year, Bezos, who filed his taxes jointly with his then-wife, MacKenzie Scott, reported a paltry (for him) $46 million in income, largely from interest and dividend payments on outside investments. He was able to offset every penny he earned with losses from side investments and various deductions, like interest expenses on debts and the vague catchall category of “other expenses.”
In 2011, a year in which his wealth held roughly steady at $18 billion, Bezos filed a tax return reporting he lost money — his income that year was more than offset by investment losses. What’s more, because, according to the tax law, he made so little, he even claimed and received a $4,000 tax credit for his children.
His tax avoidance is even more striking if you examine 2006 to 2018, a period for which ProPublica has complete data. Bezos’ wealth increased by $127 billion, according to Forbes, but he reported a total of $6.5 billion in income. The $1.4 billion he paid in personal federal taxes is a massive number — yet it amounts to a 1.1% true tax rate on the rise in his fortune.
The revelations provided by the IRS data come at a crucial moment. Wealth inequality has become one of the defining issues of our age. The president and Congress are considering the most ambitious tax increases in decades on those with high incomes. But the American tax conversation has been dominated by debate over incremental changes, such as whether the top tax rate should be 39.6% rather than 37%.
ProPublica’s data shows that while some wealthy Americans, such as hedge fund managers, would pay more taxes under the current Biden administration proposals, the vast majority of the top 25 would see little change.
The tax data was provided to ProPublica after we published a series of articles scrutinizing the IRS. The articles exposed how years of budget cuts have hobbled the agency’s ability to enforce the law and how the largest corporations and the rich have benefited from the IRS’ weakness. They also showed how people in poor regions are now more likely to be audited than those in affluent areas.
ProPublica is not disclosing how it obtained the data, which was given to us in raw form, with no conditions or conclusions. ProPublica reporters spent months processing and analyzing the material to transform it into a usable database.
We then verified the information by comparing elements of it with dozens of already public tax details (in court documents, politicians’ financial disclosures and news stories) as well as by vetting it with individuals whose tax information is contained in the trove. Every person whose tax information is described in this story was asked to comment. Those who responded, including Buffett, Bloomberg and Icahn, all said they had paid the taxes they owed.
A spokesman for Soros said in a statement: “Between 2016 and 2018 George Soros lost money on his investments, therefore he did not owe federal income taxes in those years. Mr. Soros has long supported higher taxes for wealthy Americans.” Personal and corporate representatives of Bezos declined to receive detailed questions about the matter. ProPublica attempted to reach Scott through her divorce attorney, a personal representative and family members; she did not respond. Musk responded to an initial query with a lone punctuation mark: “?” After we sent detailed questions to him, he did not reply.
One of the billionaires mentioned in this article objected, arguing that publishing personal tax information is a violation of privacy. We have concluded that the public interest in knowing this information at this pivotal moment outweighs that legitimate concern.
The consequences of allowing the most prosperous to game the tax system have been profound. Federal budgets, apart from military spending, have been constrained for decades. Roads and bridges have crumbled, social services have withered and the solvency of Social Security and Medicare is perpetually in question.
There is an even more fundamental issue than which programs get funded or not: Taxes are a kind of collective sacrifice. No one loves giving their hard-earned money to the government. But the system works only as long as it’s perceived to be fair.
Our analysis of tax data for the 25 richest Americans quantifies just how unfair the system has become.
By the end of 2018, the 25 were worth $1.1 trillion.
For comparison, it would take 14.3 million ordinary American wage earners put together to equal that same amount of wealth.
The personal federal tax bill for the top 25 in 2018: $1.9 billion.
The bill for the wage earners: $143 billion.
The idea of a regular tax on income, much less on wealth, does not appear in the country’s founding documents. In fact, Article 1 of the U.S. Constitution explicitly prohibits “direct” taxes on citizens under most circumstances. This meant that for decades, the U.S. government mainly funded itself through “indirect” taxes: tariffs and levies on consumer goods like tobacco and alcohol.
With the costs of the Civil War looming, Congress imposed a national income tax in 1861. The wealthy helped force its repeal soon after the war ended. (Their pique could only have been exacerbated by the fact that the law required public disclosure. The annual income of the moguls of the day — $1.3 million for William Astor; $576,000 for Cornelius Vanderbilt — was listed in the pages of The New York Times in 1865.)
By the late 19th and early 20th century, wealth inequality was acute and the political climate was changing. The federal government began expanding, creating agencies to protect food, workers and more. It needed funding, but tariffs were pinching regular Americans more than the rich. The Supreme Court had rejected an 1894 law that would have created an income tax. So Congress moved to amend the Constitution. The 16th Amendment was ratified in 1913 and gave the government power “to lay and collect taxes on incomes, from whatever source derived.”
In the early years, the personal income tax worked as Congress intended, falling squarely on the richest. In 1918, only 15% of American families owed any tax. The top 1% paid 80% of the revenue raised, according to historian W. Elliot Brownlee.
But a question remained: What would count as income and what wouldn’t? In 1916, a woman named Myrtle Macomber received a dividend for her Standard Oil of California shares. She owed taxes, thanks to the new law. The dividend had not come in cash, however. It came in the form of an additional share for every two shares she already held. She paid the taxes and then brought a court challenge: Yes, she’d gotten a bit richer, but she hadn’t received any money. Therefore, she argued, she’d received no “income.”
Four years later, the Supreme Court agreed. In Eisner v. Macomber, the high court ruled that income derived only from proceeds. A person needed to sell an asset — stock, bond or building — and reap some money before it could be taxed.
Since then, the concept that income comes only from proceeds — when gains are “realized” — has been the bedrock of the U.S. tax system. Wages are taxed. Cash dividends are taxed. Gains from selling assets are taxed. But if a taxpayer hasn’t sold anything, there is no income and therefore no tax.
Contemporary critics of Macomber were plentiful and prescient. Cordell Hull, the congressman known as the “father” of the income tax, assailed the decision, according to scholar Marjorie Kornhauser. Hull predicted that tax avoidance would become common. The ruling opened a gaping loophole, Hull warned, allowing industrialists to build a company and borrow against the stock to pay living expenses. Anyone could “live upon the value” of their company stock “without selling it, and of course, without ever paying” tax, he said.
Hull’s prediction would reach full flower only decades later, spurred by a series of epochal economic, legal and cultural changes that began to gather momentum in the 1970s. Antitrust enforcers increasingly accepted mergers and stopped trying to break up huge corporations. For their part, companies came to obsess over the value of their stock to the exclusion of nearly everything else. That helped give rise in the last 40 years to a series of corporate monoliths — beginning with Microsoft and Oracle in the 1980s and 1990s and continuing to Amazon, Google, Facebook and Apple today — that often have concentrated ownership, high profit margins and rich share prices. The winner-take-all economy has created modern fortunes that by some measures eclipse those of John D. Rockefeller, J.P. Morgan and Andrew Carnegie.
In the here and now, the ultrawealthy use an array of techniques that aren’t available to those of lesser means to get around the tax system.
Certainly, there are illegal tax evaders among them, but it turns out billionaires don’t have to evade taxes exotically and illicitly — they can avoid them routinely and legally.
Most Americans have to work to live. When they do, they get paid — and they get taxed. The federal government considers almost every dollar workers earn to be “income,” and employers take taxes directly out of their paychecks.
The Bezoses of the world have no need to be paid a salary. Bezos’ Amazon wages have long been set at the middle-class level of around $80,000 a year.
For years, there’s been something of a competition among elite founder-CEOs to go even lower. Steve Jobs took $1 in salary when he returned to Apple in the 1990s. Facebook’s Zuckerberg, Oracle’s Larry Ellison and Google’s Larry Page have all done the same.
Yet this is not the self-effacing gesture it appears to be: Wages are taxed at a high rate. The top 25 wealthiest Americans reported $158 million in wages in 2018, according to the IRS data. That’s a mere 1.1% of what they listed on their tax forms as their total reported income. The rest mostly came from dividends and the sale of stock, bonds or other investments, which are taxed at lower rates than wages.
As Congressman Hull envisioned long ago, the ultrawealthy typically hold fast to shares in the companies they’ve founded. Many titans of the 21st century sit on mountains of what are known as unrealized gains, the total size of which fluctuates each day as stock prices rise and fall. Of the $4.25 trillion in wealth held by U.S. billionaires, some $2.7 trillion is unrealized, according to Emmanuel Saez and Gabriel Zucman, economists at the University of California, Berkeley.
Buffett has famously held onto his stock in the company he founded, Berkshire Hathaway, the conglomerate that owns Geico, Duracell and significant stakes in American Express and Coca-Cola. That has allowed Buffett to largely avoid transforming his wealth into income. From 2015 through 2018, he reported annual income ranging from $11.6 million to $25 million. That may seem like a lot, but Buffett ranks as roughly the world’s sixth-richest person — he’s worth $110 billion as of Forbes’ estimate in May 2021. At least 14,000 U.S. taxpayers in 2015 reported higher income than him, according to IRS data.
There’s also a second strategy Buffett relies on that minimizes income, and therefore, taxes. Berkshire does not pay a dividend, the sum (a piece of the profits, in theory) that many companies pay each quarter to those who own their stock. Buffett has always argued that it is better to use that money to find investments for Berkshire that will further boost the value of shares held by him and other investors. If Berkshire had offered anywhere close to the average dividend in recent years, Buffett would have received over $1 billion in dividend income and owed hundreds of millions in taxes each year.
Many Silicon Valley and infotech companies have emulated Buffett’s model, eschewing stock dividends, at least for a time. In the 1980s and 1990s, companies like Microsoft and Oracle offered shareholders rocketing growth and profits but did not pay dividends. Google, Facebook, Amazon and Tesla do not pay dividends.
In a detailed written response, Buffett defended his practices but did not directly address ProPublica’s true tax rate calculation. “I continue to believe that the tax code should be changed substantially,” he wrote, adding that he thought “huge dynastic wealth is not desirable for our society.”
The decision not to have Berkshire pay dividends has been supported by the vast majority of his shareholders. “I can’t think of any large public company with shareholders so united in their reinvestment beliefs,” he wrote. And he pointed out that Berkshire Hathaway pays significant corporate taxes, accounting for 1.5% of total U.S. corporate taxes in 2019 and 2020.
Buffett reiterated that he has begun giving his enormous fortune away and ultimately plans to donate 99.5% of it to charity. “I believe the money will be of more use to society if disbursed philanthropically than if it is used to slightly reduce an ever-increasing U.S. debt,” he wrote.
So how do megabillionaires pay their megabills while opting for $1 salaries and hanging onto their stock? According to public documents and experts, the answer for some is borrowing money — lots of it.
For regular people, borrowing money is often something done out of necessity, say for a car or a home. But for the ultrawealthy, it can be a way to access billions without producing income, and thus, income tax.
The tax math provides a clear incentive for this. If you own a company and take a huge salary, you’ll pay 37% in income tax on the bulk of it. Sell stock and you’ll pay 20% in capital gains tax — and lose some control over your company. But take out a loan, and these days you’ll pay a single-digit interest rate and no tax; since loans must be paid back, the IRS doesn’t consider them income. Banks typically require collateral, but the wealthy have plenty of that.
The vast majority of the ultrawealthy’s loans do not appear in the tax records obtained by ProPublica since they are generally not disclosed to the IRS. But occasionally, the loans are disclosed in securities filings. In 2014, for example, Oracle revealed that its CEO, Ellison, had a credit line secured by about $10 billion of his shares.
Last year Tesla reported that Musk had pledged some 92 million shares, which were worth about $57.7 billion as of May 29, 2021, as collateral for personal loans.
With the exception of one year when he exercised more than a billion dollars in stock options, Musk’s tax bills in no way reflect the fortune he has at his disposal. In 2015, he paid $68,000 in federal income tax. In 2017, it was $65,000, and in 2018 he paid no federal income tax. Between 2014 and 2018, he had a true tax rate of 3.27%.
The IRS records provide glimpses of other massive loans. In both 2016 and 2017, investor Carl Icahn, who ranks as the 40th-wealthiest American on the Forbes list, paid no federal income taxes despite reporting a total of $544 million in adjusted gross income (which the IRS defines as earnings minus items like student loan interest payments or alimony). Icahn had an outstanding loan of $1.2 billion with Bank of America among other loans, according to the IRS data. It was technically a mortgage because it was secured, at least in part, by Manhattan penthouse apartments and other properties.
Borrowing offers multiple benefits to Icahn: He gets huge tranches of cash to turbocharge his investment returns. Then he gets to deduct the interest from his taxes. In an interview, Icahn explained that he reports the profits and losses of his business empire on his personal taxes.
Icahn acknowledged that he is a “big borrower. I do borrow a lot of money.” Asked if he takes out loans also to lower his tax bill, Icahn said: “No, not at all. My borrowing is to win. I enjoy the competition. I enjoy winning.”
He said adjusted gross income was a misleading figure for him. After taking hundreds of millions in deductions for the interest on his loans, he registered tax losses for both years, he said. “I didn’t make money because, unfortunately for me, my interest was higher than my whole adjusted income.”
Asked whether it was appropriate that he had paid no income tax in certain years, Icahn said he was perplexed by the question. “There’s a reason it’s called income tax,” he said. “The reason is if, if you’re a poor person, a rich person, if you are Apple — if you have no income, you don’t pay taxes.” He added: “Do you think a rich person should pay taxes no matter what? I don’t think it’s germane. How can you ask me that question?”
Skeptics might question our analysis of how little the superrich pay in taxes. For one, they might argue that owners of companies get hit by corporate taxes. They also might counter that some billionaires cannot avoid income — and therefore taxes. And after death, the common understanding goes, there’s a final no-escape clause: the estate tax, which imposes a steep tax rate on sums over $11.7 million.
ProPublica found that none of these factors alter the fundamental picture.
Take corporate taxes. When companies pay them, economists say, these costs are passed on to the companies’ owners, workers or even consumers. Models differ, but they generally assume big stockholders shoulder the lion’s share.
Corporate taxes, however, have plummeted in recent decades in what has become a golden age of corporate tax avoidance. By sending profits abroad, companies like Google, Facebook, Microsoft and Apple have often paid little or no U.S. corporate tax.
For some of the nation’s wealthiest people, particularly Bezos and Musk, adding corporate taxes to the equation would hardly change anything at all. Other companies like Berkshire Hathaway and Walmart do pay more, which means that for people like Buffett and the Waltons, corporate tax could add significantly to their burden.
It is also true that some billionaires don’t avoid taxes by avoiding incomes. In 2018, nine of the 25 wealthiest Americans reported more than $500 million in income and three more than $1 billion.
In such cases, though, the data obtained by ProPublica shows billionaires have a palette of tax-avoidance options to offset their gains using credits, deductions (which can include charitable donations) or losses to lower or even zero out their tax bills. Some own sports teams that offer such lucrative write-offs that owners often end up paying far lower tax rates than their millionaire players. Others own commercial buildings that steadily rise in value but nevertheless can be used to throw off paper losses that offset income.
Michael Bloomberg, the 13th-richest American on the Forbes list, often reports high income because the profits of the private company he controls flow mainly to him.
In 2018, he reported income of $1.9 billion. When it came to his taxes, Bloomberg managed to slash his bill by using deductions made possible by tax cuts passed during the Trump administration, charitable donations of $968.3 million and credits for having paid foreign taxes. The end result was that he paid $70.7 million in income tax on that almost $2 billion in income. That amounts to just a 3.7% conventional income tax rate. Between 2014 and 2018, Bloomberg had a true tax rate of 1.30%.
In a statement, a spokesman for Bloomberg noted that as a candidate, Bloomberg had advocated for a variety of tax hikes on the wealthy. “Mike Bloomberg pays the maximum tax rate on all federal, state, local and international taxable income as prescribed by law,” the spokesman wrote. And he cited Bloomberg’s philanthropic giving, offering the calculation that “taken together, what Mike gives to charity and pays in taxes amounts to approximately 75% of his annual income.”
The statement also noted: “The release of a private citizen’s tax returns should raise real privacy concerns regardless of political affiliation or views on tax policy. In the United States no private citizen should fear the illegal release of their taxes. We intend to use all legal means at our disposal to determine which individual or government entity leaked these and ensure that they are held responsible.”
Ultimately, after decades of wealth accumulation, the estate tax is supposed to serve as a backstop, allowing authorities an opportunity to finally take a piece of giant fortunes before they pass to a new generation. But in reality, preparing for death is more like the last stage of tax avoidance for the ultrawealthy.
University of Southern California tax law professor Edward McCaffery has summarized the entire arc with the catchphrase “buy, borrow, die.”
The notion of dying as a tax benefit seems paradoxical. Normally when someone sells an asset, even a minute before they die, they owe 20% capital gains tax. But at death, that changes. Any capital gains till that moment are not taxed. This allows the ultrarich and their heirs to avoid paying billions in taxes. The “step-up in basis” is widely recognized by experts across the political spectrum as a flaw in the code.
Then comes the estate tax, which, at 40%, is among the highest in the federal code. This tax is supposed to give the government one last chance to get a piece of all those unrealized gains and other assets the wealthiest Americans accumulate over their lifetimes.
It’s clear, though, from aggregate IRS data, tax research and what little trickles into the public arena about estate planning of the wealthy that they can readily escape turning over almost half of the value of their estates. Many of the richest create foundations for philanthropic giving, which provide large charitable tax deductions during their lifetimes and bypass the estate tax when they die.
Wealth managers offer clients a range of opaque and complicated trusts that allow the wealthiest Americans to give large sums to their heirs without paying estate taxes. The IRS data obtained by ProPublica gives some insight into the ultrawealthy’s estate planning, showing hundreds of these trusts.
The result is that large fortunes can pass largely intact from one generation to the next. Of the 25 richest people in America today, about a quarter are heirs: three are Waltons, two are scions of the Mars candy fortune and one is the son of Estée Lauder.
In the past year and a half, hundreds of thousands of Americans have died from COVID-19, while millions were thrown out of work. But one of the bleakest periods in American history turned out to be one of the most lucrative for billionaires. They added $1.2 trillion to their fortunes from January 2020 to the end of April of this year, according to Forbes.
That windfall is among the many factors that have led the country to an inflection point, one that traces back to a half-century of growing wealth inequality and the financial crisis of 2008, which left many with lasting economic damage. American history is rich with such turns. There have been famous acts of tax resistance, like the Boston Tea Party, countered by less well-known efforts to have the rich pay more.
One such incident, over half a century ago, appeared as if it might spark great change. President Lyndon Johnson’s outgoing treasury secretary, Joseph Barr, shocked the nation when he revealed that 155 Americans making over $200,000 (about $1.6 million today) had paid no taxes. That group, he told the Senate, included 21 millionaires.
“We face now the possibility of a taxpayer revolt if we do not soon make major reforms in our income taxes,” Barr said. Members of Congress received more furious letters about the tax scofflaws that year than they did about the Vietnam War.
Congress did pass some reforms, but the long-term trend was a revolt in the opposite direction, which then accelerated with the election of Ronald Reagan in 1980. Since then, through a combination of political donations, lobbying, charitable giving and even direct bids for political office, the ultrawealthy have helped shape the debate about taxation in their favor.
One apparent exception: Buffett, who broke ranks with his billionaire cohort to call for higher taxes on the rich. In a famous New York Times op-ed in 2011, Buffett wrote, “My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.”
Buffett did something in that article that few Americans do: He publicly revealed how much he had paid in personal federal taxes the previous year ($6.9 million). Separately, Forbes estimated his fortune had risen $3 billion that year. Using that information, an observer could have calculated his true tax rate; it was 0.2%. But then, as now, the discussion that ensued on taxes was centered on the traditional income tax rate.
In 2011, President Barack Obama proposed legislation, known as the Buffett Rule. It would have raised income tax rates on people reporting over a million dollars a year. It didn’t pass. Even if it had, however, the Buffett Rule wouldn’t have raised Buffett’s taxes significantly. If you can avoid income, you can avoid taxes.
Today, just a few years after Republicans passed a massive tax cut that disproportionately benefited the wealthy, the country may be facing another swing of the pendulum, back toward a popular demand to raise taxes on the wealthy. In the face of growing inequality and with spending ambitions that rival those of Franklin D. Roosevelt or Johnson, the Biden administration has proposed a slate of changes. These include raising the tax rates on people making over $400,000 and bumping the top income tax rate from 37% to 39.6%, with a top rate for long-term capital gains to match that. The administration also wants to up the corporate tax rate and to increase the IRS’ budget.
Some Democrats have gone further, floating ideas that challenge the tax structure as it’s existed for the last century. Oregon Sen. Ron Wyden, the chairman of the Senate Finance Committee, has proposed taxing unrealized capital gains, a shot through the heart of Macomber. Sens. Elizabeth Warren and Bernie Sanders have proposed wealth taxes.
Aggressive new laws would likely inspire new, sophisticated avoidance techniques. A few countries, including Switzerland and Spain, have wealth taxes on a small scale. Several, most recently France, have abandoned them as unworkable. Opponents contend that they are complicated to administer, as it is hard to value assets, particularly of private companies and property.
What it would take for a fundamental overhaul of the U.S. tax system is not clear. But the IRS data obtained by ProPublica illuminates that all of these conversations have been taking place in a vacuum. Neither political leaders nor the public have ever had an accurate picture of how comprehensively the wealthiest Americans avoid paying taxes.
Buffett and his fellow billionaires have known this secret for a long time. As Buffett put it in 2011: “There’s been class warfare going on for the last 20 years, and my class has won.”
Rep. Alexandria Ocasio-Cortez. (photo: Getty)
AOC Slammed Kamala Harris for Telling Guatemalan Migrants 'Do Not Come,' Saying the US Helped Destabilize the Country in the First Place
Bill Bostock, Business Insider
Bostock writes: "Rep. Alexandria Ocasio-Cortez of New York has criticized Vice President Kamala Harris' rejection of Guatemalan migrants, saying the US was in part responsible for destabilizing the country in the first place."
At a press conference in Guatemala City on Monday, Harris told Guatemalans thinking of trying to enter the US to stay home, saying, "Do not come."
Later on Monday, Ocasio-Cortez said of Harris' speech, "This is disappointing to see."
"First, seeking asylum at any US border is a 100% legal method of arrival," Ocasio-Cortez said.
"Second, the US spent decades contributing to regime change and destabilization in Latin America. We can't help set someone's house on fire and then blame them for fleeing," she continued.
The US recorded more than 178,000 migrants - a number of whom were Guatemalan - trying to enter the US-Mexico border in April, the US Customs and Border Patrol said. It was the highest one-month total in 20 years, CNN reported.
On March 24, Biden said he was putting Harris in charge of all affairs concerning the southern US border.
At her Monday speech, Harris said: "I want to emphasize that the goal of our work is to help Guatemalans find hope at home. At the same time, I want to be clear to folks in this region who are thinking about making that dangerous trek to the United States-Mexico border: Do not come. Do not come."
"We, as one of our priorities, will discourage illegal migration. And I believe if you come to our border, you will be turned back," she added.
Guatemala was Harris' first foreign trip as vice president.
A memorial created by activists at George Floyd Square on Chicago Ave., in Minneapolis. (photo: David Joles/Star Tribune)
Minneapolis Crews Give Second Attempt to Reopen George Floyd Square to Traffic
Mohamed Ibrahim, Associated Press
Ibrahim writes: "City crews returned early Tuesday to a Minneapolis intersection where a memorial to George Floyd was assembled after his death last year and worked to reopen it to traffic by removing debris and makeshift barriers, only to have activists barricade the area again."
ity crews returned early Tuesday to a Minneapolis intersection where a memorial to George Floyd was assembled after his death last year and worked to reopen it to traffic by removing debris and makeshift barriers, only to have activists barricade the area again.
Workers using front-end loaders and brooms arrived just before 5 a.m. and cleared the intersection where Floyd was killed, which is informally known as George Floyd Square, the Minneapolis Star Tribune reported.
The intersection has been closed to traffic since Floyd’s death on May 25, 2020, and some residents and businesses have expressed frustration that it has been closed for so long.
Last Thursday, city crews removed concrete barriers that blocked traffic at 38th Street and Chicago Avenue, but community activists quickly put up makeshift barriers and resumed chanting the name of the Black man whose killing galvanized the racial justice movement.
As soon as workers left the area on Tuesday, activists moved back in, again blocking traffic with parked cars, trash cans, traffic signs and other items in a repeat of last Thursday’s scene.
The tribute at the square sprang up organically in the days after Floyd’s death. As people gathered to express their grief and anger, community members set up makeshift barricades to block traffic, which the city eventually replaced with concrete ones.
Mayor Jacob Frey and other city leaders pledged to reopen the intersection, but activist leaders have said they won’t step aside unless the city meets their 24 demands. Among them: recall the county prosecutor, fire the head of the state’s criminal investigative agency, and spend hundreds of thousands of dollars on programs to create jobs, combat racism and support affordable housing.
City officials didn’t immediately respond to an email Tuesday seeking comment on the activists closing down the intersection again.
Former Minneapolis police Officer Derek Chauvin was convicted in April of second-degree unintentional murder, third-degree murder and second-degree manslaughter for pressing his knee against Floyd’s neck for about 9 1/2 minutes as he pleaded for air.
Chauvin has also been indicted on federal charges alleging he violated Floyd’s civil rights, as well as the civil rights of a 14-year-old he restrained in a 2017 arrest.
The three other former Minneapolis officers involved in Floyd’s arrest and death were also charged with federal civil rights violations. They await trial in state court on aiding and abetting counts.
Zinacantan women participate on Election Day. (photo: Ángeles Mariscal)
ALSO SEE: Mexico's President Appears to Hold Key Majority in Elections
Mexico: Four Indigenous People Murdered During Vote Count
teleSUR
Excerpt: "On Sunday night, four Indigenous people were shot to death at a voting place in the state of Chiapas after the legislative and local elections concluded."
Local authorities reported that a group of people arrived in a vehicle and started shooting them.
n Sunday night, four Indigenous people were shot to death at a voting place in the state of Chiapas after the legislative and local elections concluded.
The massacre was the result of disputes between the Encuentro Solidario (PES) and Chiapas Unido parties, which were fighting for a municipal mayor's office.
The events occurred at about 9:30 p.m. on the community basketball court, when the polling station officials were counting the votes with the presence of representatives of both parties.
The local police report pointed out that a group of people arrived in a vehicle and started shooting them.
The PES representative Patricia Carvajal informed that "the candidate of a political force arrived drunk, went crazy and shot, killing three people."
The State prosecution service identified these three of the victims as Eleodoro “N”, José “N” and Ortiz “N”.
Local authorities also mentioned that they have already started the investigation folder for these homicides.
And the average rate of CO2 increase is faster than ever. (photo: iStock)
CO2 Levels in the Air Hit Record High, Show No Impact From Pandemic
Seth Borenstein, Associated Press
Borenstein writes: "The annual peak of global heat-trapping carbon dioxide in the air has reached another dangerous milestone: 50% higher than when the industrial age began."
And the average rate of increase is faster than ever, scientists reported Monday.
The National Oceanic and Atmospheric Administration said the average carbon dioxide level for May was 419.13 parts per million. That’s 1.82 parts per million higher than May 2020 and 50% higher than the stable pre-industrial levels of 280 parts per million, said NOAA climate scientist Pieter Tans.
Carbon dioxide levels peak every May just before plant life in the Northern Hemisphere blossoms, sucking some of that carbon out of the atmosphere and into flowers, leaves, seeds and stems. The reprieve is temporary, though, because emissions of carbon dioxide from burning coal, oil and natural gas for transportation and electricity far exceed what plants can take in, pushing greenhouse gas levels to new records every year.
“Reaching 50% higher carbon dioxide than preindustrial is really setting a new benchmark and not in a good way,” said Cornell University climate scientist Natalie Mahowald, who wasn’t part of the research. “If we want to avoid the worst consequences of climate change, we need to work much harder to cut carbon dioxide emissions and right away.”
Climate change does more than increase temperatures. It makes extreme weather — storms, wildfires, floods and droughts — worse and more frequent and causes oceans to rise and get more acidic, studies show. There are also health effects, including heat deaths and increased pollen. In 2015, countries signed the Paris agreement to try to keep climate change to below what’s considered dangerous levels.
The one-year jump in carbon dioxide was not a record, mainly because of a La Nina weather pattern, when parts of the Pacific temporarily cool, said Scripps Institution of Oceanography geochemist Ralph Keeling. Keeling’s father started the monitoring of carbon dioxide on top of the Hawaiian mountain Mauna Loa in 1958, and he has continued the work of charting the now famous Keeling Curve.
Scripps, which calculates the numbers slightly differently based on time and averaging, said the peak in May was 418.9.
Also, pandemic lockdowns slowed transportation, travel and other activity by about 7%, earlier studies show. But that was too small to make a significant difference. Carbon dioxide can stay in the air for 1,000 years or more, so year-to-year changes in emissions don’t register much.
The 10-year average rate of increase also set a record, now up to 2.4 parts per million per year.
“Carbon dioxide going up in a few decades like that is extremely unusual,” Tans said. “For example, when the Earth climbed out of the last ice age, carbon dioxide increased by about 80 parts per million and it took the Earth system, the natural system, 6,000 years. We have a much larger increase in the last few decades.”
By comparison, it has taken only 42 years, from 1979 to 2021, to increase carbon dioxide by that same amount.
“The world is approaching the point where exceeding the Paris targets and entering a climate danger zone becomes almost inevitable,” said Princeton University climate scientist Michael Oppenheimer, who wasn’t part of the research.
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