The Panama Papers disclosed millions of financial documents in 2016, and later the Pandora Papers in 2021, revealed the global offshore tax havens used by the world’s richest and most powerful people to hide their wealth and avoid paying. taxes.
But Morris Pearl and Erica Payne have a fight in their new book, âTax the Rich! How lies, loopholes and lobbyists make the rich even richer, âthat the vast majority of America’s richest families don’t need to deposit their money in offshore accounts to evade taxes. Rather, they are saying that wealthy Americans, with the help of politicians they control, are legally using the U.S. tax code to minimize or avoid paying their tax bill.
Between the lines, Scott Harris spoke with Pearl, the former chief executive of BlackRock, the world’s largest asset manager who now chairs the Patriotic Millionaires, a group of hundreds of wealthy Americans who work to ensure that businesses, millionaires and billionaires love themselves, pay their fair share of taxes. Here Pearl discusses the inner workings of a system designed to make the rich richer and everyone else poorer.
PEARL OF MORRIS: What I understood as we were writing the book and talking to people is that different types of people make money in different ways.
Most of the people, most of you who are listening to this radio show right now, get a paycheck every week or every month and attach a tax to that paycheck and you understand how much money you are making and how much goes to taxes in your pay stubs.
However, it is different if you are very rich. I do not receive a salary. I always take money out of my brokerage account. So, rich people who are already rich do not need any income. And we only tax income in this country.
So as long as I can spend a lot of money without having an income, I don’t have to pay taxes. And if you’re already rich, you don’t need any income. And that’s basically why these people who are already rich get richer and richer because their money is increasing because their investments are doing well and they pay no income tax. While most people, even if they are trying to save money, a huge amount of each paycheck goes to income tax, so they fall further and further behind each day. year. And we try to explain in the book how all these different tax rules work and why the wealthiest people among us don’t pay any taxes at all relative to their income.
SCOTT HARRIS: How is it in the United States, Morris, that we don’t tax wealth and only income, as you just described? Are there other countries that tax the wealth of their citizens who escape income tax?
PEARL OF MORRIS: We had a wealth tax when the country was created, almost. Most taxes were property taxes at the time, and most wealth was real estate. All those who were rich owned land and were therefore taxed on their wealth.
And in fact, most of you are still taxed on your wealth. If you own a home almost anywhere in the United States, you pay wealth tax on most of your wealth, which is your home. You pay a property tax every year on that wealth, on that house, which is the bulk of most people’s wealth.
I don’t pay wealth tax as an investor because there is no wealth tax on things like stocks, bonds and investments and pretty much everything in there. except real estate. It’s not that our country has changed the rules, it’s that things have changed so that most of the wealth now comes in the form of businesses and corporations and stocks and not real land, which are imposed through a wealth tax. So we have to change that. We believe that we need to get the richest among us to pay wealth tax, as you all are doing now.
SCOTT HARRIS: Elizabeth Warren was among some lawmakers proposing a specific wealth tax. What do you think about what she has come up with or what others have come up with that you think would work best?
PEARL OF MORRIS: I think we need something like this. And Senator Ron Wyden of Oregon has made proposals that are in fact quite similar terms for the taxation of unrealized capital gains.
And we need something like that. And people say, âOh, that’s too complicated. We can’t deal with it. Well, the few people who have billions of dollars in wealth usually hire accountants to handle their taxes.
They could take care of it. The country is already valuing wealth when it does taxes so we can do that every year and they can have rules to deal with things you don’t know what their value is and figure it out and catch up later and mix with them. interests or whatever.
So I’m not really worried about the complexity of that. I think we need it – not on ordinary people. That was the problem they had in France, they were trying to make everyone pay wealth tax. And all the owners in France were quite unhappy with this.
We need to levy a wealth tax not on the first million people, not on the second million. Not even on their hundredth of a million. But we have to levy a wealth tax on the second billion dollars in wealth, as Elizabeth Warren puts it.
For more information on Patriotic Millionaires, visit patrioticmillionaires.org.