Originally published in The Chattanooga Times Free Press
If you’re the richest person on Earth, your next step might be to launch yourself into space. That’s what Jeff Bezos has done. I guess this planet is just too boring to invest in. Maybe that’s why his company, Amazon, paid an effective federal income tax rate of only 4.3 % on U.S. income, even when Trump’s administration dropped the rate to 21%.But Bezos had no hesitation in spending a billion dollars a year since about 2000 (through sales of some of his Amazon stocks) to finance another of his companies, Blue Origin. He poured the money and years into Blue Origin preparing for his 11-minute rocket trip from Texas to the outer reaches of Earth’s gravitational pull and three minutes of weightlessness. And he raised more than a few eyebrows with this post-trip comment: “I want to thank every Amazon employee and every Amazon customer — because you guys paid for all this.”
Bezos is worth 211 billion dollars and has been a billionaire since the late 1990s. We know he’s paid little in taxes. But did you know that not until 2011 did he make his first public gift. And it’s likely that circumventing paying taxes, while the rest of us foot the bill for federal programs, is likely to continue.
How is this possible? Some point to how the funding for the Internal Revenue Service (IRS) has decreased 25% in recent years. With new attempts to fund the IRS, come new Republican hesitation, primarily over being audited. But if it passes, not to worry. It’s not the working folks and small business people who are the focus of such audits. It’s the wealthy who are privy to strategies of getting around the laws and way of avoiding paying taxes.
Yet, it’s not tax avoidance, but legal run-arounds of the super wealthy that need to be addressed. The strategies can get complicated that will no doubt be demonstrated in upcoming legal suits agains Trump and company. I’m particularly interested in the offshore world, especially the involvement of small islands that have learned the economic joys of tax havens.
Growing up in Bermuda, I watched, rather unhappily, the tax haven economy develop. Do an online search for the super wealthy connect to Bermuda and you’ll be surprised. Or not. Of course Jeff Bezos own a Bermuda home, next to billionaire Ross Perot. They’re joined by Michael Bloomberg and others who may not own island property, but own Bermuda-incorporated companies. Check out Microsoft’s Bill Gates and the Koch Brothers.
Ultra-wealthy British moguls also use tax havens, including Richard Branson. He recently took off for space from his Virgin Galactic Holdings Inc. in New Mexico. But Branson, a British citizen, lives on his own island tax haven in the Caribbean. When accused of ducking out of Great Britain’s 50% tax rate, Branson claims that he left England not to avoid taxes, but because he loves the island life. Yeah, right.
It’s all legal, but billionaire Warren Buffet is right to say it shouldn’t be. America collects less in corporate tax revenues as a share of GDP than most other advanced economies. No wonder President Biden suggests changing corporate taxation worldwide. We need to support this. Don’t be fooled by accusations of increased taxation or more IRS audits. This is about the ultra-wealthy who pay millions to hide billions. Then they fly into space, leaving us to pick up the tab.
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