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Secret IRS Files Reveal How Wealthiest Avoid Taxes

Reprinted with permission from ProPublica

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. 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 percent in federal taxes. The highest income tax rate, 37 percent, 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 percent.

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.

The Ultrawealthy by the Numbers

Read our full methodology. Credit: Agnes Chang/ProPublica

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 percent, 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 percent true tax rate on the rise in his fortune.

Compare Bezos' Financial Picture to a Typical American Household



Read our full methodology. Credit: Agnes Chang/ProPublica

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 percent rather than 37 percent.

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 percent of American families owed any tax. The top one percent paid 80 percent 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 percent 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 percentof 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 percent 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.

Buy, Borrow, Die: How America's Ultrawealthy Stay That Way

Buy, Borrow, Die: How America's Ultrawealthy Stay That Way www.youtube.com

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 percent in income tax on the bulk of it. Sell stock and you'll pay 20 percent 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 ultra-wealthy'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 percent.

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 percent conventional income tax rate. Between 2014 and 2018, Bloomberg had a true tax rate of 1.30 percent.

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 percent 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 ultra-wealthy.

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 percent 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 percent, 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 ultra-wealthy'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 percent. 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 percent to 39.6 percent, 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."

Doris Burke, Carson Kessler and Ellis Simani contributed reporting.

Facebook’s Internal Probe Finds Failures That Stoked January 6 Insurrection

Reprinted with permission from Daily Kos

Facebook executives have been dismissive from the start about attempts to hold them accountable for their social media platform's role in inciting and organizing the January 6 insurrection at the U.S. Capitol—including CEO Mark Zuckerberg's testimony to Congress last month in which he evaded questions about his company's culpability, saying: "I think that the responsibility here lies with the people who took the actions to break the law and do the insurrection."

But an internal Facebook report uncovered by BuzzFeed shows that the company failed to take action against "Stop the Steal" and other accounts where false information about the election was widely propagated in an attempt to delegitimize the 2020 election, violence was encouraged, and where much of the insurrection was organized. Though the report was completed shortly after Zuckerberg's testimony, it essentially corroborated a report by the nonprofit advocacy group Avaaz days before he testified that found Facebook's culpability in the Capitol siege extended to well over a year before the event.

BuzzFeed reports that the internal document, assembled by an internal task force studying harmful networks, acknowledges the role of Facebook activity by "Stop the Steal" activists, as well as pro-Trump groups associated with the brief attempt to organize a "Patriot Party" split from the GOP, in the violent events of January 6. It also observes that insisting on an "inauthentic behavior" standard—rather than one based on the spread of misinformation and violent speech—hindered its attempts to take the appropriate preemptive steps.

"Hindsight is 20/20, at the time, it was very difficult to know whether what we were seeing was a coordinated effort to delegitimize the election, or whether it was free expression by users who were afraid and confused and deserved our empathy," reads the report. "But hindsight being 20/20 makes it all the more important to look back to learn what we can about the growth of the election delegitimizing movements that grew, spread conspiracy, and helped incite the Capitol insurrection."

"Do you care enough about the fate of the nation to ensure that your product is not used to coordinate and overthrow the government?" wondered Joan Donovan, research director of Harvard University's Shorenstein Center on Media, Politics, and Public Policy, in comments to BuzzFeed.

"For me, at the end of the day, it comes down to: Do you care? Do you care enough about democracy? Do you care enough about the fate of the nation to ensure that your product is not used to coordinate and overthrow the government?" she said. "There is something about the way Facebook organizes groups that leads to massive public events. And when they're organized on the basis of misinformation, hate, incitement, and harassment, we get very violent outcomes."

The report noted that while Facebook executives were pleased "at having made it past the election without major incident," that feeling was "tempered by the rise in angry vitriol and a slew of conspiracy theories that began to steadily grow" afterwards.

Donovan observed that the Stop the Steal organizing began long before Election Day, and that Facebook's failure to prepare illustrates how poorly it is able to protect democracy. Indeed, that was largely the thrust of the Avaaz report on Facebook's culpability in the insurrection published March 18, six days before Zuckerberg testified.

The Avaaz study found that over the eight months leading up to the election, there were an estimated 10 billion views on key top-performing Facebook pages that regularly and repeatedly shared false information about the election. There was also a marked lack of moderation on those pages, allowing the "false or misleading information with the potential to cause public harm" to flourish. Those pages, the study found, saw a nearly threefold increase in interactions from October 2019—when they had 97 million—to a year later, when they had 277.9 million. It also found that nearly 100 million voters saw false voter fraud content on Facebook.

"A poll conducted in October 2020 found that 44 percent of registered voters reported seeing misinformation about mail-in voter fraud on Facebook (that equates to approximately 91 million registered voters)," the report states. "The polling suggests that 35 percent of registered voters (approximately 72 million people) believed this false claim."

This growth particularly benefited pages backing the authoritarian QAnon conspiracy cult and, later, the Stop The Steal movement. The Avaaz study found 267 groups championing violence around the election with a combined following of 32 million—nearly 70 percent of which had Boogaloo, QAnon, or militia-themed names and content.

Facebook's reliance on algorithmic detection played a large role in its failures to act on these pages, Avaaz noted, since the company's policies also allow misinformation on their platform if it is being spread by politicians. It noted that political ads for the Georgia election featured misinformation that had been debunked by fact checkers nonetheless being spread by Republican candidates—permissible under Facebook policy.

"The scary thing is that this is just for the top 100 pages—this is not the whole universe of misinformation," Fadi Quran, a campaign director at Avaaz, told Time. "This doesn't even include Facebook Groups, so the number is likely much bigger. We took a very, very conservative estimate in this case."

Donovan pointed to Facebook's focus on "inauthentic activity," such as people using fake accounts, as the source of its failure. This problem was manifested earlier when Facebook attempted to clamp down on QAnon pages, but failed utterly because its takedowns were based on "coordinated inauthentic behavior," which describes accounts and pages that mislead people about their identity and intentions, regardless of whether the information they spread is accurate or not.

In other words, those QAnon pages were removed not because they spread wildly false smears but because the people operating them broke Facebook's rules about false or double identities. It's a peculiarly self-serving standard that uses truthfulness in creating accounts as a proxy for truthfulness in the content being promulgated. Moreover, as Donovan told BuzzFeed, it means that Facebook can ignore how its products create coordinated activity among real people, and the harm that can result, she said.

The internal Facebook report largely acknowledges this, explaining that the social media giant was outmaneuvered by coordinated accounts that formed a powerful network of groups promoting hate, inciting violence, and spreading lies about the election.

So-called "super-inviter" accounts—highly influential activists within these far-right movements—played key roles in the ability of Stop the Steal pages to spread even after Facebook banned the original group. The largest of these pages were fueled by 137 super-inviters who recruited some 67 percent of their members; and that many of these people coordinated with each other, lying about their locations and using private groups to organize.

"Because we were looking at each entity individually, rather than as a cohesive movement, we were only able to take down individual Groups and Pages once they exceeded a violation threshold," the report reads. "After the Capitol Insurrection and a wave of Storm the Capitol events across the country, we realized that the individual delegitimizing Groups, Pages and slogans did constitute a cohesive movement."

The Avaaz report features a long list of recommendations, including reforms for the company to undertake on its own, such as "detoxing" the algorithms, submitting to audits and other forms of transparency, and proactively correcting the record when misinformation appears on its platforms. It also recommends that President Biden launch an initiative to build an anti-disinformation infrastructure.

However, given Facebook's refusal to accept culpability in the insurrection, it also makes sense for lawmakers to take steps. So the report urges an investigation into Facebook's role, both by Congress and by a proposed January 6 Commission, which would "go beyond the actors involved in the insurrection, and investigate the tools they used, including Facebook's role in undermining the 2020 elections, and whether the platform's executives were aware of how it was being used as a tool to radicalize Americans and/or facilitate the mobilization of radicalized individuals to commit violence."

"This shows the company is anti-democratic at the very least," Donovan observed, "and at the very worst, it shows that they know the risks, and they know the harm that can be caused and they are not willing to do anything significant to stop it from happening again."

Zuckerberg Denies Facebook’s Central Role In Spurring Capitol Riot

Reprinted with permission from Daily Kos

Facebook CEO Mark Zuckerberg seemed scarcely able to contain his annoyance Thursday as he bobbed, weaved, and otherwise mostly evaded House Energy and Commerce Committee members' questions in a hearing on social media's role in promoting extremism—and particularly questions about his company's culpability in providing a platform for radicalizing and organizing the insurrectionists who attacked the U.S. Capitol on January 6.

As it happened, no one was able to ask Zuckerberg about a report issued the day before from the Tech Transparency Project demonstrating that hundreds of militia groups remain active on Facebook, organizing and recruiting, as well as spreading disinformation and promoting violence—well after the insurrection. But then, Zuckerberg's testimony made all too clear that the social media giant's response to the problem would continue to be muddled and half-hearted, as the report indicated.


Zuckerberg evasive about Facebook's culpability in Jan. 6 insurrection www.youtube.com

Zuckerberg was defiant about Facebook's role in the insurrection during Thursday's hearing, titled "Disinformation Nation: Social Media's Role in Promoting Extremism and Misinformation." He told Congressman Mike Doyle of Pennsylvania, the subcommittee cochair—who wanted to know "how is it possible for you not to at least admit that Facebook played a central role in facilitating the recruitment, planning, and execution of the attack on the Capitol?"—that the blame primarily laid elsewhere.

"I think that the responsibility here lies with the people who took the actions to break the law and do the insurrection," he said. "And secondarily, also, the people who spread that content—including the president, but others as well—with repeated rhetoric over time, saying that the election was rigged and encouraging people to organize, I think those people bear the primary responsibility as well."

The fact that they were doing so on his company's platform—often in direct and flagrant violation of its own terms of use—seemed to have no bearing on its culpability, in Zuckerberg's view. He similarly doubled down when confronted about Facebook policies that allow political groups and politicians to run ads containing false information.

When asked by cochair Jan Schakowsky of Illinois about Facebook taking money "to run advertisements to promote disinformation," Zuckerberg replied that "we don't allow misinformation in our ads. And any ad that's been fact-checked that's false, we don't allow to run as an ad."

This was at best misleading: Facebook, in fact, does run ads containing misinformation if they are political in nature—because the company has repeatedly insisted it won't fact-check political ads. Zuckerberg has argued that "political speech is important" and so the company doesn't want to interfere with it—which gives politicians and political groups open license to lie freely on Facebook.

Eventually the Democrats who were trying to hold Zuckerberg's feet to the fire for providing a platform that profits from "engagement" algorithms that wind up radicalizing thousands of users came to despair of ever getting a straight answer from the Facebook CEO. After getting a runaround to his question about whether or not Zuckerberg signed off on a reduction in a company plan to tackle extremist misinformation, committee chair Rep. Frank Pallone of New Jersey ended his discourse curtly, turning to Google CEO Sundar Pichai in frustration.

That defiant approach to the problem comports with the company's running failure to shut down some of the same far-right factions that supported the insurrection, as detailed in the Tech Transparency Project's report, despite its long-running promises to bring the problem under control.

The TTP was able to identify 201 militia pages and 13 militia groups on Facebook as of March 18. Some 70 percent of them had the word "militia" in their name.

Moreover, not only do militia pages persist on Facebook, but TTP found that the platform is actually pushing people toward them: 34 of the militia pages identified by TTP (17 percent) were actually auto-generated by Facebook. Most of these had the word "militia" in their names.

But the reason the term continues to thrive on Facebook was explicit in the response given to BuzzFeed by a company spokesman about TTP's report: "We'll review the accuracy of the claims and the content referenced as soon as we have access to this report. We have banned over 890 militarized social movements and removed more than 3,400 Pages, 19,500 groups, 120 events, 25,300 Facebook profiles and 7500 Instagram accounts representing them; but simply using the word 'militia' does not violate our policies."

"After nearly a year of promises to curb the organizing of militia groups on the platform—a threat that culminated in the attack on the Capitol January 6—Facebook has shown that they are not capable of handling the dangers posed by their platform despite their claims to Congress and the public," TTP director Katie Paul told BuzzFeed News.

Of the 201 militia groups the TTP identified, more than 20 were created after Facebook's crackdown last August. Some were formed in December 2020 or later, such as the Texas Militia, which launched its page even as the attack on the Capitol was under way on Jan. 6. Its creator and administrator claimed that "modern technology has enabled radicals to subvert the process by which we elect our representatives."

"We must be prepared…to defend our rights and prevent [the] takeover of our great nation by radicals, uphold the Constitution, and preserve our way of life," he added.

BuzzFeed also found that Facebook's algorithms continue to push users down far-right rabbit holes. Upon visiting the page for the East Kentucky Malitia (a deliberate misspelling to avoid detection), Facebook directed their reporter to the pages of Fairfax County Militia and the KY Mountain Rangers. Once there, the algorithms directed the reporter to the Texas Freedom Force.

The Texas Freedom Force, as it happens, was identified as a "militia extremist group" by the FBI in an affidavit it filed in January while charging one of its members, Guy Reffitt, with multiple felonies for participating in the January 6 Capitol attack. Reffitt, you may recall, notoriously warned his adult children he would kill them for "treason" if they turned him in to federal authorities after the insurrection.

#EndorseThis: Zuckerberg Takes On Covid-19 In Puppet Rap Battle

GZero's Puppet Regime delivered so many laughs during the Trump administration's tumultuous four year run. But with Trump gone at last, GZero has something different for puppet fans.

The latest Puppet Regime pits Facebook founder Mark Zuckerberg against the deadly Covid-19 virus in the rap battle of the century. The contest determines which is the worst thing to happen to humanity.

Who wins? All we can be sure of is that we lose. But we're still laughing.

Conservatives Sue Over Zuckerberg's Election Assistance Grants To States

This article was produced by Voting Booth, a project of the Independent Media Institute.

After local election officials from more than 1,100 jurisdictions in 40-plus states applied for private grants to better run the presidential elections, a conservative public interest law firm has sued three swing states to block officials from using those funds, stating in their briefs that "they do not want progressive candidates to win."

In addition to alleging that county and local governments in Pennsylvania, Wisconsin and Minnesota lacked the authority to take the money from the Chicago-based Center for Tech and Civic Life (CTCL), the lawsuits from the Thomas More Society, the socially conservative firm, are claiming that the grants have a partisan benefit of favoring "progressive" candidates because some recipients included metro counties—which tend to be blue epicenters.

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Danziger: The Most Useful Idiot

Jeff Danziger lives in New York City. He is represented by CWS Syndicate and the Washington Post Writers Group. He is the recipient of the Herblock Prize and the Thomas Nast (Landau) Prize. He served in the US Army in Vietnam and was awarded the Bronze Star and the Air Medal. He has published eleven books of cartoons and one novel. Visit him at DanzigerCartoons.com.

#EndorseThis: John Oliver’s Deeply Dark, Super-Funny Facebook Takedown

Everyone knows that the Kremlin and its ultra-right stooges used Facebook to wreak havoc in the 2016 presidential election. They aim to do it again now. But John Oliver reminds us that Facebook is a global behemoth, responsible for all kinds of mischief in other countries too.

Oliver spins an enlightening segment about Mark Zuckerberg’s monster abroad, from its inappropriate balloon drops in disaster-wracked Indonesia (sort of funny) to its deployment of genocidal propaganda against Myanmar Rohingya (deeply unfunny).

Yes, the world’s most powerful social media network still spends too little effort and money to reject lies and hate. Somehow Oliver transforms that depressing truth into an absolutely hilarious parody ad, mocking the company’s “we connect the world” slogan.

Just click.