COLORADO SPRINGS, Colorado – Whether it’s former Amazon CEO Jeff Bezos leveraging debt, Tesla boss Elon Musk selling stock, or even Colorado Governor Jared Polis donating to charities, there are several ways the Ultra is like -Rich in America bypass taxes to a large extent lower than the rest of the working class in the country.
“Those who have done it, which is great, are figuring out how to use the system to take full advantage of capitalism while implicitly discouraging the small business owner, even the kind of mundane worker,” said Tatiana Bailey, Ph .D. Economist and Director of the Economic Forum at the University of Colorado-Colorado Springs.
Bailey found six ways the ultra-rich can cut the taxes they owe. They are all legal, with some exploiting loopholes to lower the tax bill.
The first involves using assets and assets to take out lines of credit while taking little or no salary. The debt ratio lowers a person’s tax rate while the lines of credit can be used for a living.
“These mechanisms are theoretically open to everyone, but most people can’t handle a variety of assets, and you know these lines of credit are built on personal assets of ten, twenty, thirty million dollars,” Bailey said.
Next, Bailey says that many of the richest Americans have money in stocks and investments. The taxes on these profits, she says, are often lower than the tax brackets that many workers fall into.
While many middle class Americans invest in retirement accounts, they are unable to generate a steady income as some investments and stock options can for the wealthy.
“It’s the ultra-rich who can benefit because if you ask the average construction worker for an example, they don’t play the stock market or if they do, it’s only a small amount,” said Bailey.
To be fair, Bailey says many of the richest Americans also make large charitable donations that are also deductible from income tax.
She noted that some companies and others are forming LLCs to manage assets so that business expenses can be written off.
The final way Bailey calls it is by creating trusts, money that can be kept and grow to be used for something like an inheritance.
Bailey does not want to discourage incentives for innovation or entrepreneurship through excessive taxes, but believes that low-income workers who see a higher proportional rate pay than people who are worth a large part of their assets are a negative incentive gives.
In addition, she stresses, the rich are not overwhelmed by historical standards.
“It’s something that not only should and can be fixed, but also needs to be fixed somehow.” She said. “From an economic point of view, it’s not sustainable. If we started taxing these people at 70 percent and we cut the incentives completely, that would be a different story. But how about if they just played by the same rules that everyone else plays? ”Said Bailey.