Billionaire tax scandal: Rather than address a rotten system, America turns its fire on the leaker(s)

We have to find the leaker(s), tie them to a stake and burn them! Burn all the witches and warlocks!

That pretty much sums up the attitude of the authorities in the US to the first release of what ProPublica, a non-profit news service, says is a vast trove of data it has obtained covering the tax affairs of America’s richest citizens.

Here’s your headline figures: between 2014 and 2018, America’s 25 richest Americans saw their wealth increase by a staggering $401bn (according to Forbes). During that time they paid a collective $13.6bn in tax, which is a sizeable sum but amounts, when set against that first dizzying figure, to so much sweet FA.

The true tax rate paid by the top 25 kajillionaires amounts to a miserable 3.4 per cent, which is especially egregious when compared to the 14 per cent of $70,000 that the median American household contributes in federal income taxes. And that latter figure doesn’t even include the ruinous cost of health insurance.

In some years, the report says, the likes of Amazon founder Jeff Bezos, Tesla boss Elon Musk, media tycoon Michael Bloomberg, investor Carl Icahn and hedge fund titan George Soros, had occasion to pay an income tax rate and a dollar amount of precisely zero.

In response to the revelations, the FBI has been called in. Ditto the US Attorney’s office. They mean business.

“I share the concerns of every American for the sensitive and private nature and confidential nature of the information the IRS receives,” said Charles Rettig, Internal Revenue Service (IRS) commissioner, while announcing an investigation.

“Any unauthorised disclosure of confidential government information by a person with access is illegal and we take this very seriously,” said White House press secretary Jenn Psaki of the Biden administration’s view.

All this fire and brimstone brought to bear on the currently unknown leaker(s) diverts attention away from the core point of ProPublica’s revelations – that the figures throw an H bomb at the myth of a progressive taxation system.

Any law that facilitates numbers like those I’ve quoted is an ass. The same, by the way, is true of the laws of other western countries, where messengers have often found themselves clapped in irons for illegally revealing details of the scandalous tax affairs of mega-rich individuals and corporations.

Yes, there are issues of confidentiality and the breach thereof at work here. But there are also issues of public interest that I would argue supersede them. These are individuals who control such a vast store of American, and indeed global, wealth but who contribute proportionately very little, if anything, to the functioning of the country from which they have so handsomely profited.

Needless to say, the leak enquiry will be pursued in public with great vigour in the hopes of pacifying billionaires who often seem far fonder of writing cheques to political candidates, parties and dark money PACs, than to the IRS.

This will sap still more resources from that organisation’s coffers – resources which ought to be devoted to making sure people pay what they should.

In American pop culture, the IRS is often depicted as a heavy mob in suits and spectacles, with sharper claws than anything you’ll see on Tiger King. But when it comes to policing the tax affairs of the mega-rich, it has had those claws clipped with such ruthlessness by the US congress that they might as well be made out of origami.

That said, because of our friend the law again, the means used by those billionaires highlighted by ProPublica to minimise their tax bills are usually entirely legal.

Their ballooning wealth has largely been driven by ballooning asset values. Such gains tend to be taxed far more favourably, if at all, than is income, even when realised.

This explains why most of us pay higher marginal rates of taxation than billionaires.

The problem once prompted the legendary investor Warren Buffet, also on the top 25 list, to muse publicly on the unfairness of his paying a lower rate than his cleaner.

It would probably come as a surprise were ProPublica to find anything illegal in the data it has, because it’s so easy – with the right help – for people like Buffet to legally pay a song.

There’s no need to break any law when the law has been constructed in your favour and is, as I’ve said…

A thoroughly rotten system is what really should be the concern of “of every American”, as well as the worthy Mr Rettig, Ms Psaki, President Joe Biden, and their counterparts in other western democracies.

The numbers would be appalling were we not in the middle of a global economic, social and public health crisis. As it is, they’re a moral travesty.

To be fair to Psaki, she did go on to note that there was “more to be done” to ensure corporations and individuals paid “more of their fair share”. She also pointed out that her boss has tabled proposals to that effect.

Regrettably, the chances of those actually turning into something meaningful look slim.

But in highlighting the sheer perversity of the system, the leak might at least help some.