Ultra-Wealthy Evade 20% of Taxable Income

Ultra-Wealthy Evade 20% of Taxable Income

According to new research published in the National Bureau of Economic Research (NBER), the wealthiest Americans are more successful at evading taxes than was previously expected. The paper suggests that due to the use of sophisticated techniques, the sampled data of random audits do not capture the true amount of tax evasion. The authors estimate that the top 1% shelter 20% of their taxable income. 

Audit data showed a very small amount of tax evasion for the wealthiest Americans which can be explained by the use of foreign intermediaries (ex. Foreign bank accounts) and pass-through business entities which serve to complicate detection efforts.

While it is extremely simple to accurately audit income for the majority of Americans who earn income through wages, it is much more difficult for the 1% who have expansive resources to avoid paying taxes.

Using pass-through entities and foreign intermediaries, business owners are able to shield their profits from taxes and avoid detection from regulators.

It should come as no surprise that the wealthy are avoiding taxes and the government that serves their interests allows such activity. The wealthy use their resources to minimize the costs of funding necessary institutions and also the forces of U.S. imperialism. Under the anarchic capitalist economic system, the oligarchs will always prioritize the maximization of profit and self-interest whatever the ramifications for the larger society.

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