Posted on 05/31/2011 3:29:33 AM PDT by Son House
That is misleading.
From your source, “slightly more than half of it from investments in tax-exempt municipal and state bonds.”
You should understand that tax-exempt bonds yield a lower interest rate than other investments. So investors are accepting lower rates of return in exchange for the simpler tax situation. A corporate bond would pay a higher interest rate, yielding more income, then income tax would be due, and the after-tax return would be the same or slightly more than the tax-exempt bonds. In your example of Heinz-Kerry, investing in taxable bonds might have pushed total income up to $6M, and they’d have paid $1.5M in total taxes, or 25% overall tax rate. Nobody would then have called them tax cheats. Either way, they would end up with $4.5M after-tax. Basically, the Feds sacrifice the tax revenue as a benefit to the locality.
The only real beneficiary is the local government selling the tax-free bonds — because they get to pay a lower interest rate on money they borrow to overspend at the local level. I would eliminate tax-free bods for that reason, and not because it somehow allows investors to “get away” with something.
"Simpler"? Is that all? rotflmao.
BTW, my dad was a municipal bond financing consultant for thirty years.
The only real beneficiary is the local government selling the tax-free bonds —
And you should have seen the corruption for the benefit of developers in those. Further, you have not addressed the tax exempt foundations the wealthy use to both hide income and benefit their investments. Both are criminal and massive.
“Further, you have not addressed the tax exempt foundations the wealthy use to both hide income and benefit their investments.”
Nope, I didn’t disagree with your second point, just the misleading statement about tax rates on the $5M as though it should have all been taxable.
One can make lots of money that is untaxed following the tax laws in the US. Warren said that he could avoid all income taxes by never “trading” his assets, in some cases perhaps borrowing against his holdings at 0-1%, or in others trading “essentially equal” assets, a non-taxable event, when rearranging a portfolio. The wealthy need never pay income taxes. It is for the middle class dummies.
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