New York Times: Our Tax System Should Make You Furious, by Ezra Klein:

As you may know, April 15 was Tax Day here in the U.S. If you’re a regular American, you make money through wages, and it’s probably not your favorite day of the year. If you make a median income or above, you’re handing a lot of that money back to the government.

But that is a price we pay for living in a society, right?

Well, not for everyone. You may remember that in 2021, ProPublica published an investigation built on a bunch of leaked tax documents revealing what the richest Americans really pay — or don’t. Warren Buffett had a true tax rate of 0.1 percent; Jeff Bezos had 0.98 percent; Michael Bloomberg had 1.3 percent.

We know what they paid. So what is it they’re doing? How does it work? And what can we actually do about it?

Ray Madoff is a professor at Boston College Law School who specializes in tax law and estate planning. She’s the author of The Second Estate: How the Tax Code Made an American Aristocracy [reviewed by David Cay Johnston here]. She knows how broken the tax system is — partially because she has helped the rich navigate it — and she has some ideas for how to fix it. …

Ezra Klein: … [S]ometimes people want to tax the rich because they want to punish them. They just don’t like the rich.

They definitely don’t like the rich right now. I’m very sympathetic to the argument you’re making.

On the other hand, then a lot of things wind up in moral judgment. My view is that Sergey Brin should have to pay taxes on that wealth — no matter if he’s in the don’t be evil era or in the slightly more evil era.

Ray Madoff: I completely agree. I think it is a big mistake to focus on the idea that rich people are bad, and therefore, we should be imposing taxes.

The reason I think it’s bad is because when we move the conversation to whether rich people are good or bad, we are not focusing on the fact that the richest Americans have been written out of our tax system.

It’s as if we had a system that said: People who live in Pennsylvania don’t have to pay tax. We shouldn’t have a discussion that says: Well, some of the people in Pennsylvania are good. Maybe it’s OK they don’t pay tax.

It’s wrong as a matter of principle. It’s wrong because we need their money. It’s wrong as a matter of fairness. It is wrong for so many reasons.

I think the big problem goes back to your earlier question, which is that the public is misled into thinking the wealthy are paying more taxes than they are.

That is why, with this 1 percent paying 40 percent — most of the public doesn’t know that the wealthiest Americans are able to avoid taxes by paying taxable income. If they knew, they wouldn’t want that system.

I find what you’re telling me here to track with what people I know who have worked on crafting wealth taxes tell me. What I find very frustrating is that it seems like it should be possible.

But the more you get into it, the harder it becomes — both constitutionally, which is one dimension of it, but in the valuing and the continuous valuing and the worrying about people moving things into harder-to-value assets.

I have wanted there to be a wealth tax as long as I’ve been aware of taxation, and the thing that I feel we’re losing if we can’t do something like it, which I just think is worth naming, is that wealth creates power.

It creates a tremendous amount of power, and we’re operating in this era when the superrich were not necessarily shy about using their wealth to wield power.

I mean, you mentioned the anti-estate tax campaign that was heavily funded by 18 of the richest families. But the level of direct engagement that you’re seeing now from people like Elon Musk — they are really creating the long-running fear that if you have concentrations of wealth, you’ll have unmanageable concentrations of political power manifest.

You can design a tax code that taxes this money eventually. But it doesn’t solve the political power question in a way that a lot of people want to use a tax code to do so.

I’m curious how you think about that.

I think it’s a real problem, and it’s a real concern. People controlling massive amounts of wealth have tremendous power in our society.

I understand that in some fantasy world, a powerful enough wealth tax will be enacted to make a sufficient enough dent in the wealth of the wealthiest people, where it is brought down to a level where they no longer have this power.

However, from where I sit, that just looks like a fantasy world. That’s not going to happen. It’s not going to be significant enough. The public isn’t going to buy it.

I think one of the reasons the public isn’t going to buy it, generally, is because — something we talked about earlier — to the extent it is a special tax focused on the richest people, like we have to punish the richest people, I don’t think everybody in the country agrees with that.

A lot of people in the country think that people who have acquired their wealth have done so because they’ve done great things. They’ve started great companies, and sometimes they have done great things. So it paints too broad a brush.

The problem with it is that we have to live in the world that we actually live in. And in the world we actually live in, I don’t see that as being a solution that’s going to deliver that result.

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