Taxes took center stage at the Met Gala recently, when Representative Alexandria Ocasio-Cortez (D-NY) attended the event wearing a white gown with “TAX THE RICH” emblazoned on the back in red. The ensuing discussion was wide ranging, covering everything from the designer’s background to Ocasio-Cortez’s salary and net worth and the ethics of politicians attending the Met Gala at all. There were even articles that worked the dress into a wider discussion of the Democratic party’s tax plan. Whatever you think about the dress, politicians attending museum galas in general, or Alexandria Ocasio-Cortez specifically, the message was clear and called attention to a real issue: the fact that the amount of tax some of us pay relative to the money we make doesn’t seem to add up. Further driving this point home is the recent release of the Pandora papers, the largest release of offshore financial information in history which shows how wealthy individuals from all over the world store their wealth and set up trusts in places like the Cayman Islands or South Dakota (yes, it turns out that South Dakota is a major tax haven), where it’s less subject to what they view as “unfavorable” taxation.
Speaking of taxes and things that don’t add up, that brings us to the subject of this episode: we’re talking about the tax gap, that is the yawning void between how much tax is owed and how much tax gets paid to the IRS. Where does the tax gap come from (hint: not always where you think)? Why are some people so reluctant to pay their fair share, despite having more than enough money to do so? We also take a detour into dynastic wealth, moral millionaires, and what money does to our brains.
Links, etc. are below the cut:
Mentioned on the show:
Abigail Disney on what wealthy families teach their children about holding onto dynastic wealth.
How the “family fund” loophole makes it easier to avoid paying taxes
Kelly Phillips Erb talks to Brookings Institute Senior Fellow Steve Rosenthal about whether or not billionaires pay income tax
Another primer on the tax gap and its components, this one from the Center for a Responsible Federal Budget
According to the International Monetary Fund, healthy countries run, in part, on tax revenue.
The number of people renouncing US citizenship hit an all-time high last year, mostly out of a desire to pay less taxes?
Does money change the way we relate to others? [An interesting article to revisit in light of the global popularity of Squid Game, a South Korean series about heavily indebted people playing life-or-death versions of childhood games for an enormous cash prize-L]
From the Cleveland Clinic: Why “retail therapy” makes us feel better
From the Harvard Business Review: Don’t estimate the power of luck when it comes to success in business.
A new bill proposes forcing corporations to pay tax on their profits rather than what they report to the IRS
The International Consortium of Investigative Journalists has done some really in-depth, excellent reporting on the Pandora papers: What’s in them, and what do they teach us the strategies wealthy individuals use to avoid taxes/hide their wealth?