Fourteen years ago, Congress set out to remedy a basic unfairness in the tax code.
The tax that funds Medicare, because it’s aimed mainly at wages, hits even the poorest American workers.
But the wealthy could easily avoid paying their share.
So lawmakers created a new type of Medicare tax to capture the kinds of income the rich often enjoy:
interest, dividends and capital gains from investments.
A host of billionaires
— sports team owners, oil barons, Wall Street traders and others
— have managed to avoid paying it, ProPublica found.
To study who was actually paying the new tax, ProPublica analyzed its trove of IRS data containing information on thousands of the wealthiest Americans.
We identified 17 people who, in the first six years of the law, 2013 through 2018,
each shielded at least $1 billion in capital gains from the tax.
Together, this small group, by collectively exempting more than $35 billion, saved about $1.3 billion in taxes.
Most members of the group were able to sidestep the tax because of a huge gap written into the law,
which allows owners to exempt gains from the sale of their businesses.
They include #Donald #Sterling, the disgraced former NBA team owner who avoided the tax when he sold the Los Angeles Clippers to Steve Ballmer for $2 billion in 2014
But others eluded the tax in ways that raise questions about how the law is being enforced.
One clear target of the new tax was investment professionals who rack up capital gains.
Yet ProPublica found examples in the IRS data of financiers who claimed outsize profits but did not pay the tax.
Tax experts contacted by ProPublica said they couldn’t think of a legitimate reason why those individuals were exempt.
#Lynn #Tilton, a hard-charging private equity manager,
who has been dubbed the “diva” of distressed asset investing,
is one example.
The biggest avoider of the new tax in the data was #Jeff #Yass, the Republican megadonor who sits atop one of the most profitable trading firms in the world
https://www.propublica.org/article/billionaires-net-investment-income-tax