How the rich and powerful avoid taxes？

To become a rich person is not only to be able to earn money but more importantly, to be able to save money. For ordinary people, the key to saving money is to reduce living expenses and avoid wastefulness. For the rich, the most cutthroat non-tax is.

However, there is always a group of rich people who have found a variety of magical tax avoidance methods, the IRS data show that the rich pay the actual tax rate of only 3.4%, the richest 25 billionaires, an actual tax rate of about 1%, such as 2014 to 2018, Musk's value rose $13.9 billion, but he only paid a total of $450 million in taxes, while the United States levied more than 539,900 for single taxpayers, the top tax rate remains at 37 percent. How did the wealthiest Americans achieve effective tax rates well below the federally mandated income tax rates?

First of all, it needs to be stated that tax avoidance is perfectly legal within the existing legal framework. This seemingly insurmountable bureau can not defeat them, as long as my income is enough, then the personal tax is not enough for me, so there is a declaration of 'one dollar annual salary of the operation, we are familiar with Cook is this character, their actual income was to run it?

The answer is that the CEO executives of these companies use the company's holdings instead of salary, as long as the company's share price continues to climb, generating profits far higher than wages. And most of these tycoons use ample connections and fame, they can also use their fame as a guarantee to find a bank to get a cash loan for their daily expenses by way of asset collateral.

For example, in 2020 Musk pledged 92 million shares of stock, which are worth about $60 billion, as collateral for his high-dollar loans, which are neither salary nor asset income and only require interest on the loan, which pales in comparison to the taxes they should have paid. So the bank attracts big customers, and the rich and famous have legal tickets to spend and enjoy a high quality of life, this is a win-win.

However, do you think this is the end of the story? The following is the most painful capital gains tax for the rich, for those who earn more than $1 million a year, their gold, stocks, bitcoin, and other commodities with value-added properties. When they sell, they must pay an additional 20% capital gains tax on the value of their money. But don't worry, there's not any way out, so won't I be fine if I don't sell my assets?

Eh, this trick works, so that is the perfect way to avoid the capital gains tax this big head of tax. Of course, counting stocks like this they will not always hold, the valuation is too high to cash out, and you will have to pay taxes.

In early November 2021, Musk sold 5.4 million shares of stock held in trust, the sale proceeds by long-term capital gains. The tax is with a 20% tax rate, the tax is about $1.2 billion, which can be the amount that ordinary people can not even think about. After avoiding the capital gains tax, the IRS has tailored a tough move for the rich and powerful - 'estate tax'.

For ordinary people, this tax will not see a lifetime, and for those rich people whose estate amount exceeds $12.7 million, they must honestly pay 40% of the tax, which is dead top, ah, so we are the most common charitable foundations that have emerged, the rich and powerful to set up charitable foundations in their names, their equity, and property into the foundation, because charities in the United States belong to the Because charities are unique institutions in the United States, there will be many tax-free privileges, daily avoidance of many complicated taxes, and the rich can also use some of the money for charity, to themselves and their companies in society to create a better image, can be said to kill two birds with one stone.

What's more crucial is that when they grow old, they can also hand over the charity to their offspring to manage. Lyric is perfect to avoid the huge amount of inheritance tax, In the same way, there are also direct to the tax-free side of the trust to avoid the operation of inheritance tax, save yourself the trouble of taking care of the charity. In short, although the rich and powerful can always find loopholes in the law to maximize their profits, the law is constantly improving itself so that the rich and powerful are obedient, so this offensive and defensive war will continue to continue.