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How the rich avoid paying taxes - YouTube
Channel: Vox
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this is warren buffett one of the
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richest people in the world thanks to
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the company he runs berkshire hathaway
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basically it's a holding company that
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just owns a bunch of other companies
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geico dairy queen a huge railroad as
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well as a lot of stock in other
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companies like apple and coca-cola
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so when those companies do well and
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their stock goes up berkshire hathaway
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stock goes up
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when buffett took over the company in
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1965 a single share was worth nineteen
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dollars
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today it's worth nearly half a million
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dollars
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buffett owns nearly 240 000 of these
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shares
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this is where his wealth is
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but as he's been known for pointing out
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warren buffett still pays a lower tax
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rate than his secretary she pays at
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twice the rate i pay i think that's
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outrageous that's because they pay
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different types of taxes his secretary
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pays income taxes on her salary but
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buffett mainly pays capital gains taxes
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on his sold stock and that's taxed at
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nearly half the rate
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the wealthy
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are definitely
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under tax in the u.s the disparity
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between the richest americans and
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everyone else has been growing and in
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the last 40 years the after-tax income
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of the richest has risen more than 400
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while middle-class income has only risen
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50. the way these people make money is
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very different than the way these people
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make money
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and they're not taxed the same
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i pay less in taxes than people that
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work for a living
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and make as much money as i do this is
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morris he used to work on wall street
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now he's retired and lives off his many
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stock market investments i own stock in
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companies i mean berkshire hathaway and
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amazon and apple
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he's a pretty typical one percenter
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except that he spends his money
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advocating for rich people like him to
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be taxed more i want to live in a
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country filled with a middle class of
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people who can all afford to shop in our
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businesses
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most people have a normal job they get a
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paycheck and pay income tax ranging from
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10 to 37 percent
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but people like morris they make a lot
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of their income from investments
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generally stocks in real estate
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these investments are taxed as capital
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gains and things like long-term stock
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have a maximum tax rate of just 20
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percent i sold some stock
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recently for four hundred thousand
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dollars and my
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taxes on that's around fifty thousand
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dollars
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but that fifty thousand dollars is far
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less tax than anyone who has a job
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making four hundred thousand dollars a
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year would pay
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and most of his wealth well isn't even
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taxable people like morris or buffett
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are worth so much money because of the
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stock that they hold but it's not
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tangible spendable taxable money i can
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look at my stock portfolio and i can say
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oh you know i made a million dollars
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this year but it doesn't have to be
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anything in taxes
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because our system is based on only
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paying taxes when you actually sell
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something amazon's jeff bezos the
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richest man in america thanks mostly to
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his amazon stock pays almost nothing in
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taxes
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we value his worth here but it's never
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taxed unless it's turned into real money
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when he sells the stock and it's taxed
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as a capital gain
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this is one way billionaires are able to
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be technically worth so much money but
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pay so little in taxes
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some billionaires like elon musk are
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able to get loans against their stocks
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and live off of that they don't even
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need to sell the stock to turn it into
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spendable money no sale no taxes
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the fact is if you're a billionaire
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you don't need any income
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there's also a big loophole in capital
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gains taxes that the rich exploit called
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the stepped-up basis
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if hypothetically warren buffett were to
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sell his stock he'd have to pay capital
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gains taxes based on his profit so the
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cost of the stock minus the original
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investment
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but if he holds off selling his entire
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life when he dies whoever inherits the
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stock and then sells it would only have
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to pay taxes on what they earned after
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they inherited it
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leaving all those original gains untaxed
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it's part of what's called buy borrow
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die and it's one way the richest
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families avoid paying taxes
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it's this system and the fact that most
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taxable capital gains are going to the
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top one percent that lawmakers see
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changing the capital gains tax as an
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easy way to tax the rich
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president biden has proposed closing
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that stepped up loophole and increasing
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the maximum tax rate from 20 to 39.6
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but just for people making more than a
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million dollars a year
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critics argue that it may discourage
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people from investing in the stock
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market or that current millionaires
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would just sell less stock but it would
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bring in more tax revenue from more
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conservative estimates of 200 billion
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over 10 years to double that
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it would also mean buffett would pay a
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closer tax rate to a secretary
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but this pile of unrealized money still
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goes untaxed
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there's a lot of things we could do to
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make the system more fair we could have
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taxes on wealth we could have taxes on
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gains in the stock market most americans
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are bothered that wealthy people don't
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pay their fair share and changing
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capital gains taxes wouldn't be the
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whole solution but advocates argue it
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would be an easy place to start our
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system is making the rich get richer and
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richer and richer
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and everyone else just
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not
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