Jesse Isinger
speaker
31 appearances
1 recordings
1 series
first heard Oct 2024
last heard Oct 2024
Jesse Isinger’s voice in public audio — every appearance, attributed to the second.
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Well, I mean, me, non-tax reporter, non-tax expert, it was all extraordinarily revelatory. But even tax experts didn't understand this fully. So, you know, I think there's a general lay understanding that the wealthy avoid taxes. And that's the kind of eye roll thing that you would hear in a bar if you were talking about these stories with someone.
drinking next to you, but they didn't know that Jeff Bezos and Musk and Bloomberg and Carl Icahn and George Soros literally could pay zero in federal income tax in recent years. They didn't know that Jeff Bezos got a child tax credit because his income was so low. Experts understood that in the abstract, and no one understood it in the specific until we
proved it because we had the specific numbers and the names.
No. So what happens instead is he gets a small paycheck. You know, a lot of these guys get $1 salaries.
And, you know, Steve Jobs sort of popularized that. But the Google guys, Larry Page and Sergey Brin, they get $1. It's very popular. And if you got $1 divided by 52, you're not paying a lot in taxes. And so what's happening with those guys is they're not really getting that kind of weekly paycheck or they're getting very modest amounts of money.
There's nothing to tax in terms of wages. They're keeping their wages low. And the reason why you're keeping your wages low is that wages are relatively highly taxed. They're taxed at about 40%. The top marginal tax rate of 37% plus about 3% for payroll taxes. And so you don't want wages. It's stupid if you're a really wealthy person to get wages.
So instead what you're doing is you're getting money through gains on your assets.
And so what Bezos, it's very easy to think about what Bezos is doing, which is that most of his wealth is tied up in Amazon stock. And so Amazon stock goes up several billion dollars a year, typically, or has for a long time. And then if Bezos needed cash... he could sell some of that stock, and then he would get cash.
And then if he sold that stock, then he would have to pay taxes on it. You're not paying 37%. You're only paying 20% on that because that's what capital gains tax is. But why pay 20%? So what you want to do instead is borrow against that money.
Yeah, so I don't actually know if Bezos specifically does this, but Larry Ellison, we know, does this. He's the billionaire from Oracle, one of the richest people in the world, and a guy named Elon Musk. We've talked about him on this very podcast. He's literally borrowed against his stock to the tune of tens of,
Yeah, exactly.
You don't get taxed on borrowings.
Yeah, Larry Elson bought a Hawaiian island. But then what do you do? You have to pay loans back.
No. Wrong. Why? You're so naive. I am. Yeah.
Yeah. So you basically borrow at almost no cost. Yeah. Because they know that the stock is there and they can call it at any time. Yeah. And you essentially never really have to pay it back. The estate's going to pay it back when you die.
He's got a lot of debt and they were a little worried about it at some point. The reason we know this is that his lawyers forced him to disclose it in the SEC filings. That's why we also know about Larry Ellison. So you can't see everybody's borrowing. So you don't know how much Jeff Bezos is actually borrowing, if he's borrowing at all.
But this is an extremely common technique for ultra wealthy people.
It's a religious tenet among tax accountants and lawyers that you cannot tax unrealized gains.
In tax circles, this is as spicy as you get.
People responded to us by saying, you idiots, we don't tax unrealized gains in this country. And we had to say, you know, I responded to 150 emails from readers saying, yeah, that's the point of the article, is that we have a choice about what to tax, and we're not taxing this, and that's why billionaires are able to live outside of our tax systems.
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