Exercise: 2 mile walk to Trader Joes
Piano Song of the day: Vivaldi Spring (80% speed)
Something that is doing the rounds at the moment is the fact that a whole bunch of rich peoples tax returns were leaked by somebody in the IRS (Buffet, Gates, Beos, Musk etc) and people are shocked that some years they paid no taxes, yet they are very rich.
Well, it would seem that they aren't shocked by the fact that they didn't pay taxes because some years they took their income and plowed it into investments and other businesses, what hired people and gave those people jobs, and those people paid taxes. No it seems that doesn't count.
Then somebody did a comparison again the taxes they paid and their net worth to show that they paid like half a percent of their net worth in taxes, and I'm left thinking, why are they making this comparison, it's meaningless. You pay income tax on your income and you pay capital gains tax on your capital gains. And if most of your gains (or loses) are of the capital - and not the income type - then you pay the tax you owe.
Let's take Elon Musk as an example.
Net Worth (on paper): $13.98B
Taxes paid: $455M
ProPublica says that is a tax rate of: 3.27% (1.52/13.98*100) which is low compared to the average American who pays approximately 14% in tax.
But that's not how it works, the real calculation is:
455/1520*100 => 29.93% tax.
That's right Elon Musk is paying twice as much as the average American in taxes.
So why does ProPublica want you to think it is 3.27%, because it makes for a good headline.
And crappy journalism for those that can't do math!
Personally I'm shocked that everyone fell for the misinformation they are promoting and didn't see the flaw the minute they claimed it.
ProPublica article is here