How the richest Americans avoid paying taxes?

"The richest Americans don't pay their fair share of income taxes for the simple reason that a lot of their income is never taxed.

Missing from the statistics cited in your editorial "How America Soaks the Affluent" (March 4) are unrealized capital gains[1], which provide very real economic benefits -- including the ability to borrow against them at cheap rates -- but can avoid taxation forever.

This omission in our tax system often allows billionaires to pay little or nothing in taxes. President Biden and his fellow Democrats are trying to fix it through a billionaire income tax and reforms to capital-gains-tax rules.

Many Americans want the rich and corporations to pay a fairer share of taxes not because of "posturing in Washington" but because of their correct perception that wealth and its attendant political power are becoming more concentrated in fewer hands and are being passed down essentially tax-free to future generations.

In addition to raising adequate revenue for essential public purposes, a truly progressive tax system would curb such dynastic tendencies. Our tax code needs reforming along the lines proposed by Democrats to properly perform those functions.

Frank Clemente

Director, Americans for Tax Fairness

Washington

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Regarding your editorial "All the President's Tax Increases" (March 10): When Mr. Biden was 29 years old, the British blues-rock group Ten Years After released the song "I'd Love to Change the World." It featured the famous lyric: "Tax the rich, feed the poor / 'Til there are no rich no more."

Fast forward to 2023, with Mr. Biden overseeing the development of his latest budget proposal. Who could have guessed that he would take policy advice on raising revenue from a more than 50-year-old song lyric?

Paul E. Greenberg

Brookline, Mass." [2]

1. “An unrealized gain is a theoretical profit that exists on paper, resulting from an investment that has not yet been sold for cash. Unrealized gains are recorded on financial statements differently depending on the type of security, whether they are held-for-trading, held-to-maturity, or available-for-sale.

An unrealized gain occurs when the current price of a security is higher than the price the investor initially paid for the security, including any fees associated with the purchase. Many investors calculate the current value of their investment portfolios based on unrealized values. In general, capital gains are taxed only when they are sold and become realized.”

2.  The Rich Don't Pay Their Fair Share of Tax
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 14 Mar 2023: A.18.