Professor Ray Madoff on How to Tax the Rich

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“Somebody who is self-employed and earned sixty thousand dollars will pay about thirteen thousand dollars in income taxes and payroll taxes.”

— Professor Ray Madoff

Why do billionaires often pay lower tax rates than working Americans? In this episode of the Sunlight Tax Podcast, I sit down with tax policy expert and professor, Ray Madoff, to explore how income, wealth, and inheritance are taxed in the United States, and why the current system often favors the ultra-wealthy.

We discuss wealth inequality, estate taxes, billionaire tax strategies, and the most promising proposals for tax reform. If you've ever wondered how the tax code shapes who builds wealth in America, this conversation offers a clear and accessible look at what a fairer tax system could look like.

“Let’s say that you’re Mark Zuckerberg. What he has is a growth in value of his stock. And even though that growth in value of his stock has made him very, very rich, it is not treated as taxable income.”

— Professor Ray Madoff

Also mentioned in today’s episode:

02:30 Background on Professor Ray Madoff and her work

05:40 How the tax system favors the wealthy

07:19 The impact of growth in stock value and tax treatment

09:02 Living off wealth, not income

10:04 Inheritance, gifts, and the lack of taxation

12:15 The estate tax and loopholes

16:20 Public perception and fairness in the tax system

17:21 How the wealthy avoid taxes: borrowing against assets

23:02 Political feasibility of tax reforms

25:46 Wealth taxes and their challenges

29:56 Legal and constitutional issues with wealth taxes

31:46 Potential benefits of well-designed tax policies

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About Professor Ray D. Madoff:

Ray D. Madoff is a professor at Boston College Law School and the cofounder and director of the Boston College Forum on Philanthropy and the Public Good. She is the author of Immortality and the Law: The Rising Power of the American Dead and lead author of The Practical Guide to Estate Planning. Her writing has appeared in The New York Times, The Wall Street Journal,  The Washington Post, and The New York Review of Books, among other outlets.

Episode Links:

Professor Ray Madoff’s Book: The Second Estate: How the Tax Code Made an American Aristocracy

My FAQ page on how to Tax the Rich

Get my Tax Help on Substack

Get your FREE visual guide to tax deductions

Order my book: Taxes for Humans: Simplify Your Taxes and Change the World When You’re Self-Employed

Watch YouTube video version

Some of the Art World’s Largest Donors Have Paid Millions to Squelch a Wealth Tax

A decades-long campaign by the ultra-wealthy, including the Koch, deVos, Mars, Bass, and Walton families, has successfully misinformed United States taxpayers about what the estate tax actually is and who it affects.

The Democratic candidates for the presidency — especially Warren and Sanders — have proposed establishing new “wealth taxes” to address income inequality in the US. This is an important conversation for our country to have, because income inequality is at a five-decade high now in the US, and has insidious effects on the entire population. But these proposals would be difficult to implement, and there’s concern that such taxes might even be subject to a constitutional challenge.

But before we get lost in that debate, I want to reacquaint everyone with the tax we already have on the books that addresses income inequality: the Estate Tax. A decades-long campaign by the ultra-wealthy has successfully confused and misinformed United States taxpayers about what the estate tax actually is and who it affects. Among those families are several of the art world’s biggest patrons, including the Koch, deVos, Mars, Bass, and Walton families.

So what is the estate tax? …read more…

This article first appeared on Hyperallergic on March 13, 2020.

The Estate Tax: An Economic Justice No-Brainer

Economic inequality is one of our biggest problems as a society, and it’s ruining our health. But it’s hard to write headlines about something that gets incrementally worse every day, instead of making a dramatic, newsworthy entrance. Bernie Sander’s campaign struck a chord by focusing on income inequality, and Trump garnered popularity by addressing workers on the losing end of the economy (though, I would argue, not with actual solutions).

I wish I could write a column about the perfect solution to income inequality. But a problem with many causes, needs multiple solutions. A lot of opportunity exists within the tax code to address these problems. The current administration either views income inequality as a benefit to society that should be boosted through the tax code, or simply does not care about anyone outside the 1%. We know this, because virtually everything in Trump’s tax proposal is regressive and would worsen income inequality.

There’s no shortage of topics to tackle with regards to the proposal (if that’s what you can even call the incomplete bullet list the White House sent out) but I’d like to focus on what I think should be an economic justice rallying cry: The Estate Tax. Read more...