Sen. Elizabeth Warren, D-Mass., is pressing Senate Finance Committee Chairman Ron Wyden, D-Ore., to hold hearings and investigate wealthy individuals' use of tax loopholes to avoid paying income taxes, as recently reported by ProPublica and The Wall Street Journal.
Warren and Sen. Sheldon Whitehouse, D-R.I., both members of the Senate Finance Committee, told Wyden Wednesday in a letter that the recent ProPublica report "demolishes the cornerstone myth of the American tax system: that everyone pays their fair share and the richest Americans pay the most."
The tax records reviewed by ProPublica, the senators wrote, "show that the wealthiest can — perfectly legally — pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year."
"ProPublica obtained a trove of tax data for the nation's billionaires," Warren and Whitehouse wrote. "It estimated that the tax bills of some of the nation's wealthiest individuals were equivalent to just 3.5% of their growing fortunes — well below the typical rates paid by middle class wage earners. Several paid even less," they wrote, citing Warren Buffett and Jeff Bezos.
The senators also told Wyden to investigate banks' record lending to the wealthy, allowing "them take out cheap loans backed by their investment portfolios so they can fund their lifestyles while minimizing their tax bills," as reported by The Wall Street Journal.
The banks "profit from these arrangements by boosting their management fees when they use these practices to help the wealthy avoid having to pay taxes," the senators told Wyden.
Morgan Stanley's wealth management clients "have $68.1 billion worth of securities-based and other nonmortgage loans outstanding, more than double the amount they had five years ago, and Bank of America has $62.4 billion in securities-based loans," the senators wrote.
