Five Tips How to Avoid Paying Taxes



Propublica.org dropped a wonderful bombshell report recently, cheerfully outlining how the Ultra-Rich avoid paying taxes. At the very least, their taxations are a fraction of what the rest of us are paying. The most fabulous thing is that the ProPublica team took a bunch of raw IRS data to cull and present us with these mind-blowing figures of just how disproportionate income inequality has become. Who are these amazing Ultra-Rich unicorns? Mostly white, non-Hispanic, cisgender men. Bezos, Musk, Buffet, Soros, and a few more. Well, ok, I won't make you look them up, but I bet you can guess: Gates, Murdoch, Zuckerberg, and Bloomberg. All told, the ProPublica report is based on months of research on 25 of these folks. Essentially, what everyone has guessed to be true about economic inequities in taxation is… true. The middle-class and low-income earners (mostly single mom's and people of color) of America pay for the majority of taxes collected by local, state, and federal governments. Fun, fun. This past Pandemic Year, I have highlighted how income inequalities affect Latino Americans and other people of color. As a Latina identifying as Ecuadorian-Canadian-American, I focus on the effect of inequality of women in these three different posts (Here, here, and here, available to read for a nominal $2.00 monthly subscription). Ultimately, not sharing the taxation burden equitably affects anyone who is not one of the Ultra-Rich, which is probably you! The crazy part is that this is a bi-partisan issue that will be unseen as such because what is more American than voting against your own interests? I am certain that one person reading this will eventually make it to the Ultra-Rich status, and that what is in place now needs to stay so it will also work in your favor in twenty, thirty, forty, fifty years. So, how do the rest of us get to avoid paying taxes, too? So simple really!

1. Become one of the Ultra-Rich

SO easy! That's why out of 328.2 million people living in the United States, according to 2019 Google data, only 25 of those people… are the Ultra-Rich…

2. Marry someone who is Ultra-Rich

Of course! Why didn't everyone except those 328.2 million-minus-25 who are currently married or are divorced-with-no-monetary-prenup partners think of that… Even going on the Bachelor/Bachelorette is not likely, but maybe more likely then stepping into A-Rod's shoes now that he's splitsville with JLo. Yet, they're not on the Ultra-Rich list. Is it because they're Latinos?? According to Yahoo! Finance, JLo is worth about $400 million, with A-Rod only $350 million. That means Bezos is worth even more. His ex-wife, MacKenzie Scott Tuttle, is worth an estimated $57.0 billion. Ok, that's Ultra-Rich.

3. Regardless of your economic status, Simply Stop Paying Taxes

This is interesting because many people have tried in part to stop paying their federal taxes, like this one guy who hasn't for 40 years, according to MarketWatch. There are a whole host of legal and illegal ways to avoid paying taxes like accepting and dealing strictly in cashcashcash, or, as suggested by Wikipedia, being part of tax resisters organizations: sending letters when filing taxes about why you're not paying (i.e.

don't want your money going to the military), or outright tax evasion techniques like shell corps.


4. Follow the Cordell Hull taxation loophole

According to ProPublica,

"Cordell Hull, the congressman known as the 'father' of the income tax… predicted that tax avoidance would become common. The [Eisner v. Macomber] ruling opened a gaping loophole, Hull warned, allowing industrialists to build a company and borrow against the stock to pay living expenses. Anyone could 'live upon the value' of their company stock 'without selling it, and of course, without ever paying' tax, he said.

"Well that's crazy!" you say. Hull was right, and this is exactly what happened. This is what the Ultra-Rich continue to follow because they make so much money, they can borrow against themselves, thereby avoiding taxation unless they dissolve stocks or have dividends that become taxable upon payout. Warren Buffet, who has long advocated for the wealthy to shoulder more of their fair share in taxes, shared some info. According to ProPublica:

"Buffett did something in that [New York Times] article (available by New York Times subscription) that few Americans do: He publicly revealed how much he had paid in personal federal taxes the previous year ($6.9 million). Separately, Forbes estimated his fortune had risen $3 billion that year. Using that information, an observer could have calculated his true tax rate; it was 0.2%. But then, as now, the discussion that ensued on taxes was centered on the traditional income tax rate."

That means while the rest of us paid 37-39% income tax rate, Buffet paid 0.2%. I don't know about you, but that hurts my soul. It was all legal too. The average tax paying person in the United States is not in a position to play the game at their level. The average tax paying person just wants to have the basics: a home they can claim to be their own, clean running water, food on the table, a car or mode of transportation, some savings, and no fears about from where or when the next paycheck will come. When we take a loan out, it's because we need it. Not so for the likes of Buffet, because the bottom line is: if you can avoid an income, you avoid paying taxes. That's nuts.

5. Have your bestie turn in a death certificate, move off the grid, and disappear somewhere in Spain...

Why Spain? I knew a guy, who knew a guy, who said that "back in the day" Spain was the place of choice by "certain folk" who were avoiding the law for "various reasons." They could disappear into the countryside "quite easily," supposedly.


Tapas, anyone?


This section is that part of "illegal ways" to avoid paying taxes scheme I mentioned above. It's short of peaceful taxation resistance, sometimes called redirected resistance. Outside of this there's not much left. If you're wanting to emulate someone, according to Wikipedia, "Julia Butterfly Hill resisted about $150,000 in federal taxes, and donated that money to after school programs, arts and cultural programs, community gardens, programs for Native Americans, alternatives to incarceration, and environmental protection programs." I can't imagine what the IRS fallout to all that would be like, to be honest. Who has time for that?? Taxing "unrealized capital gains" may be one way to stop this ridiculousness, and close the Cordell Hull taxation loophole, according to Senate Finance Committee Ranking Member, Ron Wyden (D-OR). He has released his "Treat Wealth Like Wages" proposal, a "plan to fix our broken tax code, ensure the wealthy pay their fair share, and protect Social Security." YUP! Read that 33-page plan here. I guess it is possible to avoid paying taxes, but it's not tenable for most people. And in case you were wondering, I am not supporting or endorsing anyone to do so… illegally.

© Isabel Alvear, June 2021 For more information on this topic and more, please "click" on the highlighted links. Drop a comment below, like, and share.


Photo credits: First image by Claudio_Scott from Pixabay; Second image by Firmbee from Pixabay

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