Here’s how the ultrarich avoid paying taxes

In this episode of Make Me Smart, host Kimberly Adams explores how the wealthiest Americans systematically avoid paying taxes through a combination of strategic financial maneuvers and longstanding tax code loopholes. Guest Ray Madoff, law professor and author of 'The Second Estate, How the Tax Code Made an American Aristocracy,' explains the 'tax avoidance playbook' used by billionaires: avoiding salaries, borrowing against untaxed stock gains, and leveraging inheritances that are largely tax-free. She highlights how a decades-long campaign by elite families has undermined estate tax reforms, resulting in a 36-year congressional 'quiet quitting' on closing loopholes. Madoff also challenges the common argument that the rich already pay their fair share, noting that the top 1% of income earners are not the same as the top 1% of wealth holders—many of whom pay no income tax at all. The episode underscores how this tax avoidance contributes to a $2 trillion annual deficit and burdens future generations with debt, while proposing reforms like taxing wealth transfers at death or gift, rather than relying on a broad wealth tax. Despite political challenges, Madoff expresses cautious optimism that growing public awareness will pressure lawmakers to act.