Companies don’t pay taxes; people do. So it was helpful this week that the folks at ProPublica turned attention to the biggest problem with the American tax system. Capital gains are not treated as income until they are realized. Even when realized, they are taxed at just over half the top tax rate. They go away when you die (or when you give your assets to charity.) And you can borrow against them largely tax free. “Buy, borrow, die” is the essence of the strategy that allows people like Jeff Bezos and Warren Buffett to accumulate massive fortunes while paying only a tiny percentage in income tax.

Defenders of this system say it helps create the incentives to invest and build great companies, like Amazon and Berkshire Hathaway, which create jobs, improve lives and advance prosperity. Others note that many of the super-rich have signed the giving pledge and are giving their tax-free fortunes to good causes—Buffett and Bill Gates (but not Bezos) are leading examples. 

But the basic inequity in the system is still hard to swallow—even for the likes of a Buffett, who backs reform. The challenge is whether, in today’s polarized political environment, the U.S. government can come up with reasonable fixes to address this—or any other obvious policy problem—without oscillating between politically motivated, lobbyist-lubricated, and economically destructive extremes. The circumstances of our times increasingly demand it, but the odds still seem stacked against it. 

No doubt there will be much debate in the months ahead over who gave ProPublica the private tax data it used for this analysis. One way or another, that’s a criminal act. But the criminal may share the view Pentagon Papers leaker Daniel Ellsberg recently expressed to The Guardian: “I never regretted for a moment doing it.”

More news below. And by the way, for a take on how the structural flaws in the U.S. tax system cited above have been manipulated to benefit one particular class of businesspeople—those in the private equity—it’s worth reading this piece in the Sunday New York Times.

Alan Murray
@alansmurray
alan.murray@fortune.com

TOP NEWS

Moderna backer

Flagship Pioneering, Moderna's VC backer, has raised a $3.4 billion fund to build more biotech companies. It's one of the biggest funds ever amassed in the field, and it comprises $2.2 billion raised this year and $1.2 billion raised in 2020. It will be parceled out over the next three years. Financial Times

Nuclear leak

The French nuclear tech firm Framatome has taken the unusual step of notifying the U.S. government about a leak at a Chinese nuclear power plant that it part owns and helps operate. Framatome alleges that the Chinese safety authority has raised the "acceptable" limits for radiation detection outside the Taishan Nuclear Power Plant near Guangzhou, Shenzhen and Hong Kong, so it doesn't have to shut the facility down. So far, the Biden administration sees no crisis. CNN  

Bitcoin, Tesla

Bitcoin's up again, to a shade under $40,000. Yes, it's Elon Musk, tweeting again. Tesla will apparently accept Bitcoin payments again, but only when it's mostly mined using clean energy. Fortune

Farewell Bibi

Benjamin Netanyahu is no longer the Israeli prime minister. The country's longest-serving leader has been replaced by far-right leader Naftali Bennett, who will himself be replaced in two years' time by the relatively centrist Yair Lapid, who was until yesterday the opposition leader. At least, that's the plan. Israel is now ruled by a very motley coalition that has a razor-thin parliamentary majority, and Bibi insists he will be "back soon", so really, who knows? Al Jazeera

AROUND THE WATER COOLER

Coal phaseout

The U.K. and EU failed to drag the rest of the G7 into a commitment to phase out coal power over this decade. The end-of-party communiqué only said the countries would "accelerate" the end of coal. Coming without a timescale, that's actually a weaker commitment than that made by G7 environment ministers in May, which called for an "overwhelmingly decarbonized power system in the 2030s." Politico

European support

European governments are extending their support measures for local companies that were stricken by the pandemic, in order to avoid a wave of bankruptcies. The measures have kept unemployment low, but the question now is whether they're just staving off the inevitable. Wall Street Journal

Nasdaq diversity

How come Nasdaq's push for more boardroom diversity doesn't include people with disabilities, asks Ted Kennedy Jr. in this piece for Fortune: "People with disabilities have long been recognized by Congress, the courts, and government agencies as having been subjected to a history of unequal treatment and marginalization based on myths, fears, and stereotypes…More importantly, for Nasdaq, an organization that focuses on investor transparency and value, identifying business leaders with disabilities is clearly a material concern for investors." Fortune

Vaccinating the economy

To "vaccinate the economy and bolster our ability to respond to tomorrow's emerging public health threats," the U.S. should more than double funding for the National Institutes of Health (NIH), writes Michelson Medical Research Foundation chief Gary K. Michelson in this Fortune piece: "Now is precisely the time to be bold and go big. It is time for the NIH to invest in what has been off-limits: high-risk, high-return research with the highest potential for scientific breakthroughs." Fortune

This edition of CEO Daily was edited by David Meyer.