1. A Detailed Comparative Analysis: A clear, side-by-side comparison of the tax strategies and effective tax burdens of billionaires versus middle-class households.
2. Quantification of Tax Gap: An evidence-based estimate of the annual tax revenue lost due to the primary avoidance strategies identified.
3. Political Economy Power Map: A visual and narrative map identifying key actors (lobbyists, political groups, financial institutions), their interests, their level of influence, and how they shape tax legislation.
4. Actionable Policy Recommendations: A set of 3-5 specific, well-justified policy proposals aimed at closing loopholes and creating a more equitable tax system.
5. Dissemination Strategy Outline: A brief plan outlining how to communicate the findings to key audiences (e.g., media outlets, congressional committees, the general public) for maximum impact.

• Framework Teaching:
  • Political Economy Analysis (PEA): Think of PEA as a lens to understand the "rules of the game" and who gets to write them. It moves beyond just looking at policies as written and asks why they exist. It does this by analyzing the interplay between political actors (like politicians and lobbyists), economic interests (like corporations and wealthy individuals), and institutions (like Congress and the IRS). It helps uncover the underlying power dynamics that shape policy outcomes.
  • Comparative Analysis: This is a structured method for comparing two or more subjects. In this case, we'll use it to create a direct, evidence-based contrast between the tax realities of billionaires and the middle class, ensuring the comparison is fair and highlights the most critical differences.
• Applicability Explanation:
  • Your question explicitly asks how political and economic power shapes policy, which is the central question of PEA. This framework is essential for connecting the technical tax loopholes to the political actions that create and protect them.
  • A direct Comparative Analysis is necessary to fulfill the core of your request: contrasting the two groups to illustrate the system's inequity in a way that is clear and undeniable.

Business Research Proposal: Tax Avoidance and Policy Dynamics

Part 1: Information Collection

A. Web Search Plan

• Search Topics & Purpose:
  1. "Billionaire 'true tax rate' ProPublica"; "effective tax rate US top 1% vs middle 50%":
     • Purpose: To obtain baseline data for the comparative analysis. Reports from sources like ProPublica, the Tax Policy Center, and the Congressional Budget Office provide estimates of the "true tax rate" (taxes paid relative to wealth growth) for the ultra-wealthy, which can be contrasted with the effective federal tax rates paid by middle-income households.
  2. "How 'Buy, Borrow, Die' strategy works"; "stepped-up basis tax loophole":
     • Purpose: To understand the mechanics of key tax avoidance strategies. This will allow you to explain how wealth, unlike labor income, can grow and be leveraged without triggering a taxable event.
  3. "Pandora Papers offshore structures"; "US corporate profits held in tax havens":
     • Purpose: To gather evidence and case studies on the use of complex legal entities and offshore jurisdictions (e.g., Cayman Islands, Switzerland). This will help quantify the scale of profit-shifting and identify the professional "enablers" involved.
  4. "Lobbying spending on tax legislation by industry"; "OpenSecrets tax lobbying data":
     • Purpose: To collect quantitative data for the Political Economy Analysis. This information is crucial for identifying which corporate and financial actors are spending the most to influence tax policy and mapping their power.

B. User Interview Plan

• Interview Subjects:
  1. Tax Attorneys & Private Wealth Managers: Professionals who specialize in estate planning and tax strategy for high-net-worth and ultra-high-net-worth individuals.
  2. Former Senior IRS Officials or Treasury Policy Advisors: Individuals with firsthand knowledge of tax code enforcement, its limitations, and the political pressures exerted during policy formation.
  3. Investigative Financial Journalists & Academics: Researchers who have published major works on tax avoidance and wealth inequality.
  4. Certified Public Accountants (CPAs) for Middle-Class Families: To provide a clear contrast, interview accountants whose clients are primarily salaried employees or small business owners.
• Core Interview Questions & Analysis Purpose:
  • For Tax Attorneys/Wealth Managers:
    1. "Without revealing client specifics, can you describe the most common structures you see being used to legally minimize capital gains and estate taxes?"
       • Analysis Purpose: To get a practitioner's view on the most effective and popular strategies, confirming or adding nuance to what you found in public reports.
    2. "How has the growth of the private credit market changed the options available for clients to access liquidity from their assets without selling them?"
       • Analysis Purpose: To understand the practical application and growth of the "Borrow" part of the "Buy, Borrow, Die" strategy.
  • For Former Government Officials:
    1. "From your experience, where are the biggest gaps between the intent of a tax law and its real-world enforcement when it comes to sophisticated filers?"
       • Analysis Purpose: To identify institutional weaknesses and resource gaps (e.g., lack of funding for audits of complex returns) for your policy recommendations.
    2. "Can you recall an instance where lobbying directly led to the modification or preservation of a specific tax loophole? How did that process unfold inside the department?"
       • Analysis Purpose: To gather qualitative evidence for the PEA, linking specific lobbying efforts to concrete policy outcomes.
  • For CPAs for Middle-Class Families:
    1. "What are the primary sources of income for your clients, and what are their biggest limitations in reducing their taxable income?"
       • Analysis Purpose: To build the "Middle-Class Profile" for your comparative analysis, highlighting their reliance on wage income and limited access to the loopholes available to the wealthy.

Part 2: Information Analysis

Step 1: Construct the Comparative Analysis Table

• How to Execute:
  1. Create a table with two main columns: "Billionaire Profile" and "Middle-Class Profile."
  2. Create rows for key comparison points:
     • Primary Source of Wealth/Income: (e.g., unrealized capital gains from assets vs. W-2 wages).
     • Primary Tax Type Faced: (e.g., lower long-term capital gains rates vs. higher ordinary income tax rates).
     • Key Tax Reduction Strategies: (e.g., Buy-Borrow-Die, offshore deferral vs. 401(k) contributions, mortgage interest deduction).
     • Effective Tax Rate (Illustrative): Use data from sources like ProPublica to show the low "true tax rate" on wealth growth vs. the typical federal effective tax rate on wages.

Step 2: Detail the Tax Avoidance Mechanisms

• How to Execute:
  1. For each strategy (Offshore Structures, Buy-Borrow-Die, etc.), create a section in your report.
  2. In each section, explain:
     • The Legal Foundation: Which part of the tax code allows this? (e.g., "stepped-up basis" at death).
     • The Mechanism: Use a simplified, hypothetical example to explain how it works. (e.g., "An individual holds $1B in stock, borrows $20M against it for living expenses, and pays no income tax on that $20M because loans are not income.").
     • The Scale: Use data gathered on offshore profits and asset-based lending to estimate the financial significance of the strategy.

Step 3: Build the Political Economy Power Map

• How to Execute:
  1. Identify Key Actors: Based on web searches of lobbying databases and expert interviews, create a list of the key players. Group them into categories: Financial Services Industry (e.g., private equity trade groups), Corporate Lobbyists, Anti-Tax Advocacy Groups, and Pro-Reform Groups.
  2. Map Interests and Influence: For each actor, document their stated goal (e.g., "Preserve the carried interest loophole") and their influence tactics (e.g., "Spent $17.3M on lobbying in Q4 2017," "Donated to members of the Senate Finance Committee").
  3. Connect Influence to Outcomes: Draw explicit lines from lobbying efforts to specific legislative outcomes. For example, connect the massive lobbying spike in late 2017 to the passage of the Tax Cuts and Jobs Act and the preservation of specific loopholes within it. This turns a list of facts into a compelling narrative of cause and effect.

Step 4: Formulate and Justify Policy Recommendations

• How to Execute:
  1. For each major problem identified in your analysis (e.g., "The Buy-Borrow-Die strategy allows untaxed wealth to fund consumption"), propose a direct solution.
  2. Frame your recommendations clearly. Examples could include:
     • "To address the 'Die' component, propose reforming the 'stepped-up basis' provision at death."
     • "To address the 'Borrow' component, propose treating pledging assets for loans beyond a certain threshold as a realization event."
     • "To counter political influence, propose stricter limits on lobbying by former Treasury officials or increased funding for IRS enforcement on high-income returns."
  3. For each recommendation, write a brief justification that ties it directly back to your findings, explaining precisely which loophole it would close or which power dynamic it would disrupt. This ensures your recommendations are seen as logical conclusions from your research, not just political opinions.