Biden reaffirms support for Ukraine in Poland, how the wealthy save on taxes: 5 Things podcast
On today's episode of the 5 Things podcast: Biden reaffirms support for Ukraine in Poland
President Joe Biden reaffirmed support for Ukraine in Poland on Tuesday. Plus, USA TODAY National Correspondent Rick Jervis looks at the challenges facing displaced Ukrainian children, the Biden administration proposes new asylum access limits at the border, a winter storm stretches from coast to coast, and USA TODAY Money and Personal Finance Reporter Medora Lee explains how the wealthy save on taxes.
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Hit play on the player above to hear the podcast and follow along with the transcript below. This transcript was automatically generated, and then edited for clarity in its current form. There may be some differences between the audio and the text.
Taylor Wilson:
Good morning. I'm Taylor Wilson and this is 5 Things you need to know Wednesday, the 22nd of February 2023. Today, Biden reaffirmed support for Ukraine in Poland, plus the challenges facing millions of displaced Ukrainian children and how wealthy Americans save on their taxes.
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President Joe Biden spoke in Poland yesterday as he marked this week's one-year anniversary of Russia's invasion of Ukraine. He said US support for Ukraine isn't going anywhere.
Joe Biden:
One year into this war, Putin no longer doubts the strength of our coalition, but he still doubts our conviction. He doubts our staying power. He doubts our continued support for Ukraine. He doubts whether NATO can remain unified. But there should be no doubt, our support for Ukraine will not waiver. NATO will not be divided and we will not tire.
Taylor Wilson:
Ahead of the speech, Russian leader, Vladimir Putin, gave his own address and announced that Russia is leaving a nuclear arms reduction treaty between the US and Russia. He blamed the decision on the US and NATO, but would not add specifics. Biden's visit to Poland comes after he made an unannounced stop in Kyiv, where he said nearly half a billion dollars in additional security assistance is headed to Ukraine.
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As we approach one year of war in Ukraine, millions of children remain displaced. And as USA TODAY National Correspondent Rick Jervis told me, that has a serious effect on their mental health. Rick, thanks for coming on the podcast.
Rick Jervis:
It's my pleasure.
Taylor Wilson:
So Rick, let's just start with the basics here off the top. How many children are displaced in Ukraine and where have they gone throughout this war?
Rick Jervis:
So a total of 5 million children have been displaced throughout this war. Some of them have actually gone to different countries abroad. A lot of them have wound up in Poland and other countries throughout Europe. Some of them have actually come to the US as well. But a chunk of them have also stayed in Ukraine. They're in different cities, but they're displaced from their hometowns.
Taylor Wilson:
Yeah, that is a huge number. So obviously one of the big issues here, Rick, is schooling and learning in a time of war. What are some of the challenges that Ukrainian children face when trying to go to school during all of this?
Rick Jervis:
We basically wrote about this study which just actually came out from the Ukrainian Children's Action Project. It's a New York-based non-profit. They basically went around Ukraine talking to mothers, and grandmothers, and guardians of a lot of these children right now inside Ukraine. Even in places that are relatively safe, and relatively being a very strong term there - places like Kyiv or Lviv - they're still under constant threat of airstrikes, there's constant air sirens going off, there are explosions at times, there's blackouts. A lot of these things basically compound themselves and make a difficult environment for children to actually learn in.
Taylor Wilson:
This past year has to be brutal on the mental health of some of these children. I found it really powerful, Rick, in your story when you talked about this idea of resentment that many of these children must be feeling. Can you talk about that a little bit?
Rick Jervis:
Yeah, that was an interesting point, too. The leader of this study, Irwin Redlener and his wife Karen, they basically went around Poland and Ukraine talking to some of these families. And he had a really interesting, sort of telling anecdote. He was in Warsaw visiting with some high schoolers there, and he basically asked them whether they could ever forgive Russia for invading Ukraine. And the answer was either "generations from now," or a very strong "never." What he took away from that was that there's a lot of resentment brewing there among these school-aged children. Redlener has actually made past studies about how traumatic events impact children, from Hurricane Katrina, Hurricane Maria in Puerto Rico. But the difference there is that those children there didn't have anything to point to to resent. And he's finding that a lot of the children back in Ukraine are actually fostering a lot of resentment, and that, he says, fosters into anger, and into PTSD, and into other things later.
Taylor Wilson:
All right. USA TODAY National Correspondent Rick Jervis. Great info on all of this. Thanks so much for your time.
Rick Jervis:
Great, thank you.
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Taylor Wilson:
The Biden administration proposed a new policy yesterday that would limit access to asylum for migrants who cross into the United States at the southern border illegally if they fail to apply for protections in another country. The administration did not give a specific date for the new policy, but they said they aim to time it with the end of Title 42. That pandemic era policy allows for the rapid expulsion of migrants and is said to expire on May 11th. If this new policy is approved, migrants will be ineligible for asylum if they have not used existing lawful processes like a humanitarian parole program, or scheduled a time and place of arrival at a port of entry, or been denied asylum in a third country that they've traveled through.
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A major winter storm is stretching 2,600 miles coast to coast today. Residents in western states and the Plains have already faced severe winter weather for the past few days, and blizzard conditions are expected today from Wyoming across the Midwest. There are also ice storm warnings in several midwestern states this morning. And further east, a winter weather advisory is in effect starting at 4:00 PM today for parts of New York State and New England. You can find more about what's happening in your neck of the woods with a link in today's show notes.
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Wealthy Americans avoid paying huge amounts in taxes. They use a number of strategies and some might even be available to average Americans. USA TODAY Money and Personal Finance Reporter Medora Lee explains. Medora, welcome back to 5 Things.
Medora Lee:
Thanks for having me.
Taylor Wilson:
First off, how much do rich people avoid in taxes?
Medora Lee:
They are really good at it. They avoid about, the Treasury estimates, $163 billion a year.
Taylor Wilson:
Geez, that is a huge number. So you outlined a bunch of different strategies that the uber-wealthy use to do this. I want to start with foundations and gifting. What do we know about this?
Medora Lee:
So foundations, I never realized this, because you always hear about the Clinton Foundation, Bill & Melinda Gates Foundation, "Oh gosh, they're so charitable." Well, they actually get a lot of deductions off of that. Immediately, as soon as you start up a foundation, you can take an income tax deduction of up to 30% of your adjusted gross income for your contribution. You only have to distribute 5% of your foundation every year. And in the first year you don't even have to, because they base it on the 5% of your previous year. So there was no previous year the first year you started. And then you can invest all that money, or stocks if you donated stock, or whatever, and avoid capital gains tax. Foundations only have to pay an excise tax of 1.39% on their gains.
Taylor Wilson:
So when I say the words family office, some people maybe think of a shared desk in their house that the whole family uses. I take it that's not what we're talking about with the uber-rich, correct?
Medora Lee:
Right. I know, this one's a good one, right? Apparently all the really super wealthy people like the Bezoses, they all have these family offices. You turn your managing of your investments, and your accounting, and even sometimes some concierge services, and you manage it like an office. You have to structure it properly, there are a lot of rules on how you have to structure that. But by doing that, you can expense all of those fees and services.
Taylor Wilson:
So what are some other strategies that the super wealthy use to avoid taxes?
Medora Lee:
Thanks to a 2017 Tax Cuts and Jobs Act, the lifetime gift tax exclusion is now $12.92 million this year. They basically doubled it. Back in 2016, it was only $5 million or so, but that's only until 2025, and then it reverts back. So a lot of wealthy people are probably taking advantage of that. And then on top of that, every year you can give away, this year it'll be $17,000, to people tax-free.
Taylor Wilson:
Are there plans, or is there any legislation in the works, to potentially close some of these loopholes for the super rich?
Medora Lee:
Biden had talked about taxing the rich when he came into office, and having a big national tax, the rich tax, and that never went anywhere. So now some of the states are taking it into their own hands. And every state has their own approach, but typically they include trying to tax the assets of rich people, and then also lowering the threshold where they can pass on money and have to pay estate taxes on.
Taylor Wilson:
What are some tactics that actual average Americans can potentially use, Medora, to try to reduce their taxes?
Medora Lee:
One is the Roth IRA. That's a great one. Peter Thiel used it to parlay something like $2,000 into $5 billion. We might not be so lucky. He had some private investments of PayPal stock and things like that. But we can use the Roth IRA. Even though there are a lot of income limits to using it, there are ways to use it, called a Backdoor Roth IRA, which is really common. Basically what you do to get around the income limits is you contribute money to traditional IRA and you can take the deduction, but you pretty closely immediately convert it into Roth IRA. And so you can contribute even though your income is too high.
And then the other way is, after last year the market got crushed. You could have sold some of your investments at a loss and you could use that to offset any gains you have, or any kind of income you have on your federal income tax. And whatever you don't use, because your losses were over $3,000, you can just save those losses and put them towards gains in future years, indefinitely. And then if you're lucky enough to have your own business, this is actually one that the wealthy use a lot too, you can hire your kids. And by doing that you can pay them a big salary, and the salaries will be deducted as a business expense, and then you're passing money on to your kids.
Taylor Wilson:
Medora Lee, you always bring us great info from the world of money. Thanks for your time.
Medora Lee:
Thank you. Have a good day.
Taylor Wilson:
Thanks for listening to 5 Things. You can find us every day of the week right here, wherever you get your audio. I'm back tomorrow with more of 5 Things from USA TODAY.
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