If President Obama wants a "Buffett Rule" to keep billionaires paying their fair share of taxes, he’ll have to look at the "800-pound gorilla" in the room, tax experts say. That gorilla, explains one expert, is "unrealized appreciation"—cash that America’s wealthiest take in via stock transactions that isn't considered taxable income, Bloomberg reports. Case in point: Sports impresario Red McCombs claimed a $9.8 million loss on his tax return, but conveniently omitted the $259 million he’d scored by loaning shares of Clear Channel to an investment bank. Because he won't actually sell them to the bank for a few years, he didn't pay capital gains tax at the time.
Similarly, the head of Dole Food scored $228.6 million in 2009 that won’t cost him a dime in taxes until he delivers his Dole shares next year; former AIG boss Hank Greenberg took in $278.2 million last year that’s not taxable for years. "The problem is not that people like Warren Buffett pay tax at a 17% rate, it’s that they can use complex transactions not available to most Americans to get cash from their appreciated stock without paying any taxes at all," says a UCLA professor.