ProPublica investigation shows how little US super-rich, including Jeff Bezos and Elon Musk, reportedly paid between 2014 and 2018
The 25 richest Americans, including Jeff Bezos,
Warren Buffett and Elon Musk, paid a “true tax rate” of just 3.4%
between 2014 and 2018, according to an investigation by ProPublica, despite their collective net worth rising by more than $400bn in the same period.
The report by the non-profit news organization exposes the US tax system as income and wealth inequality continues to widen.
ProPublica
used Internal Revenue Service data to dive into the tax returns of some
of America’s wealthiest and most prominent people. It found that in
2007 Bezos, the founder of Amazon and already a billionaire, paid no
federal taxes. In 2011, when he had a net worth of $18bn, he was again
able to pay no federal taxes – and even received a $4,000 tax credit for
his children. Last year, Bezos’s net worth
topped $200bn.
ProPublica
created what it called a “true tax rate” for the wealthiest 25
Americans by comparing federal income tax paid between 2014 and 2018 to
how their net worth increased on Forbes’ well-regarded rich list over the same period.
“The
results are stark,” ProPublica wrote. “According to Forbes, those 25
people saw their worth rise a collective $401bn from 2014 to 2018.
“They
paid a total of $13.6bn in federal income taxes in those five years,
the IRS data shows. That’s a staggering sum, but it amounts to a true
tax rate of only 3.4%.”
By contrast, the median American household paid 14% in federal taxes, ProPublica reported. The top income tax rate is 37% on incomes over $523,600 for single filers, having been reduced from 39.6% under Donald Trump.
ProPublica
found that Buffett, founder of the investment firm Berkshire Hathaway,
paid $23.7m in taxes from 2014 to 2018, on a total reported income of
$125m. But Buffett’s wealth grew by $24.3bn, meaning he had a “true tax
rate” of 0.1%.
Bezos’s wealth grew by $99bn
over the four-year period, but he paid a true tax rate of 0.98%,
according to ProPublica. Musk and Michael Bloomberg paid 3.27% and 1.3%
respectively.
The billionaires are not accused
of illegal activity. But the rates expose the failures of America’s tax
laws to levy increases in wealth derived from assets in the way wages –
the prime source of income for most Americans – are taxed.
“America’s
billionaires avail themselves of tax-avoidance strategies beyond the
reach of ordinary people,” ProPublica reported. “Their wealth derives
from the skyrocketing value of their assets, like stock and property.
Those gains are not defined by US laws as taxable income unless and
until the billionaires sell.”
ProPublica did
not not disclose how it had obtained the IRS information. It said
reporters had spent months analyzing the data and would release more
reports.
Bezos, the richest person in the world, “declined to receive questions”, ProPublica said.
Musk,
who Forbes estimates is worth $151bn, had first replied to a query
“with a lone punctuation mark: ‘?’”, ProPublica said, adding that he had
not replied to further queries.
Bloomberg, who according to Forbes
has a net worth of $59bn, told ProPublica he had paid the taxes he
owed. A spokesman cited the billionaire’s philanthropic giving. “Taken
together, what Mike gives to charity and pays in taxes amounts to
approximately 75% of his annual income,” the spokesman said.
ProPublica said Buffett had defended his practices in an email.
“I
continue to believe that the tax code should be changed substantially,”
Buffett told ProPublica. He said that “huge dynastic wealth is not
desirable for our society”.
Buffett, worth $96bn, has said
99% of his wealth will go to philanthropy “during my lifetime or at
death”. In 2020, he donated about $2.9bn in Berkshire Hathaway stock to
five charities, CNBC reported.
“I
believe the money will be of more use to society if disbursed
philanthropically than if it is used to slightly reduce an
ever-increasing US debt,” Buffett said.
Joe Biden has proposed
raising the top rate of income tax and increasing capital gains tax,
though that would probably have little effect on the true tax rate paid
by billionaires. Senators Elizabeth Warren and Bernie Sanders have pushed a “wealth tax” that would introduce a 3% tax on the net worth of the ultra rich. There seems little hope it will pass into law.
At
least some of America’s richest people want to better tax wealth.
Patriotic Millionaires, a group campaigning to increase taxes on the
rich, said
the ProPublica report demonstrated “how the richest 400 Americans end
up owning more wealth than the bottom 150 million Americans combined”.
“The
ultra-wealthy get to pick and choose when and how they’re taxed,”
Patriotic Millionaires said. “This is exactly why we need a strong,
unavoidable wealth tax now.”
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