In 2007, Jeff Bezos, the billionaire owner of Amazon and now the richest man in the world, didn’t pay a dime in federal income taxes. In 2011, he repeated the move. Tesla founder Elon Musk, the second richest person in the world, also paid no federal income taxes in 2018. Tycoon Michael Bloomberg also paid nothing in income taxes in recent years, as did George Soros, another billionaire who paid no federal income taxes for three years in a row. No one among the top 25 wealthiest avoided as much tax as Warren Buffett. This is perhaps surprising, given his public stance as an advocate of higher taxes for the wealthy.
This has been made clear by the non-profit ProPublica in an article compiled from tax returns to the Internal Revenue Service (the U.S. government’s federal agency in charge of tax collection) over a three-decade period. These data, “taken together, demolish the fundamental myth of the U.S. tax system that everyone pays their fair share and the wealthiest Americans pay the most.”
“IRS records show that the wealthiest may, perfectly legally, pay income taxes that represent only a small fraction of the hundreds of millions, if not billions, of what their fortunes grow each year,” ProPublica stresses. A U.S. household earns on average $70,000 gross annually and pays 14% in federal taxes, although there are states and counties that collect, in addition, their own taxes. “Confidential tax records obtained by ProPublica show that the ultra-wealthy effectively circumvent this system,” the NGO stresses.
ProPublica explains that the wealth of these tycoons derives from the high value of their assets, mainly shares and properties, and that the appreciation of these assets is not subject to taxation as long as their holder does not sell them. That is the main reason why the 25 richest people, according to Forbes magazine, saw their fortunes grow $401 billion between 2014 and 2018, but only paid $13.6 billion in that period, or only 3.4%.
According to ProPublica, between 2014 and 2018, the fortune of investor and businessman Warren Buffet grew by $24.3 billion, while he recorded an income of $125 million, on which he paid $23.7 million in taxes. This amount represents 19% of his income, but only 0.1% of the growth of his fortune. The NGO stressed that the also known as the “oracle of Omaha” is the billionaire who has paid the least taxes in relation to the money amassed.
He is followed by Jeff Bezos, who paid federal taxes in that period 973 million, 0.98% of the fortune of $99 billion accumulated in that period, and Michael Boomberg, who paid 292 million, which is 1.30% of the capital he amassed.
In fourth place is Elon Musk, who between 2014 and 2018 saw his fortune increase by $13.9 billion and paid $455 million in taxes, 3.27 % of the new accumulated capital. ProPublica assures that in the coming months it will use the tax data at its disposal to investigate in detail how the ultra-rich avoid paying taxes and take advantage of legal loopholes to avoid paying.
U.S. President Joe Biden has proposed legislation to raise taxes on the wealthiest and large corporations to defray the cost of government spending proposals. The president, whose proposals must be approved by Congress, would also raise taxes on corporations, which would affect wealthy investors who own corporate stock.
Democratic Senators Elizabeth Warren and Bernie Sanders, among others, have proposed taxing the wealth of the wealthiest Americans, not just their income. On Tuesday, Warren tweeted in response to ProPublica’s report, “Our tax system is rigged for billionaires who don’t make a fortune on their income like working families do. The evidence is crystal clear: it’s time for a wealth tax in America to finally make the ultra-wealthy pay their fair share ″.
Last weekend, leaders of the G7, which includes the United States, agreed to back a global corporate minimum tax of at least 15% to deter multinational corporations from dodging taxes by hiding their profits in countries with low tax rates.
US tax authorities are investigating the leak of this confidential data of billionaires. There are possible criminal penalties for IRS employees or others who may have disclosed such information.