They declared 158 million dollars in wages in 2018, just 1.1% of what they reported as total income on their tax forms.
An investigation by independent news agency ProPublica has revealed that billionaires like Jeff Bezos, Elon Musk, and Warren Buffett pay little or nothing in income taxes compared to their enormous wealth.
Amazon and Blue Origin owner Jeff Bezos, who just announced he will travel into space with his brother Mark on a tourist trip, didn’t pay a penny in federal income taxes in 2007 and 2011.
Neither did his archenemy Elon Musk of SpaceX, a company that recently secured a 2.9-billion-dollar contract from NASA for SpaceX to send U.S. astronauts back to the Moon.
Musk didn’t pay income tax in 2018 either. Nor did Michael Bloomberg, who managed to evade this tax in recent years, along with billionaire investor Carl Icahn, who twice didn’t pay taxes, while George Soros didn’t pay income tax for three years in a row.
ProPublica has released this information with more than 15 years of data from the Internal Revenue Service on the tax returns of thousands of America’s richest people.
The data reflects the financial lives of titans like Warren Buffett, Bill Gates, Rupert Murdoch, and Facebook’s Mark Zuckerberg.
According to the publication, the data reveals that richest Americans are not the ones who pay the most and that not everyone pays their fair share. Tax records show that the ultra-rich effectively circumvent the system.
Warren Buffett, the chief executive of Berkshire Hathaway, increased his wealth by 24.3 billion dollars between 2014 and 2018. In that time, he paid only 23.7 million dollars in taxes, less than 10 cents for every 100 dollars he added to his wealth.
The value of Bezos’ Amazon stock has soared since 2006. In most years, his wealth grew by much more than what he declared in income to the Internal Revenue Service (IRS).
From 2006 to 2018, Bezos’ wealth increased by 127 billion dollars, but he reported 6.5 billion dollars in income.
For every 100 dollars of growth in wealth during that period, typical Americans paid 160 dollars in taxes. Bezos paid only 1.09 dollars.
With the exception of one year when he traded more than a billion dollars in stock options, Musk’s tax bills don’t at all reflect his fortune.
In 2015, he paid 68,000 dollars in federal income taxes. In 2017, it was 65,000 dollars, and in 2018, he paid no federal income tax.
Between 2014 and 2018, he had a real tax rate of 3.27%.
In both 2016 and 2017, investor Carl Icahn, listed as the 40th richest American on the Forbes’ list, paid no federal income taxes despite filing a total of 544 million dollars in adjusted gross income (which the IRS defines as earnings minus items such as payments on student loan interest or child support).
The 25 richest Americans declared 158 million dollars in wages in 2018, according to IRS data. That’s just 1.1% of what they declared on their tax forms as their total declared income.
The ultra-rich use a number of techniques not available to the less well-off to circumvent the tax system. What they do is minimize income and therefore taxes.
They ask for loans. Since loans must be repaid, the IRS doesn’t consider them income. Banks often demand guarantees, but the rich have quite a few.
Billionaires have an array of tax evasion options to offset their earnings using loans, deductions (which may include charitable donations), and losses, all to reduce or even cancel their tax bills.
Some own sports teams that offer deductions so lucrative that owners often end up paying much lower tax rates than their millionaire players.
Others own commercial buildings that are constantly increasing in value, but which can nevertheless be used to put losses down on paper to offset income.
Many 21st century titans have unrealized gains, the total size of which fluctuates every day as stock prices rise and fall.
Most of their dividends, and the sale of stocks, bonds, or other investments, are taxed at rates lower than wages.
During the pandemic, billionaires added 1.2 trillion dollars to their fortunes from January 2020 to the end of April this year, according to Forbes.
Currently, the Treasury Department said the federal government is working to determine how the tax records were disclosed.
According to an article in The New York Times, “unauthorized disclosure of confidential government information is illegal,” said Lily Adams, a spokeswoman for the Treasury Department.
And, while they search for those responsible for leaking the information, ProPublica has said the documents were provided to the media outlet “in raw form, with no conditions or conclusions.”