The 25 wealthiest people in the US, including Jeff Bezos, Warren Buffet, Michael Bloomberg, and Elon Musk, paid little to no income taxes, according to a report by news organization ProPublica.
These individuals paid $13.1 billion in federal taxes between 2014 to 2018, compared to their $1.1 trillion combined wealth at the end of 2018.
According to Forbes, these 25 Americans saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%.
ProPublica reported that every person whose tax information is described in the story was asked to comment and those who responded, all said, “they had paid the taxes they owed.”
The report comes at a time where there has been a growing demand to make US tax rates more 'fair' following rising levels of wealth disparity.
ProPublica's report highlights the glaring loopholes in the US Tax Code that allows billionaires and centibillionaires to effectively sidestep the tax system. It lets them pay tax only on labour income instead of their overall wealth.
Billionaires do not pay taxes on how much they're worth, but on the sum that they collect in income from various sources like wages, dividends, investments.
Much of the wealth that the rich accrue — like shares in companies they run, vacation homes, yachts, and other investments — isn’t considered “taxable income” unless those assets are sold and a gain is realised. Even then, there are loopholes in the tax code that can limit or erase all tax liability.
In 2007, Jeff Bezos, then a multibillionaire and now the world’s richest man, did not pay anything in federal income taxes. He managed to repeat this in 2011. In 2018, Tesla founder Elon Musk, the second-richest person in the world, also paid no federal income taxes, according to the ProPublica report.
Michael Bloomberg was also on the list of people who did the same in recent years. Billionaire investor Carl Icahn hasn’t paid income tax twice while George Soros didn’t pay it for three years in a row.
The Biden administration plans to increase the tax rate in order to make the wealthy contribute their fair share. However, the proposal to increase the marginal tax rate from 39.6 percent to 37 percent is unlikely to have much impact on what billionaires are paying.
Other individuals like Sen. Elizabeth Warren, D-Mass., have also proposed measures like a wealth tax. The two percent wealth tax would apply to an individual’s net worth, including the value of stocks, houses, boats,, and anything else a person owns, after subtracting any debts, above $50 million. The idea, however, was deemed unworkable by the current administration.
"What this data reveals is that the country’s wealthiest, who profited immensely during the pandemic, have not been paying their fair share,” Sen. Ron Wyden, D-Ore., the chairman of the Senate Finance Committee, said.
(Edited by: By Kanishka Sarkar)