June 8, 2021
ProPublica, the nonprofit investigative journalism operation, has somehow, mysteriously, come into possession of fifteen years of tax returns for many of the richest people in America. In a bombshell announcement, they dropped their first report on the twenty-five richest people in America, obviously including the easily recognizable names of Elon Musk, Jeff Bezos, Bill Gates, Warren Buffet, Michael Bloomberg, and others. Reading the report is depressing and unsettling, but it’s a bombshell, especially as President Biden and his administration are calling for minimum tax rates for corporations and higher tax rates for wealthy individuals.
Sometimes for example, they paid nothing. As ProPublica reports: In 2007, Jeff Bezos, then a multibillionaire and now the world’s richest man, did not pay a penny in federal income taxes. He achieved the feat again in 2011. In 2018, Tesla founder Elon Musk, the second-richest person in the world, also paid no federal income taxes. Michael Bloomberg managed to do the same in recent years. Billionaire investor Carl Icahn did it twice. George Soros paid no federal income tax three years in a row.
It gets worse. For example, they found the big winner, regardless of his well-publicized complaint that his secretary pays more taxes than he does, saw Warren Buffet pay only a 0.10% rate. Jeff Bezos paid 0.98%. Michael Bloomberg is paying 1.3%, and Elon Musk pays the lavish amount of 3.27%. The average of the richest twenty-five is hardly a 4% tax rate on their annual income. Meanwhile, as ProPublica notes,
In recent years, the median American household earned about $70,000 annually and paid 14% in federal taxes. The highest income tax rate, 37%, kicked in this year, for couples, on earnings above $628,300.
And, hey, all of this is likely legal which is an embarrassment to our democracy and an insult to hundreds of millions of working people believing the American storyline that we are all paying our fair share.
Would the Biden tax proposals level the field? Amazingly, no! Some hedge fund managers might pay more with a reform of carried interest, but all of the loopholes and gifts of the current tax code would still benefit the richest Americans, even if – big IF – the highest rates on earned income were elevated.
How is all of this possible? Well, wages are taxed higher than many other forms of income. Many of the rich hardly even record a salary at all. Bezos makes $80,000 per year for example. Zuckerberg takes zero. The trick is that even as their wealth grows with rising stock prices and investment growth, taxes are only owned when they sell or cash out, not as they accumulate. Yes, they pay on income from dividends and distributions, but not on actual appreciation on the assets. This is also true for all of us of course. A house is assessed more, but we only pay, when we sell. Same for them at a magnitude one-thousand-fold.
There are huge national bills that need to be paid. There are millions who need benefits and support that might be possible with more resources paid fairly. It may all be legal, but it has to be changed.