Jeff Bezos did not pay federal income taxes in 2007 and 2011, according to a report by ProPublica.
Most people know that the ultra-rich pay much less taxes as a percentage of their wealth than the average worker, but a new report from ProPublica suggests that inequality may be greater than thought.
Jeff Bezos, Mark Zuckerberg and Elon Musk, among other Mughals, have built their billions in fortunes while paying almost no federal taxes by structuring their pay to avoid income, the investigation site reported after they had a stash IRS documents.
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None of the activities were illegal, ProPublica said. However, the tax records show how the super-rich minimize taxes, sometimes by borrowing and using their stock holdings as collateral. The wage earners, on the other hand, live primarily on their paychecks, which are taxed as income.
According to a ProPublica tax filing analysis, the 25 richest people in the United States amassed $ 1.1 trillion in fortunes in 2018. It would have taken the net worth of 14.3 million average US earners to reach that amount, the publication said. Those wage earners would have paid an estimated $ 143 billion in taxes, 75 times the $ 1.9 billion the 25 richest Americans paid $ 1.9 billion in 2018.
The analysis reveals very personal and classified information about Bezos, Zuckerberg, and Musk, as well as other well-known members of the richest ranks in the United States, including George Soros and Warren Buffet. The technology CEOs did not immediately respond to CNET’s requests for comment and did not comment on ProPublica (although Musk allegedly responded to an initial request with a single “?”
Here’s what we learned from the key tech minds report:
The man, who is currently the second richest person in the world, reportedly paid no federal income taxes for two years, 2007 and 2011. In 2007, Bezos’ net worth grew by $ 3.8 billion, according to Forbes figures, but he reported an income of $ 46 million (legally). He compared that income to losses from investments and tax withholding, resulting in zero dollar taxable income, ProPublica said.
Between 2006 and 2018, Bezos’ net worth reportedly grew by $ 127 billion, but his total reported income for that 13-year period was $ 6.5 billion, with a cumulative tax burden of $ 1.4 billion . That equates to a tax rate of around 21% of his reported income or 1.1% of his total assets.
According to ProPublica, Bezos’ average wage earner paid more federal income taxes than their average wealth grew over the same 13 years.
Amazon did not respond to a request for comment.
According to ProPublica, the third richest man in the world allegedly didn’t pay federal income tax on Tuesday morning in 2018. The news agency also reported that Tesla’s CEO paid $ 68,000 in federal income tax in 2015 and $ 65,000 in 2017.
Elon Musk was among the 25 richest Americans who paid little taxes relative to the growth in their wealth.
A graph accompanying the story shows that Musk’s net worth grew by $ 13.9 billion in the five years from 2014 to 2018. He reported $ 1.52 billion in income and paid $ 455 million in taxes over the same period.
Musk has used Tesla stock as security for personal loans, a strategy used by many wealthy people.
Musk doesn’t accept direct messages through his Twitter account. Tesla did not immediately respond to a request for comment.
How wealth remains untaxed
The federal government only taxes “income,” which includes wages, dividends from stocks, interest from bonds, and proceeds from the sale of financial instruments. The result is that if a billionaire owns stocks that skyrocket, those wealth won’t be taxed themselves.
Like Musk, wealthy people can still get value from company shares without selling them by using them as collateral for loans. Loans are not taxed because they have to be paid back.
Ultrarich investor Warren Buffet believes tax law needs to be reformed despite using existing laws to keep his tax payments low in relation to his wealth. Buffett has repeatedly referred to the current tax system as part of a “class war” and declared, “My class won”.