ProPublica reports that many super-rich Americans pay almost no income tax
The rich are really different from you and me: they are better at avoiding tax collectors.
Amazon founder Jeff Bezos did not pay income tax in 2007 and 2011. Tesla co-founder Elon Musk’s income tax bill was zero in 2018.According to a report by the non-profit investigative agency on Tuesday, the financier George Soros has not paid federal income tax for three consecutive years. Public Broadcasting Corporation.
ProPublica found that, overall, if social security and Medicare taxes are included, the 25 richest Americans pay less taxes than many ordinary workers—on average, 15.8% of adjusted total income. Its findings may intensify the national debate about the huge and growing inequality between the wealthiest Americans and everyone else.
An anonymous source provided ProPublica with a wealth of data on the wealthiest people in the United States from the IRS, including Warren Buffett, Bill Gates, Rupert Murdoch, and Mark Zuckerberg.
ProPublica compares the tax data received with information available from other sources. It reports, “In each case, we were able to check-in tax declarations involving more than 50 different people-the details provided to ProPublica matched the information from other sources.”
Tax law is progressive
Using a completely legal tax strategy, many super-rich people are able to reduce their federal tax bills to zero or close to zero.
A spokesperson for Soros, who supports tax increases on the wealthy, told ProPublica that the billionaire lost money on investments from 2016 to 2018 and therefore did not owe federal income tax for these years. Musk responded to ProPublica’s initial request for comment with punctuation-“?”-and did not answer detailed follow-up questions.
The federal tax law is progressive—that is, as income increases, the tax rate that the rich pay on their income steadily increases. ProPublica found that, in fact, people with annual incomes between US$2 million and US$5 million paid an average of 27.5%, the highest of all taxpayers.
However, with income exceeding 5 million U.S. dollars, the tax rate has fallen. The top 0.001% of taxpayers — 1,400 who reported incomes of more than $69 million — paid 23%. The 25 richest people paid even less.
The wealthy can reduce taxes by using charitable donations or by avoiding wage income (up to 37% taxable) and benefiting mainly from investment income (usually taxed at 20%).
Biden seeks to increase the maximum tax rate
In order to seek income to fund his spending plan, US President Joe Biden proposed to impose higher taxes on the wealthy. Biden hopes to increase the maximum tax rate for taxable income earners with an annual income of $400,000 or more to 39.6%, which is estimated to be less than 2% of American households. The highest tax rate for workers’ wages is now 37%.
Biden proposed to nearly double the tax rate on the profits made by high-income Americans from stocks and other investments. In addition, according to his proposal, inherited capital gains will no longer be tax-exempt.
The President’s proposal must be approved by Congress. He will also raise corporate taxes, which will affect wealthy investors who own company stocks.
ProPublica reports that compared with skyrocketing wealth-the value of their investment portfolios, real estate and other assets, the taxation of the rich is particularly low??. According to calculations by Forbes magazine, ProPublica pointed out that from 2014 to 2018, the wealth of the 25 richest Americans increased by a total of US$401 billion. Over the years, they paid $13.6 billion in federal income taxes – only 3.4% of their wealth growth.
After the story, Reuters reported that the Ministry of Finance has asked law enforcement agencies to investigate the disclosure of tax records.
Treasury spokesperson Lily Adams said in an e-mail statement that the matter has been submitted to the FBI, federal prosecutors and the two internal oversight agencies of the Treasury Department, “They all have independent investigative powers.”