ELON MUSK, JEFF BEZOS, AND WARREN BUFFETT AGREE: PAYING TAXES IS FOR POOR PEOPLE
When Joe Biden unveiled his $1.8 trillion American Families Plan in April, one of the ways he proposed paying for it was by boosting the Internal Revenue Service’s budget by $80 billion, which the White House estimates will raise $700 billion over a 10-year period by recovering taxes from people who‘ve wriggled out of paying Uncle Sam.
Which, what with tax cheats being bad and the funding of things like child care being good, sounds like a worthwhile initiative. Another valuable exercise? Considering if it’s fair that billionaires like Elon Musk, Jeff Bezos, George Soros, and Michael Bloomberg—most of whom make more money during an episode of the Bachelor than most people make in a lifetime, and whose net worth dwarfs the GDP of dozens of small countries—frequently, and fully legally, pay nothing in federal income taxes. As in zero dollars and zero cents. As in, take the amount of money they make in a year and subtract nothing from it because that’s how much they sent the government. As in, if you’re a person who actually works for a living, you probably pay a higher tax rate than the guy with the $175 million house and his own rocket ship company.
Thanks to a trove of data obtained by ProPublica, we know that Bezos paid nothing in federal income taxes in 2007 and 2011, while Musk paid nada in 2018. Bloomberg has been similarly lucky, as has Soros, who managed to pay no federal income tax three years in a row. Nonagenarian billionaire Warren Buffett, currently clocking in as the fifth-richest person in the United States (and the sixth in the world) paid very, very little and, honestly, what he did pay was basically a rounding error.
While the Biden administration is currently proposing an increase in the tax rates on people making over $400,000 and raising the top income tax rate from 37% to 39.6%, ProPublica reports that such changes would have basically no impact whatsoever on the 25 wealthiest Americans, many of whom add $400,000 to their wealth in the time it takes a working slob to load H&R Block on their phone. That’s because, among other things, the money the richest people in America make every year—largely in stock and property—isn‘t classified as income unless the assets are sold, which they almost never are. Comparing the IRS data it obtained with the publicly reported wealth of the individuals in question, ProPublica calculated what it calls people’s “true tax rate,” and even if you are already vaguely aware that the rich are different than everyone else, the results are quite to fairly maddening:
According to Forbes, [the 25 richest people in the U.S.] 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, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%.
No one among the 25 wealthiest avoided as much tax as Buffett, the grandfatherly centibillionaire. That’s perhaps surprising, given his public stance as an advocate of higher taxes for the rich. According to Forbes, his riches rose $24.3 billion between 2014 and 2018. Over those years, the data shows, Buffett reported paying $23.7 million in taxes. That works out to a true tax rate of 0.1%, or less than 10 cents for every $100 he added to his wealth.
During the same period, ProPublica found that middle-class wage earners in their early 40s expanded their net worth by roughly $65,000, mostly due to the rise in value of their homes, while paying almost $62,000 in taxes. Meanwhile, between 2014 and 2018, ProPublica’s analysis shows that Bezos, the richest man in the world, paid a true tax rate of 0.98%, Bloomberg paid 1.30%, and Musk paid 3.27%. By the end of 2018, the top 25 richest Americans had a collective net worth of $1.1 trillion, for which they paid $1.9 billion in federal taxes. On the flip side, the roughly 14 million Americans whose net worths combined equal that of the top 25 paid the government $143 billion.