Here’s something that both sides of the aisle can agree on: All Americans should be paying their fair share of taxes. The nonprofit news agency ProPublica gained access to 15 years’ worth of tax records from the top 25 wealthiest Americans, revealing how shockingly little those billionaires pay in personal income taxes. IRS records show that some paid not a dime despite enjoying riches and luxurious lifestyles the rest of Americans could only dream about.
In 2007 and 2011, Amazon founder Jeff Bezos, now the world’s richest man, did not pay a penny in federal income taxes. In 2018, Elon Musk, now the second richest person in the world, also paid zero dollars to Uncle Sam. George Soros paid no federal income tax three years in a row. Warren Buffett, an advocate for raising taxes on the wealthy, saw his wealth rise by $24.3 billion between 2014 and 2018, yet he paid only $23.7 million in taxes — a true tax rate of only 0.1%.
“Many Americans live paycheck to paycheck, amassing little wealth and paying the federal government a percentage of their income that rises if they earn more,” ProPublica reported. “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.” ProPublica didn’t say how it obtained the tax records, which by law are supposed to be confidential.
ProPublica’s reporting shows that the wealthiest know how to buck the system, so they don’t have to pay any bucks. All of this is also perfectly legal, which stinks. The 2017 tax package engineered by then-President Donald Trump and the GOP-controlled Congress added even more sweeteners for the wealthy.
Income taxes are paid on income. The wealth of these billionaires is derived from the value of their assets. Those gains in assets are not taxable income until they are sold, but there are ways they can draw from interest and dividends without having to count it as income. For the rest of us, wages are taxed. The only way to get zero-tax status is to have no income — and starve.
ProPublica compared how much in taxes the 25 richest Americans paid each year to how much Forbes estimated their wealth grew in that same period. They call this their “true tax rate.” Bezo’s true tax rate was just shy of 1%. Musk’s true tax rate was 3.27%.
While millions of Americans lost their jobs during the pandemic, Forbes reports that the wealthiest Americans “added $1.2 trillion to their fortunes.”
The current system may be perfectly legal but feels morally unjust. These legal tax loopholes need to be closed so that everyone pays fairly into the system.