America's richest have paid next to nothing in income taxes

America’s richest have paid next to nothing in income taxes

It’s true that the super-rich are different from the rest of humanity: they are experts at paying less taxes.

Amazon founder Jeff Bezos did not pay income tax in 2007 and 2011. Tesla founder Elon Musk’s income tax was zero in 2018. Financier George Soros also did not pay federal income tax for three years in a row, according to a report by ProPublica – a nonprofit investigative journalism organization – published Tuesday.

Altogether, the richest 25 Americans pay less taxes – on average 15.8% of adjusted gross income – than many ordinary workers, once taxes for Social Security and Medicare health insurance are included, according to ProPublica.

These findings could fuel the ongoing national debate about the huge and growing inequality between the wealthiest Americans and the rest of the population.

THE PROPUBLICA INVESTIGATION

An anonymous source provided ProPublica with tons of data from the Internal Revenue Service on the nation’s richest, such as Warren Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg. ProPublica compared that data with data from other sources.

He reported that “in all the cases that we were able to verify – with tax returns from more than 50 people – the details provided to ProPublica coincided with information from other sources.”

Through perfectly legal tax strategies, many super-rich are able to reduce their federal taxes to nothing or almost zero.

A spokesman for Soros, who has publicly supported raising taxes on the rich, told ProPublica that the billionaire lost money on his investments from 2016 to 2018 and that is why he did not pay federal taxes for those years. Musk reacted to ProPublica’s request for comment with a simple question mark “?” and did not respond to subsequent questions.

Federal tax payments are supposed to be gradual, meaning that the wealthy must pay an increasing rate on their income as it increases. And ProPublica concluded that, in fact, people who earn between $ 2 million and $ 5 million a year paid an average of 27.5% in taxes, the highest rate of any group of taxpayers.

But above $ 5 million in revenue, rates fell: The 0.001% of top taxpayers — 1,400 people with reported incomes above $ 69 million — paid 23%. And the richest 25 paid an even lower percentage.

HOW THE RICHEST MANAGE TO REDUCE THEIR TAX PAYMENTS

The wealthy can reduce their taxes through the use of charitable donations or by avoiding salary income (which is subject to a 37% tax) and benefiting instead from investment income (usually taxed at 20%).

President Joe Biden, who is seeking funds to finance his spending plans, has proposed raising taxes on the rich. Biden wants to raise the maximum rate to 39% for people who make $ 400,000 a year or more in taxable income, and that would be less than 2% of American households. The current maximum rate is 37%.

Biden proposes to almost double the tax rate that wealthy Americans pay on earnings from stocks and other investments. Additionally, it proposes that inherited capital gains will no longer be tax-exempt.

The president, whose plans need congressional approval, would also raise taxes on corporations, hurting wealthy investors who own corporate stocks.

Melissa Galbraith
Melissa Galbraith is the World News reporter for Globe Live Media. She covers all the major events happening around the World. From Europe to Americas, from Asia to Antarctica, Melissa covers it all. Never miss another Major World Event by bookmarking her author page right here.