If Jeff and Elon Don’t Pay Tax, Then The System Is Broken
Jeff Bezos isn't a popular guy. There are concerns about the way employees at Amazon are treated. And a report released today by ProPublica — a nonprofit newsroom that investigates abuses of power won’t help his popularity.
They revealed that in 2007 and again in 2011, Bezos paid 0 taxes.
Not a dollar.
The richest man in the world paid fewer taxes than his employee slaving away in a warehouse trying to get packages out on time for minimum wage.
To make matters even worse, due to his losses in 2011, Bezos actually received a tax credit of $4000 for his children. Great to see the government helping out those desperately in need.
According to the investigation, joining him in the Billionaires That Pay No Taxes club are Elon Musk, George Soros, and Michael Bloomberg. And, of course, we have a former President who refused to release his tax returns.
It seems the more you earn, the fewer taxes you pay.
The true tax rate
The wealthy can employ expensive accountants and tax lawyers who specialize in tax minimization. Their ethos is to pay as little as possible. Compare that to the average American trying to understand Turbo Tax, do the right thing by their fellow Americans, and pay their fair share.
As a way to compare tax rates, ProPublica analyzed what the true tax rate was. They did this by looking at the tax paid by the 25 richest Americans paid compared to how much their net wealth grew in that period — as determined by Forbes.
The statistics highlight how little tax they pay.
The tax lawyers earned their fees, as the true tax rate works out to be only 3.4%.
Would a wealth tax work?
The federal tax code is supposed to be progressive. The more you earn, the higher the tax bracket you are in.
And this seems to work to some extent; many of the rich pay their fair share. ProPublica found that those earning between $2 million and $5 million a year paid an average of 27.5 percent tax, which was the highest of any group of taxpayers.
But it falls away after that. Those lucky enough to earn above $5 million saw their tax rates fall. Those who earned above $69 million —only paid 23 percent.
The Top 25 paid far less.
There are some legal ways to reduce your tax bills, and the Top 25 do take advantage of these. Charitable donations are one way as is avoiding paying wages to yourself — Elon Musk, for example, takes no salary from Tesla. Steve Jobs took $1 in salary, and Mark Zuckerberg and Google’s Larry Page have done likewise.
Investment income which generates a lot of their wealth, is taxed at a lower rate of around 20 percent.
While I agree that philanthropy should be encouraged, should the elite rich be able to access so many tax advantages?
In a move that will have Republicans screaming from the rafters, Joe Biden wants to nearly double the tax rate that high-earning Americans pay on profits from stocks and other investments. For the trust fund kids, Biden wants to tax inherited capital gains.
Of course, this needs to get through Congress.
Elizabeth Warren was quick to give her thoughts on the ProPublica report.
“Our tax system is rigged for billionaires who don’t make their fortunes through income like working families do. The evidence is abundantly clear: it is time for a #WealthTax in America to make the ultra-rich finally pay their fair share.”
What do the billionaires think?
“?” Elon Musk
That was the reply from Elon Musk when quizzed about the issue by ProPublica. Perhaps he was thinking of names for his next child, but it seems to sum up the wealthy's disdain for paying taxes. The journalist followed up with Musk but received no further comment.
George Soros — favored target for QAnon conspiracy theorists, had this official reply from one of his staff:
“Between 2016 and 2018 George Soros lost money on his investments, therefore he did not owe federal income taxes in those years. Mr. Soros has long supported higher taxes for wealthy Americans.”
Warren Buffett, Michael Bloomberg, and Carl Icahn all gave lengthy responses to the ProPublica team, outlining their thoughts and reiterating they had paid all the taxes they owed.
And that seems to be the problem — there are far too many ways for billionaires to vastly reduce their tax bills.
Buffett has acknowledged the huge class gap in the past, saying, “his class was winning.” He agrees with a wealth tax by raising taxes on the top 1%. He has also suggested that raising the earned income tax credit that reduces the tax burden of working Americans would help close the country’s wealth gap.
“We address it through things like the Earned Income Tax Credit,” Warren Buffett
Does the public have the right to know?
Even though many writers seem to brag about their earnings and side hustles, most people don’t want to disclose their earnings or tax returns to the public.
Should the rich have their tax affairs publicly displayed? Does your privacy evaporate when you hit billionaire status?
ProPublica received reams of Internal Revenue Service data on the country’s wealthiest people from an anonymous source. Should this be considered a WikiLeak or a Deep Throat?
While we love to criticize the wealthy, they should be protected by the same privacy laws as the regular (tax-paying) folk. If we publish their tax returns, what stops the “anonymous source” from passing over IRS information on all Americans. Google already has data on all of us; should we just go all in and give them out tax information and have it available for anyone to search.
There is precedence for this.
Back in 1924, the federal government opened files for public inspection that included the incomes of all American taxpayers and the amounts they had paid in taxes. In a 2019 New York Times opinion piece, it was argued this should happen again.
Norway has made tax filings available to the public since 1814 and has been published online since 2001. A study estimated that when the records went online, it resulted in a 3.1 percent increase in the reported incomes of self-employed Norwegians over the next three years. The reason being they feared being exposed for underpaying taxes to their fellow Norwegians.
I would be willing to bet Jeff Bezos’ tax bill that such a move in the United States would lead to similar results. (Yes, I realize that is actually a small bet).
Norway’s Nordic neighbors, Finland, publish tax data each year on Nov. 1, which has become to be known as National Jealousy Day. Perhaps if we created a Hallmark Holiday for tax returns and gave everybody a day off, people would be happy to disclose their earning. Is a long weekend enough to incentivize full disclosure?
Will this ever happen? In the words of Elon Musk — “?”
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