Wealthiest Executives Paid Little to Nothing in Federal Income Taxes,
Report Says
An analysis by ProPublica based on I.R.S. documents showed billionaires
like Jeff Bezos and Elon Musk benefited from tax code loopholes and a
focus on taxing income over wealth.
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Some of America’s richest people, including, from left, Jeff Bezos,
Michael Bloomberg, and Elon Musk, avoided paying federal income taxes in
recent years.
Some of America’s richest people, including, from left, Jeff Bezos,
Michael Bloomberg, and Elon Musk, avoided paying federal income taxes in
recent years.Credit...From left: Joshua Roberts/Reuters; Logan
Cyrus/Agence France-Presse — Getty Images; Mike Blake/Reuters
Alan Rappeport <https://www.nytimes.com/by/alan-rappeport>
ByAlan Rappeport <https://www.nytimes.com/by/alan-rappeport>
NYT, June 8, 2021
WASHINGTON — The 25 richest Americans, including Jeff Bezos, Michael
Bloomberg and Elon Musk, paid relatively little — and sometimes nothing
— in federal income taxes between 2014 and 2018, according to ananalysis
from the news organization ProPublica
<https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax>that
was based on a trove of Internal Revenue Service tax data.
The analysis showed that the nation’s richest executives paid just a
fraction of their wealth in taxes — $13.6 billion in federal income
taxes during a time period when their collective net worth increased by
$401 billion, according to a tabulation by Forbes.
The documents reveal the stark inequity in the American tax system, as
plutocrats like Mr. Bezos, Mr. Bloomberg, Warren Buffett, Mr. Musk and
George Soros were able to benefit from a complex web of loopholes in the
tax code and the fact that the United States puts its emphasis ontaxing
labor income versus wealth
<https://www.cbpp.org/research/federal-tax/substantial-income-of-wealthy-households-escapes-annual-taxation-or-enjoys>.
Much of the wealth that the rich accrue — like shares in companies they
run, vacation homes, yachts and other investments — isn’t considered
“taxable income” unless those assets are sold and a gain is realized.
Even then, there are loopholes in the tax code that can limit or erase
all tax liability.
Administration officials said on Tuesday that federal authorities were
investigating the disclosure of private tax information, which can
constitute a criminal offense.
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“Any unauthorized disclosure of confidential information by a person
with access is illegal,” Jen Psaki, the White House press secretary,
said at a briefing. “We take this very seriously.”
The rare window into the tactics of the nation’s top billionaires comes
as President Biden is trying to overhaul the tax code so that
corporations and the rich pay more. Mr. Biden has proposed raising the
top marginal income tax rate to 39.6 percent from 37 percent, which
would reverse the reduction ushered in by former President Donald J.
Trump’s 2017 tax cuts.
The documents and the conclusions of the analysis could renew calls for
Mr. Biden toconsider a wealth tax
<https://www.nytimes.com/2019/10/01/us/politics/sanders-warren-wealth-tax.html>,
given that a higher marginal tax rate would do little to raise the tax
bills of the 25 richest Americans. From 2014 to 2018, the 25 wealthiest
Americans paid an average of15.8 percent, or $13.6 billion
<https://www.propublica.org/article/you-may-be-paying-a-higher-tax-rate-than-a-billionaire>,
in personal federal income taxes.
Chuck Marr, senior director of federal tax policy at the Center on
Budget and Policy Priorities, said the private tax data highlighted the
relatively modest approach that Mr. Biden is proposing considering the
extent to which the tax code rewards wealth and punishes labor.
“Some of the solutions are often cast as aggressive,” Mr. Marr said.
“What’s really radical is the current circumstance.”
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Lawmakers like Senator Elizabeth Warren, Democrat of Massachusetts, have
championed the idea of placing a 2 percent tax on an individual’s net
worth above $50 million — including the value of stocks, houses, boats
and anything else a person owns, after subtracting any debts. In an
interview on Tuesday, Ms. Warren called the tax revelations “deeply
shocking” and said it reinforced the fact that lawmakers should be
thinking about wealth over income when writing tax policy.
“Increasing the personal income tax rate by 2 percent or 10 percent is
not going to make any real difference to these multibillionaires,” Ms.
Warren said. “The real action in America is on wealth, not income.”
Although she praised some of Mr. Biden’s proposals such as increasing
taxes on capital gains and targeting “real” corporate profits, Ms.
Warren said that she would like to see the White House be more ambitious.
“I want to see the Biden administration push harder on the wealth
taxes,” Ms. Warren said.
Mr. Biden and his advisers have generally deemed the idea of a wealth
tax unworkable but they have not formally closed the door on the idea.
Instead, the president wants an extra $80 billion over a 10-year period
to beef up the Internal Revenue Service so it is better equipped to go
after tax cheats. And he has proposed doubling the tax on capital gains
— the proceeds of selling an asset like a stock or a boat — for people
earning more than $1 million.
“We know that there is more to be done to ensure that corporations,
individuals who are at the highest income, are paying more of their fair
share,” Ms. Psaki said.
At aNew York Times DealBook
event<https://www.nytimes.com/2021/02/23/business/dealbook/janet-yellen-dealbook.html>in
February, Treasury Secretary Janet L. Yellen said that a wealth tax is
“something that has very difficult implementation problems.” She
suggested that other tax changes that would increase taxes on wealth
that is transferred at death could have a similar effect. In March,
however, Ms. Yellen suggested that she remained open minded about a
wealth tax.
“Well, that’s something that we haven’t decided yet,” Ms. Yellen said on
ABC News, before pointing to other tax ideas that would also affect the
rich.
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ProPublica did not reveal how it obtained the information and it could
not be independently verified by The New York Times. But the publication
said the documents were provided to the outlet “in raw form, with no
conditions or conclusions” and that it had run the information past
every executive whose information was included in the article.
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“Every person whose tax information is described in this story was asked
to comment,” ProPublica said, adding that those who responded “all said
they had paid the taxes they owed.”
In a separate article, the outletsaid
<https://www.propublica.org/article/why-we-are-publishing-the-tax-secrets-of-the-001>it
was publishing the information “quite selectively and carefully —
because we believe it serves the public interest in fundamental ways,
allowing readers to see patterns that were until now hidden.”
The report highlights the techniques that the wealthy often use to
reduce their tax bills, including taking advantage of a complex web of
loopholes and deductions that are perfectly legal and can significantly
minimize tax liability. That includes borrowing huge sums of money
backed by enormous stock holdings. Loans are not taxed and the interest
that the executives pay on the borrowed money can often be deducted from
their tax bills.
ImageLawmakers like Senator Elizabeth Warren have pushed to place a 2
percent tax on an individual’s net worth above $50 million.
Lawmakers like Senator Elizabeth Warren have pushed to place a 2 percent
tax on an individual’s net worth above $50 million.Credit...T.J.
Kirkpatrick for The New York Times
In 2007, Mr. Bezos, the chief executive of Amazon, paid nothing in
federal income taxes even as his company’s stock price doubled. Four
years later, as his wealth swelled to $18 billion, Mr. Bezos reported
losses and received a tax credit of $4,000 for his children, according
to ProPublica. An Amazon spokesman did not immediately respond to a
request for comment.
Mr. Buffett, the chief executive of Berkshire Hathaway who has long said
publicly that the tax code should hit the rich harder, paid just $23.7
million in taxes from 2014 to 2018, when his wealth rose by $24.3 billion.
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In a statement to ProPublica, Mr. Buffett said he expected that 99.5
percent of his wealth would go toward taxes and charity upon his death,
adding, “I continue to believe that the tax code should be changed
substantially.”
Mr. Soros, the billionaire philanthropist and investor, paid no federal
income tax for three consecutive years, according to the report. A
spokesman for Mr. Soros told ProPublica that “between 2016 and 2018
George Soros lost money on his investments, therefore he did not owe
federal income taxes in those years.”
In 2018, Mr. Bloomberg, who controls the media giant Bloomberg L.P.,
reported income of $1.9 billion and paid $70.7 million in income tax.
According to the report, Mr. Bloomberg was able to reduce his tax bill
through deductions, charitable donations and “credits for having paid
foreign taxes.”
A spokesman for Mr. Bloomberg, in a statement to ProPublica, said they
would “use all legal means at our disposal to determine which individual
or government entity leaked these and ensure that they are held
responsible.”
The Treasury Department said that the federal government is working to
determine how the tax records were released.
“The unauthorized disclosure of confidential government information is
illegal,” Lily Adams, a Treasury spokeswoman, said. “The matter is being
referred to the Office of the Inspector General, Treasury Inspector
General for Tax Administration, Federal Bureau of Investigation, and the
U.S. attorney’s office for the District of Columbia, all of whom have
independent authority to investigate.”
A Department of Justice spokesman referred an inquiry about an
investigation to the F.B.I., which referred the matter to the I.R.S.
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At a Senate Finance Committee hearing where he was testifying on
Tuesday, Charles Rettig, the I.R.S. commissioner, said that he could not
comment on the apparent breach at his agency but said that it was being
scrutinized.
“I can confirm that there is an investigation with respect to the
allegations that the source of the information in that article came from
the Internal Revenue Service,” Mr. Rettig said. “The investigators will
investigate.”
Senator Ron Wyden of Oregon, the chairman of the finance committee, told
Mr. Rettig that he was concerned about the security of taxpayer data. He
also emphasized that the disclosures made clear that the tax code needed
to be rewritten.
“What this data reveals is that the country’s wealthiest, who profited
immensely during the pandemic, have not been paying their fair share,”
Mr. Wyden said, adding that he has proposals to fix that disparity.
After the hearing, Mr. Wyden declined to offer specifics about his plan
to address the issue, but emphasized his concern about unfairness in the
tax code.
“The people I represent are doing work, like treating Covid patients,
they’re paying taxes with every paycheck,” Mr. Wyden said. “The
country’s wealthiest, including during the pandemic, profited handsomely
and then do not pay their fair share because they have figured out with
good lawyers and accountants how to defer and delay and postpone and
almost do it in perpetuity.”
Some Republicans played down the idea that the wealthy don’t pay enough
in taxes and instead used the disclosures to raise questions about the
trustworthiness of the I.R.S.
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Senator Patrick J. Toomey, Republican of Pennsylvania, said on Tuesday
that while it was problematic if some of the wealthiest Americans paid
no income taxes, he thought that top earners were paying their fair
share overall. He pointed to data that shows the top 10 percent of
American earners make about half of all the income earned in America and
pay 70 percent of all the income taxes.
“There’s this mythology that high-income people don’t pay any taxes,”
Mr. Toomey said on a telephone town hall. “Are there individual
exceptions? I’m sure there are. We should see if there are loopholes
that are perpetuating that, but we have a very, very progressive tax code.”
Senator Mike Crapo of Idaho, the top Republican on the committee, said
that the disclosures added to his concern about a Biden administration
proposal to give the I.R.S. more access to the financial information of
taxpayers. He suggested that the agency could not be trusted to keep the
data secure.
Emily CochraneJeanna Smialekand Karen Weise contributed reporting.
Democrats’ Plans to Tax Wealth Would Reshape U.S. Economy
Oct. 1, 2019
<https://www.nytimes.com/2019/10/01/us/politics/sanders-warren-wealth-tax.html?action=click&module=RelatedLinks&pgtype=Article>
Alan Rappeport is an economic policy reporter, based in Washington. He
covers the Treasury Department and writes about taxes, trade and fiscal
matters. He previously worked for The Financial Times and The
Economist.@arappeport <https://twitter.com/arappeport>
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