Richest Americans pay little to nothing in federal income taxes
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Mr Elon Musk (left) and Mr Jeff Bezos benefit from a complex web of loopholes in the US tax code and the fact that the US emphasises taxing labour income versus wealth.
WASHINGTON • The 25 richest Americans, including billionaires Jeff Bezos, Michael Bloomberg and Elon Musk, paid relatively little - and sometimes nothing - in federal income taxes between 2014 and 2018, according to an analysis from the news organisation ProPublica that was based on a trove of Internal Revenue Service tax data.
The analysis showed that America's richest executives paid just a fraction of their wealth in taxes - US$13.6 billion (S$18 billion) in federal income taxes on US$401 billion of their wealth, which was tabulated by Forbes.
The documents reveal the stark inequity in the United States tax system, as plutocrats such as Mr Bezos, Mr Bloomberg, Mr Warren Buffett, Mr Carl Icahn and Mr Musk were able to benefit from a complex web of loopholes in the tax code and the fact that the US puts its emphasis on taxing labour income versus wealth.
Much of the wealth that the rich accrue - like shares in companies they run, vacation homes, yachts and other investments - is not considered "taxable income" unless those assets are sold and a gain is realised. Even then, there are loopholes in the tax code that can limit or erase all tax liability.
The rare window into the tactics of the nation's top billionaires comes as US President Joe 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 per cent from 37 per cent, which would reverse the reduction ushered in by former president Donald Trump's 2017 tax cuts.
But the documents and the conclusions of the analysis could renew calls for Mr Biden to consider a wealth tax, 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 of 15.8 per cent, or US$13.6 billion, in personal federal income taxes.
Lawmakers such as Democratic Senator Elizabeth Warren have championed the idea of placing a 2 per cent tax on an individual's net worth above US$50 million - including the value of stocks, houses, boats and anything else a person owns, after subtracting any debts.
Ms Warren said on Twitter that the ProPublica report showed "our tax system is rigged for billionaires who don't make their fortunes through income, like working families do".
NYTIMES
