Yes, millionaires pay much less tax than you
That millionaires pay very little tax compared to their wealth is something we all already know. But the situation becomes especially bloody when the constant and correct figures of what they pay appear, because they reveal that any ordinary citizen with a salary contributes to the coffers of his country much more than the rich.
Two of the richest men in the world, Jeff Bezos s Elon MuskThey avoided paying federal taxes for some years and only spent 3.4% in taxes on growing their wealth between 2014 and 2018, according to an investigation. ProPublicaAn independent investigative news website.
Meanwhile, the average American family with an income of about $70,000 per year pays 14% in federal taxes each year.
The numbers speak for themselves
ProPublica examined more than 15 years of confidential, leaked individual tax data that showed how wealthy Americans pay very little, or in some cases, no federal income tax.
On average, the 25 richest Americans paid 16% of federal personal taxes (which includes Medicare and Social Security) in those four years. This number is much lower than the number of Americans who earn $45,000 a year.
For the analysis, ProPublica relied on the “real tax rate,” a new measure of how much tax a person pays each year compared to Forbes’ estimate of how much their wealth grew over the same time. Specifically, ProPublica in its study counted unrealized capital gains that are not currently taxed in the United States.
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According to the analysis, founder and CEO of Amazon Jeff Bezos, who is currently the richest man on the planet, paid an amount 0.98% real tax rate His fortune grew by a staggering $99 billion between 2014 and 2018; It recorded only $4.22 billion in revenue during the same period.
ProPublica further revealed that Bezos did not pay federal income taxes in 2007, even though he added $3.8 billion to his fortune that year. That’s because it was able to offset the $46 million in income it reported with investment losses and deductions for debt and other expenses, according to a ProPublica analysis.
At the same time, Elon Musk, billionaire CEO Tesla and SpaceX, saw its wealth increase by $13.9 billion between 2014 and 2018, reported $1.52 billion in revenue, and paid a real tax rate of 3.27%.
In 2018, Musk did not pay income taxes.
Michael Bloomberg, the former New York mayor, reported $10 billion in that period, but only paid a 1.30% tax rate.
Billionaire investor Warren Buffett said, Who openly support higher taxes for the wealthyHe saw his fortune grow by more than $24 billion from 2014 to 2018 and paid a real tax rate of just 0.10%, reporting only $125 million in income during that period, while making significant charitable contributions.
ProPublica explained that because he pays himself minimum wage, most of his income comes from capital gains with lower taxes.
Despite everything, they comply with the law
The study estimated that the richest 1% of taxpayers do not pay taxes on 20% of their income. However, ProPublica did not point out that these billionaires broke the law, but calculated the “real tax” on income, not on wealth, which for the wealthy is much higher, because unrealized gains – that is, when the assets that gave rise to them have not been sold – They are not subject to tax.
The report is likely to feed into the Joe Biden administration’s proposal to raise taxes on the country’s super-rich. Biden’s tax plan will raise the highest income tax rate to 39.6%, which was reduced in 2017, under Trump, to 37%. Republicans oppose this change.
Biden’s plan seeks to tax capital gains and dividends at the highest average average income for families making more than $1 million annually.
Biden also wants to cancel the “increase” in the basis for tax-free capital gains passed to heirs over $1 million for individuals or $2 million for a married couple; This currently means that all unrealized capital gains that have accrued in the inheritance are not taxable.
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