AUSTIN, Texas — A new report reveals how some of the world’s richest men, including Jeff Bezos, Warren Buffett, Michael Bloomberg, George Soros and now-Central Texan Elon Musk, pay just a small fraction of their increasing fortunes in taxes.
The report from ProPublica is based on confidential IRS data it obtained, showing the 25 richest Americans “saw their worth rise a collective $401 billion from 2014 to 2018.” However, the report says, those people paid a “true tax rate” in federal income taxes of just 3.4% over the same period, a total of $13.6 billion. In some cases, those individuals paid no taxes in a given year.
Putting that in perspective, the median U.S. household earning $70,000 per year paid around 14% of that in federal taxes. Those in the highest income tax bracket paid 37% on earnings over $628,300.
The report notes America’s billionaires avail themselves of tax-avoidance strategies beyond the reach of ordinary people.
“Their wealth derives from the skyrocketing value of their assets, like stock and property,” it says. “Those gains are not defined by U.S. laws as taxable income unless and until the billionaires sell.”
In December, Musk confirmed he had moved from California to Texas, a change that will save the billionaire a hefty amount of money. The Tesla CEO will save billions of dollars in taxes because Texas does not have a state income tax, while California has one of the highest in the U.S.
Construction is planned or underway in Central Texas on a number of the tech entrepreneur's projects, including Tesla and SpaceX facilities.
ProPublica said Musk paid a true tax rate of 3.27%, or $455 million, on wealth growth of $13.9 billion, which has an actual taxable income of $1.52 billion. The report said Musk paid no federal income taxes in 2018.
Others paid an even lower true tax rate. Buffett, CEO of Berkshire Hathaway, paid just 0.1%, or $23.7 million, on wealth growth of $24.3 billion.
Meanwhile, Bezos, founder of Amazon, paid just under 1% true tax rate, or $973 million, on a wealth growth of $99 billion over the five-year period. His actual taxable income was $4.22 billion, the report said. Bezos “did not pay a penny” of federal income taxes in 2007 and avoided federal income tax liability in 2011, according to the report.
The article said former New York City mayor Bloomberg paid a 1.3% true tax rate, paying $292 million on an actual taxable income of $10 billion.
Soros, an investor, paid no federal income taxes between 2016 and 2018. A spokesman told ProPublica it was a result of him losing money on investments.
ProPublica said it went to considerable lengths to verify the information it obtained is accurate. KVUE has not independently verified the report’s information.
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