Wed. May 25th, 2022

WASHINGTON (NYTIMES) – 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”.

Mr Biden and his advisers have deemed the idea of a wealth tax unworkable. Instead, he has sought US$80 billion to beef up the IRS so it is better able 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 US$1 million.

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.

“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 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 US$18 billion, Mr Bezos reported losses and received a tax credit of US$4,000 for his children, according to ProPublica.

Mr Buffett, the CEO of Berkshire Hathaway, who has long said publicly that the tax code should hit the rich harder, paid just US$23.7 million in taxes from 2014 to 2018, when his wealth rose by US$24.3 billion.

In 2018, Bloomberg, who controls the media giant Bloomberg, reported income of US$1.9 billion and paid US$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”. In a statement to ProPublica, a spokesman for Mr Bloomberg 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”.

By rahul