It was revealed by the documents that the richest people from the high technology and financial sectors of the USA, which added wealth to their fortunes during the coronavirus pandemic period, paid almost no income taxes. According to research by New York-based nonprofit journalism platform ProPublica; Amazon CEO Jeff Bezos paid zero income taxes in 2007 and 2011, and Tesla, SpaceX CEO Elon Musk in 2018.
According to the news based on tax returns filed by the Internal Revenue Service (IRS) by the richest over the past 15 years. News industry tycoon and former New York City Mayor Michael Bloomberg, Berkshire Hathaway CEO Warren Buffett, activist-investor Carl Icahn, and finance speculator George Soros known for Open Society Foundations are among those who have paid little, and sometimes even no, tax compared to their income.
For example, Bezos, who reported a loss in 2011 saying his investment losses exceeded his income, also received a $4,000 tax deduction for his children that year.
ProPublica pointed out that US billionaires do not work on their tax returns illegally, but they do have a choice of tax avoidance strategies that are not an option for ordinary citizens, such as donating to charities, withdrawing, and tapping into investment income instead of salary income. And also to the way taxable income is defined in US law. The U.S. Tax Code does not take into account the incremental value of assets such as stocks and property, but only taxes income from the sale of these items.
ProPublica emphasized that the 25 richest people in the USA had a total income of 401 billion dollars between 2014-18, according to Forbes data, but paid a total of 13.6 billion in taxes at that time, meaning that they paid fewer taxes than the majority of mainstream workers. This equates to an average of 15.8 percent of adjusted gross income.
Comparing the taxes they pay with how much their wealth has increased in a given year, ProPublica notes that the richest pay well below the official 37 percent tax for the highest income earners. In this case the ‘real tax rate’ means, for example, Warren Buffett is only 0.1 percent for the taxes between 2014 and 2018.
“You can pay zero taxes if you’re a multi-billionaire… Ultra-rich people are able to bypass the system completely legally. They have a tremendous ability to find cuts, get loans, and exploit loopholes in the system.” Jesse Eisinger, editor-in-chief and editor of ProPublica told the Today program.
Stating that ‘the value of their wealth has increased tremendously through the ownership of shares of companies, this is not recorded as income’, Eisinger stated that there is more: “They often take advantage of exaggerated tax breaks as they borrow to finance their lifestyles. They buy or set up an asset or inherit a fortune and then borrow against their wealth. Any income that is taxable because they don’t make any profits or sell any stocks. Then they borrow money from a bank at a relatively low-interest rate, get along with it, and use the interest expense as a cut in income.”
“All put together, the myth that the cornerstone of the American tax system is that everyone pays their fair share and the richest pays the most is debunked.” the report said.
On one side of the coin, a federal investigation was opened into the leaks of tax returns submitted to the IRS. Treasury Department spokeswoman Lily Adams stated that “Unauthorized disclosure of confidential government information is illegal.” and Bloomberg said that “the leak was a privacy breach and legal ways will be used to reveal its source”.
On the other side of the coin, at the meeting of the G7 finance ministers on June 6, it was decided to tax multinational giant companies such as Google, Apple, and Amazon at a higher rate. The decision to have a global corporate tax rate of at least 15 percent from large companies will be discussed at the G7 leaders’ summit, which will be held this week with the participation of US President Joe Biden.
Biden, who has pledged to raise taxes on the richest Americans as part of a campaign to advance equity and raise money for his massive infrastructure investment program, wants to raise the top tax rate, double the tax on investments for the high-income, and replace the inheritance tax.
Sharing ProPublica‘s research on Twitter, Warren said, “Unlike working families, our tax system is rigged in favor of billionaires whose wealth is not based on income. It’s time for wealth tax in America for the ultra-rich to finally pay their fair share.”