yes, millionaires pay much less taxes than you

From left to right, billionaires Michael Bloomberg, Elon Musk, Jeff Bezos, and Warren Buffet. Photos: AP.

That millionaires pay very little taxes compared to their wealth is something we all already knew. But the situation becomes especially bloody when the constant and sound figures of what they pay come to light, because they reveal that any ordinary citizen with a salary contributes much more to the coffers of their country than the rich.

Two of the richest men in the world, Jeff Bezos Y Elon Musk, avoided paying federal taxes for some years and spent just 3.4% taxes on their wealth growth between 2014 and 2018, an investigation by ProPublica, an independent investigative journalism site.

Meanwhile, the average American household 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 leaked confidential individual tax data, showing how the wealthiest Americans pay very little or, in some cases, no federal income tax.

On average, the 25 richest Americans paid 16% in federal personal taxes (which include Medicare and Social Security) in those four years. That number is far less than that of Americans who earn $ 45,000 a year.

For the analysis, ProPublica relied on the “real tax rate,” a novel measure of how much tax a person pays each year compared to Forbes’ estimate of how much their wealth grew during the same time. Specifically, ProPublica counted in its study the unrealized capital gains that are not subject to the current US tax.

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Billionaires, with a tax team at their command, always find a way to pay the least amount of taxes possible.  In the image, a United States tax return form.  Photo: Getty Images.

Billionaires, with a tax team at their command, always find a way to pay the least amount of taxes possible. In the image, a United States tax return form. Photo: Getty Images.

Jeff Bezos

According to the analysis, Amazon founder and CEO Jeff Bezos, currently the wealthiest man on the planet, paid a 0.98% real tax rate as his wealth grew by a staggering $ 99 billion between 2014 and 2018; reported 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. This was because it was able to offset the $ 46 million in income it reported with investment losses and deductions for debts and other expenses, according to ProPublica’s analysis.

Elon Musk

At the same time, Elon Musk, the billionaire CEO of Tesla and SpaceX, saw its wealth increase by $ 13.9 billion between 2014 and 2018, reported $ 1.52 billion in revenue, and paid a 3.27% real tax rate.

In 2018 Musk did not pay income taxes.

Michael Bloomberg

Michael Bloomberg, the former mayor of New York, reported $ 10 billion in that period, but only paid a tax rate of 1.30%.

Warren Buffett

For his part, billionaire investor Warren Buffett, who publicly advocates higher taxes for the rich, saw his wealth grow by more than $ 24 billion from 2014 to 2018 and paid a real tax rate of just 0.10%, as he reported only $ 125 million in income during that period, while making large charitable contributions .

Since he pays himself minimum wage, most of his income comes from lower-taxed capital gains, ProPublica explained.

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 indicate that these billionaires violated the law, but that they calculate the “true tax” on income, and not on wealth, which for the very rich is much higher, since the unrealized gains – that is, when the assets that give rise to them have not been sold – they are not taxed.

The report will likely fuel the Joe Biden administration’s proposal to raise taxes for the country’s ultra-rich. Biden’s tax plan would raise the top income tax rate to 39.6%, which in 2017, under Trump, was reduced to 37%. Republicans oppose that change.

Biden’s plan seeks to tax capital gains and dividends at the highest ordinary income rate for households making more than $ 1 million per year.

Biden also wants to eliminate the “increase” in the basis of previously tax-free capital gains passed on to heirs above $ 1 million for individuals or $ 2 million per couple; currently that means that all unrealized capital gains that accrued in inheritance are not taxable.

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