Wednesday, June 9th 2021
Update
Legal loopholes
Bezos, Musk and Co. hardly paid any taxes
Investigative research reveals that super-rich Americans hardly pay any income tax. However, entrepreneurs like Jeff Bezos or Elon Musk are by no means acting illegally. Rather, they use US tax law. The authorities are meanwhile looking for the source of the information.
According to a media report, Amazon boss Jeff Bezos, Tesla boss Elon Musk and other super-rich US celebrities have paid little or no income tax in recent years. Some of the richest US citizens paid “little income tax relative to their massive wealth – and in some cases none,” it says Report of the US investigative platform Propublica. The tax avoidance strategies were not illegal.
Bezos did not pay a cent in income tax in 2007 and 2011, and Musk avoided all income tax payments in 2018, the report said. The billionaire and former New York City Mayor Michael Bloomberg, the investor Carl Icahn and the philanthropist and investor George Soros are among those who would have used tax avoidance strategies on a large scale. The investigative journalists did not reveal how they got the confidential tax data. According to the information, the research is based on anonymously leaked IRS data on the income, assets and taxes of the richest Americans.
Propublica also compared the federal income taxes of the 25 richest Americans for the years 2014 to 2018 with their asset growth according to the “Forbes” billionaires list and came to the conclusion that the tax rate was de facto only 3.4 percent on average.
Buffett defends himself
Also noteworthy: Stock market guru Warren Buffett, who repeatedly speaks out in public for higher taxes for top earners, paid the lowest taxes of the 25 super-rich from 2014 to 2018. The 90-year-old head of private equity holding Berkshire Hathaway increased his wealth by $ 24.3 billion during this period, but only reported an income of $ 125 million with the tax authorities and ultimately paid 23.7 million in taxes. This results in a “true tax rate” of only 0.1 percent.
Buffett responded to the data leak with a detailed explanation, stating that he intended to donate virtually all of his wealth to charity. He believed that that way his money was more useful to society. Buffett also reiterated his support for a fairer tax system to reduce wealth inequalities among the population.
The revelations are making waves in the USA, but ultimately show the effect of a long-known and controversial property of the tax system. In contrast to most citizens, the wealth of billionaires like Bezos and Co. usually results less from their income than from the increase in the value of assets such as stocks. But apart from their dividends, they are only taxed when they are sold. In addition, the tax burden can be reduced, for example through loans or investment losses.
Warren demands wealth tax
The research destroys the “fundamental myth of the American tax system: that everyone contributes their fair share and that the richest Americans pay the most,” the report said. A Soros spokesman told Propublica that the investor did not owe any income tax between 2016 and 2018 because he made losses on his investments. Bloomberg and Icahn told the media they had paid all the taxes they were required to pay. Bezos was therefore not ready to take a stand. When asked, Musk only started with “?” replied and then stopped responding.
Democratic Party Senator Elizabeth Warren wrote, in response to Propublica research on Twitter, “Our tax system has been tinkered with for billionaires who don’t get their fortune from income like working families do.” The US needed a tax on the rich “so that the ultra-rich finally pay their fair share,” she added. Warren has long campaigned for higher taxation on the super-rich, which should include assets like stocks and real estate.
The US Treasury Department announced an investigation into the revelations. “The unauthorized disclosure of confidential government information is illegal,” said a ministry spokeswoman for the AFP news agency. The matter had been referred to the Treasury Inspector General as well as to the FBI and the federal prosecutor in Washington.
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