Warren Buffett and Jeff Bezos
Lacy O’Toole | CNBC; Getty Images
Some of the richest men in the world – Jeff Bezos, Elon Musk, Warren Buffett, Carl Icahn, Michael Bloomberg, and George Soros – only pay a tiny fraction of their growing wealth in taxes, and in some cases pay no tax on a report in a given year Tuesday.
ProPublica, citing confidential IRS data obtained from thousands of wealthy people, reported that the 25 richest Americans “rose in value by a total of $ 401 billion from 2014 to 2018.”
But those people paid just $ 13.6 billion in federal income taxes over those five years, which is “a true tax rate of only 3.4%,” the article says.
In contrast, the average U.S. household was making around $ 70,000 a year over the past few years, paying 14% of that in federal taxes. Couples in the highest income tax bracket paid a rate of 37% on incomes greater than $ 628,300, the report said.
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ProPublica pointed out that unlike most other people whose income comes from conventional wage incomes, billionaires often benefit from “tax avoidance strategies beyond the reach of the common man”.
And their wealth is often based largely on the rising value of stocks and real estate, which are not considered taxable unless those assets are sold, the report said.
ProPublica did not disclose how it obtained the tax information cited in the article, but said the point of sale “made significant efforts to confirm that the information sent to us is correct”. CNBC has not independently verified the information in the report.
The article states that Buffett’s “true tax rate,” based on ProPublica’s calculations, was only 0.1%, or $ 23.7 million, in taxes he paid over the five-year period on the $ 24.3 billion asset growth had paid.
During that period, Berkshire Hathaway CEO Buffett reported statutory taxable income of $ 125 million.
Bezos, who became the richest person in the world as the founder of Amazon, paid a little less than 1% of ProPublica’s true tax rate, or $ 973 million, with assets growing $ 99 billion over the five-year period. Bezos’ actual taxable income during that time was $ 4.22 billion, the report said.
In 2007, Bezos “did not pay a cent in federal income tax,” and in 2011 he also avoided any federal income tax liability, the article says.
According to ProPublica, the world’s second richest person, Tesla CEO Elon Musk, paid a true tax rate of 3.27%, or $ 455 million on asset growth of $ 13.9 billion.
Musk, who had actual taxable income of $ 1.52 billion over the five-year period, did not pay federal income taxes in 2018, according to ProPublica.
Bloomberg, former New York City mayor and founder of Bloomberg LP, paid a true tax rate of 1.3%, or $ 292 million, during the period considered by ProPublica. His actual taxable income was $ 10 billion, the report said.
Soros, an investor, did not pay federal income taxes between 2016 and 2018, due to losing money on his investments, his spokesman told ProPublica.
Another investor, Icahn, paid no federal income tax in 2016 and 2017, years when his adjusted gross income totaled $ 544 million, the article says.
Icahn told ProPublica that he had tax losses in both years for taking hundreds of millions of dollars in deductions from the interest he paid on loans.
When asked if it was fair that he did not pay income tax in certain years, Icahn said he was confused by the question, ProPublica reported.
“There’s a reason it’s called income tax,” Icahn was quoted as saying in the article. “The reason is if you’re a poor person, a rich person, if you are Apple – if you have no income, you don’t pay taxes.”
He added, “Do you think that a rich person should pay taxes no matter what? I don’t think it makes sense. How can you ask me this question? “
Read the full ProPublica report here.