A new analysis of leaked Internal Revenue Service (IRS) documents shows that some of the U.S.’s wealthiest people have paid a disproportionately low federal income tax rate in recent years.
In analysis released Thursday, Americans for Tax Fairness found that, in relation to their wealth, 26 of the nation’s richest billionaires paid an average effective federal income tax rate of just 4.8 percent between 2013 and 2018. Collectively, they paid just $24 billion in taxes — a miniscule amount compared to an immense growth of $500 billion in their wealth over those six years.
The report highlights the huge disparities in the tax code for rich and regular Americans.
Billionaires can dodge taxes on large amounts of their wealth thanks to tax laws that allow them to accrue. wealth largely tax-freeThrough investments and other sources. The taxes they did pay are on their relatively low taxable incomes — which Americans for Tax Fairness calculates in this case to be $132.2 billion, or only about a fourth of their wealth gain.
A comparison: Tax Foundation analysisThe average tax rate paid by Americans in 2018 was 13.3 percent, according to a study.
“This revelation underscores the need to tax billionaires and other ultra-wealthy Americans more effectively, as proposed in plans from President Biden and Congressional Democrats,” according to the report.
A handful of these billionaires paid an effective tax rate of about 2 percent or less, including some of the world’s richest people. Jeff Bezos and Mark Zuckerberg, currently the world’s second and 15th richest peopleBoth paid a federal tax rate effective at 1.1 percent. Charles Koch and David Koch, conservative bankrollers, paid only 1.3 percent and 1.4%, respectively. The world’s fifth richest person, Warren Buffett, paid a diminutive 0.1 percent in income taxes.
Elon Musk, now the world’s richest manAccording to Forbes, paid a tax rate of only 2.1 percent between 2013 and 2018 — which may have set the stage for his Wealth to grow exponentiallyOver the years.
“As long as we fail to tax their main source of income — the growth in their fortunes — many billionaires will continue to live largely tax-free lives,” said Americans for Tax Fairness Executive Director Frank Clemente. “Teachers, plumbers, firefighters and other working Americans can already pay higher tax rates than billionaires — and that’s just counting the small part of billionaire income that is now taxed. When you include their untaxed wealth growth in the calculation, many billionaires pay almost nothing.”
This is how a corrupt, rigged system should look.
Effective Tax Rate
0.1%: Warren Buffett worth $111 billion
1.1%: Jeff Bezos is worth $131 billion
1.8% Mike Bloomberg worth $82 Billion
2.1%: Elon Musk worth $210 Billion
13.5%: Registered nurse
Yes. It’s time to #TaxTheRich
— Bernie Sanders (@SenSanders) May 19, 2022
Thursday’s report echoes previous findings that the richest Americans pay lower tax rates than the average American. Last year, a White House analysis estimated that the nation’s richest 400 families paid an income tax rate of just 8.2 percent over 2010 and 2018, largely because of the flexibility allowed to the wealthy in reporting their incomes and “preferred rates” for the types of taxes they pay, like taxes on stock sales.
The wealthy often use incredibly complex ways to manage and store their wealth, making it difficult for IRS auditors to ensure that they’re taxed correctly. A Government Accountability Office report, released Tuesday, states that complex audits and a lack of IRS funding are leading to problems for those with incomes over $200,000. audits to go down overallThis opens up more opportunities for the wealthy to avoid taxes.
Some Democratic lawmakers introduced measures to reduce the country’s growing wealth gap earlier in the year. President Joe Biden requested in his 2023 budget proposal that Congress pass a “Billionaire Minimum Income Tax” of 20 percent to capture not only salaries but also unrealized gains from assets like stocks.