Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax
3 hours ago
- Ultrawealthy individuals like Jeff Bezos, Elon Musk, and Warren Buffett pay little to no federal income tax legally, with true tax rates as low as 0.1% due to unrealized capital gains not being counted as income.
- The U.S. tax system allows billionaires to avoid taxes through strategies like borrowing against assets, avoiding dividends, and using deductions, unlike middle-class Americans who pay a significant portion of their income.
- ProPublica's analysis of IRS data from 2014-2018 shows the 25 richest Americans paid a true tax rate of 3.4% on $401 billion in wealth growth, while median households paid 14% on $70,000 income.
- Historical and legal precedents, such as the 1916 Eisner v. Macomber ruling, established that only realized gains are taxable, enabling the wealthy to defer taxes indefinitely.
- ProPublica reveals that billionaires exploit loopholes, charity deductions, and trusts to minimize taxes, challenging the fairness of the system and sparking debates on tax reform.