July 25, 2021

When Jeff Bezos, Elon Musk, and George Soros don’t pay income tax

Jeff Bezos, founder of Amazon and the richest man in the world, did not pay federal income tax in 2007 and 2011. His runner-up, Elon Musk, did not pay a dime in 2018. This A feat has also been achieved in recent years by former New York mayor, billionaire Michael Bloomberg, and philanthropist speculator George Soros, who has paid nothing for three years in a row. All this in a perfectly legal way.

This is the scoop revealed Thursday, June 8 by the ProPublica site, which obtained the data, in theory confidential from the tax authorities, concerning the tax returns of the first twenty-five American billionaires.

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According to his calculations, over the period 2014-2018, these twenty-five people paid $ 13.6 billion (11.2 billion euros) in federal income tax. During this time, their fortunes grew by $ 401 billion.

ProPublica deduces that the tax rate for these billionaires is only 3.4%. This calculation does not correspond to legal tax reality – income tax is not a tax on the increase in wealth – but it highlights two obvious facts: there is no wealth tax in the United States and Joe Biden did not plan to introduce this measure, which was on the program of the unsuccessful candidates for the 2020 Democratic nomination, Senators Bernie Sanders (Vermont) and Elizabeth Warren (Massachusetts); as for capital gains, they are not taxed as long as they remain latent, since a case law of the Supreme Court rendered in 1920.

Minimize your income

Billionaires see their fortunes grow because of the progress of their company on the stock market. But until they sell, they don’t pay. Thus, over the period 2014-2018, Jeff Bezos saw his fortune grow by 100 billion dollars, but he received “only” 4.22 billion dollars in income and he paid a tax of 973 million dollars. (or 23% on average).

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The whole trick is to minimize your income. In this regard, the champion is Warren Buffett, the man who estimated in 2010 that he did not pay enough taxes: over the period 2014-2018, the fortune of the nonagenarian increased by $ 24.3 billion, but he only declared $ 125 million in income. Explanation: his holding company, Berkshire Hathaway, does not pay dividends. With a derisory taxable income, the “sage of Omaha”, as he is nicknamed, paid only a tax of 23.7 million dollars.

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