IRS records show US billionaires paid little in federal taxes

American tax system hits ordinary wage-earners harder than the richest people in the country

Amazon's Jeff Bezos paid a 'true tax rate' of 0.98pc. Photo: Andrew Harrer/Bloomberg

Amazon's Jeff Bezos paid a 'true tax rate' of 0.98pc. Photo: Andrew Harrer/Bloomberg

Jeff Bezos

Amazon's Jeff Bezos paid a 'true tax rate' of 0.98pc. Photo: Andrew Harrer/Bloomberg

Todd C Frankel and Douglas MacMillan

June 09 2021 02:30 AM

The wealthiest Americans – including Warren Buffett, Elon Musk and Jeff Bezos – paid little in federal income taxes at times in recent years, despite soaring fortunes, according to Internal Revenue Service data obtained by ProPublica.

The tax information published yesterday shows how billionaires are able to legally reduce their tax burden, highlighting how in some cases the American tax system hits ordinary wage-earners harder than the richest people in the country, ProPublica said.

ProPublica analysed the data by focusing on the soaring fortunes of the country's wealthiest members in recent years and alleged they were paying a "true tax rate" of just 3.4pc. The news organisation came up with this rate by calculating estimates of the value of their stock portfolios and other assets and then how much they paid in federal income taxes.

The publication of information from these personal income tax forms comes as the Biden administration pushes to raise income taxes on the country's top wage-earners. But ProPublica's data shows how taxing income would have little effect on the richest Americans, whose wealth is mostly held as assets.

The US tax system focuses on income, not so-called "unrealised gains" from unsold stocks, real estate or other assets.

"These are extremely well-known facts," said Jeffrey Hoopes, a tax expert and associate professor at the University of North Carolina at Chapel Hill.

"If you don't realize [the income], you don't pay," Mr Hoopes added.

Information from individual IRS tax forms are closely guarded secrets and, in recent years, have loomed large in political fights after former President Donald Trump refused to release his personal income tax forms in the run-up to and during his presidency, claiming his tax forms were under an IRS audit. It was unclear how ProPublica obtained the records.

The records, though, purport to show Warren Buffett, head of Berkshire Hathaway, as having paid $23.7m (19.45m) in federal income taxes on total income of $125m from 2014 to 2018, which would indicate a personal income tax rate of 19pc. ProPublica estimated that Buffett saw his wealth soar by $24.3bn during that period and so his "true tax rate" was 0.10pc.

Mr Buffett has in the past called for tougher restrictions on the wealthy to prevent them avoiding paying taxes.

Likewise, Mr Musk, chief executive of Tesla, paid $455m on $1.52bn in income during the same period, when his wealth grew by $13.9bn, accounting for a "true tax rate" of 3.27pc, according to ProPublica.

Mr Bezos, chief executive of Amazon and the owner of The Washington Post, paid $973m in taxes on $4.22bn in income, as his wealth soared by $99bn, resulting in a 0.98pc "true tax rate".

Spokespeople for Mr Buffet, Mr Musk and Mr Bezos did not immediately respond to a request for comment.