A report published Wednesday by ProPublica shows metrics for the wealth of America's top 400 earners. According to leaked IRS tax receipts, Jeff Bezos paid a 23.2% tax rate from 2013 to 2018, far below the top tax rate of 37% that applies to the ordinary income of high-earning Americans. Musk paid 27%. Bill Gates and Larry Ellison saved $125 million and $106 million, respectively, on their taxes. The report mentioned Michael Bloomberg, who had an effective tax rate of 4.1% thanks to charitable deductions. The billionaires did not speak to ProPublica, but their spokesman said that the failed presidential candidate pays the maximum tax rate on all federal, state, local and international income as prescribed by law.
Tech billionaires comprise a large percentage of the richest people on the planet and stay that way with a lot of tricks for avoiding taxes. Since both groups make most of their money by selling stock, the techies and hedge fund managers are the next set of wealthiest. The third-largest group of ultra-wealthy are the heirs.
The U.S. is supposed to have a progressive tax system, with a graph of how much each group pays in taxes looking like an incline, but instead it is a bell curve. The people in the $2-$3 million range pay 29% in federal income taxes. The top 400 pay 22%. Some of the wealthiest people pay less than a quarter of their income to the federal government.
Many billionaires are getting taxed based on stock sales, which are handled by a long-term capital gains rate of just 20%, much lower than the top tax rate on ordinary income.
The lower rate for stock sales has been in place for over a century, but it wasn't until 2003 that it was allowed to apply to most stock dividends. Since the start of the 21st century tech boom, moguls have been taking advantage of the low rate.
The total wealth has changed a lot since the report was published. Four years ago, Amazon head Jeff Bezons was making $823 million, while Musk was earning $254 million. Over the past few years, the two have jockeyed for the top richest man in the world, while Bill Gates has slipped to number 4.
The IRS data acquired by ProPublica is what differentiates this report from other studies in the past.
The richest tech billionaires are able to protect their money from taxes. They use their stock holdings for charitable donations. They can deduct the stock at its current price without having to pay capital gains tax.
There are still more things to learn from the data. It doesn't take into account how taxes on Social Security and Medicare hit the less money you make, and how payroll taxes take more out of lower-income people.
The report states that the level of income inequality has risen dramatically over the past few decades, and that it is not getting better because of the swine flu.
The ones making it big four years ago are making it even bigger now because of this. It is said that Musk is worth $262 billion. It is close to $177 billion. It isn't like those at the top of their game have slipped up, moreso that the newest wealthiest have made that much more. The number 2 earner on Propublica's list is now worth $82 billion and is the 13th wealthiest.
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