Series: The Secret IRS Files
Inside the Tax Records of the .001%
ProPublica has obtained a vast trove of IRS data on the tax returns of thousands of the wealthiest people. It reveals just how effectively the richest sidestep the tax system, which we’ll show below. But first, to understand the scale of that wealth, let’s look at the richest person in the United States: Jeff Bezos.
Here are the main takeaways from the article.
1. Never-before-seen tax records pull back the curtain on how America’s wealthiest manage to pay so little — if anything — in income tax.
The data provides an unprecedented look inside the financial life of not just Bezos but other American titans, including Elon Musk, Warren Buffett, Bill Gates, Rupert Murdoch, Mark Zuckerberg and many, many more.
2. The two wealthiest people in the world have each had years in which they didn’t pay any federal income tax.
Amazon CEO Bezos was already a multibillionaire in 2007 when he did not pay a penny in federal income tax. He repeated the feat again in 2011, on his way to becoming the world’s richest person. In 2018, Tesla founder Musk, now the second-richest person in the world, also paid no federal income taxes. Representatives for Bezos declined to receive detailed questions; Musk responded to an initial query with “?” then did not reply beyond that.
3. They’re not alone. Other megabillionaires have also managed to have years with $0 income tax bills.
Our analysis found Michael Bloomberg managed to do the same in recent years. Investor Carl Icahn did it twice. George Soros paid no federal income tax three years in a row. Each said they paid the taxes that they owed.
4. The secret IRS trove demolishes the cornerstone myth of the American tax system: that everyone pays their fair share.
In theory, the richest Americans pay the highest tax rates. But the tax data shows the wealthiest can — perfectly legally — pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year.
5. Don’t be fooled by income tax payments that appear to be huge.
In 2018, the 25 people at the top of Forbes’ wealthiest Americans list were worth a combined $1.1 trillion. We calculated that it would take the combined wealth of 14.3 million typical American wage earners to reach that amount.
The 2018 income tax bill for the 25 richest came to a total $1.9 billion, which is a huge amount ... until you see how much the group of wage earners paid in income tax that same year: $143 billion.
6. What America’s richest pay in income taxes is minuscule compared with how much their fortunes have grown.
In a first-of-its-kind analysis, ProPublica took these top 25 wealthiest Americans and compared how much their wealth grew with how much they paid in taxes. From 2014 to 2018, they paid taxes equal to 3.4% of their wealth gain. ProPublica is calling that their “true tax rate.”
7. Some of the top 25 pay shockingly low true tax rates.
Bloomberg paid 1.3% in income taxes compared with his increased wealth between 2014 to 2018, while Bezos’ true tax rate in those years was less than 1%, according to our analysis.
8. The megabillionaire with the lowest true tax rate has been a vocal proponent of taxing the rich.
No one among the 25 wealthiest avoided as much tax as Buffett, the grandfatherly centibillionaire, who has long called for higher tax rates on the wealthy. According to Forbes, his riches rose $24.3 billion between 2014 and 2018. Over those years, the data shows, Buffett reported paying $23.7 million in taxes.
That works out to a true tax rate of 0.1%, or 10 cents for every $100 he added to his wealth.
9. Bezos reported negative income one year. That year, he claimed — and received — a tax credit for his kids.
In 2011, the second year in which Bezos avoided a federal income tax despite his estimated wealth of $18 billion at the time, records show he not only offset his income with losses from side investments and various deductions, but also took a $4,000 tax credit for his children. (Bezos and MacKenzie Scott did not respond to requests for comment.)
10. For the ultrawealthy, wages are basically pocket change.
Most Americans rely on wages from their jobs for most, if not all, of their income. But when it comes to the top 25 wealthiest Americans, wages barely register. In 2018, these billionaires reported a combined $158 million to the IRS in wages, a mere 1.1% of their total reported incomes for that year.