The 25 wealthiest Americans have a “true tax rate” with almost nothing: Report

The US tax system is designed to be progressive. In other words, the wealthiest citizens pay more than the underprivileged citizens.But new Analysis of ProPublica An analysis of tax data on some of the wealthiest Americans in the United States concludes that the “true tax rate” of the 25 wealthiest Americans is almost zero.

The study, published Tuesday, relies on a “huge amount” of IRS data provided to news services without “conditions or conclusions.” ProPublica said it would not disclose the source of the data, and court documents and He added that he would verify the information by comparing it with publicly available details such as financial disclosure and scrutinize the information of those whose tax information was disclosed. ..

The findings arrived at an important time in the national debate on wealth and the fairness of the US tax system. Prior to the pandemic, the 2017 Tax Reduction and Employment Act lowered tax rates for HNWIs and businesses, setting the driving force for effectively snowballing income inequality in countries that are already widening. As the pandemic has hit low-income households, especially those of color and women, President Joe Biden is calling for a tax increase for the wealthy to support the wealth of poor middle-class families.

ProPublica’s report focuses on what is called the “true tax rate.” This is defined as the amount of tax paid annually by the wealthiest Americans against the estimated growth rate of assets during that period. For example, Amazon CEO Jeff Bezos paid $ 1.4 billion in personal federal taxes on his reported revenue of $ 6.5 billion between 2006 and 2018, during which time his assets were $ 127 billion. Has increased. According to ProPublica calculations, this reflects a true tax rate of 1.1%.

However, some tax experts point out that the analysis is comparing what they call apples and oranges, that is, income and assets. IRS is working income and stock sales, dividends, And collect taxes on income received from other income provided by the investment. No tax is levied on the unrealized profits of personal assets or the value of paper.

“It’s a bit unfair to calculate the fairness factor based on total net worth,” Jackson Hewitt’s chief tax intelligence officer, Mark Stever, told CBS MoneyWatch. “They are based on income. I’m not saying I’m paying unfair taxes. They said it was based on their own value. “

“What about business owners and farmers who have low incomes but high net worth? Are they not paying enough because the value of their farms has increased? It’s a slippery slope,” he added. T.

According to Biden’s plan, the maximum tax rate for people with taxable income of $ 400,000 or more per year has risen to 39.6%, estimated to be less than 2% of US households. Currently, the maximum tax rate that workers pay on salaries and wages is 37%. The president also proposes to almost double the tax rate that high-income Americans pay on profits from the sale of shares and other investments. Moreover, under his proposal, it is inherited. Capital gains are no longer tax exempt.

“The biggest tax story of the year”

IRS Commissioner Charles Rettig said the IRS is investigating a data breach to ProPublica.

“We can see that an investigation is underway on the allegation that the source of the article comes from the Internal Revenue Service,” Retig said at the beginning of the Senate Finance Committee’s hearing on the IRS budget. “I checked the article and got the proper contact. This is what you expect and the investigator will investigate.”

And unless wealth is “realized,” it avoids taxation, which is a completely legitimate strategy. For example, Amazon CEO Jeff Bezos’ wealth increased 57% year-on-year to $ 177 billion in April 2021 thanks to the surge in the value of his company’s stock. But unless he sells his Amazon stock and “realizes” profits, the wealth surge will not be taxed.

Gabriel Zucman, an economist at the University of California, Berkeley, wrote on Twitter about ProPublica’s findings: “It seems like the biggest tax system of the year, if not ten years.” It was always clear that the top billionaires didn’t pay a lot of taxes … but I’m also surprised at their low effective tax rates. ”

Zucman, the economist behind Massachusetts Senator Elizabeth Warren’s wealth tax proposal, is known for analyzing the US tax system. Pay a total tax rate of about 23% — Or lower than the lower half of US households paying a rate of about 24%.

“The US tax system is top-notch and terribly regressive,” he added to ProPublica’s report. “It may not be perfectly optimal.”

Rich Differences: Loopholes

Underlying these debates is the question of US tax fairness. For example, most hourly and salary workers do not have access to loopholes and tax avoidance technologies that the wealthiest people in the country employ to lower tax rates.

According to a ProPublica report, the wealthiest Americans have a lot of free techniques to avoid taxes. Sure, these methods are legal, but the report casts doubt on their fairness.

In 2011, Bezos reported that he lost money because he lost more money than he earned. That year, 2011 Child Tax Deduction — To help middle-class families offset their child-rearing costs — $ 1,000 per child, as long as the couple’s adjusted gross income is less than $ 110,000. Bezos’ adjusted income was so low in 2011 that he claimed and received a $ 4,000 tax deduction for his four children. The value of Bezos’ wealth for the year is 180. It amounted to 100 million dollars.

According to the report, Mr. Bezos is not the only one with a very low true tax rate. The 25 wealthiest people in the United States increased their wealth by $ 401 billion between 2014 and 2018, but paid $ 13.6 billion in federal income tax. According to ProPublica, this is equivalent to a true tax rate of 3.4%.

ProPublica argued that the middle class has a much higher actual tax rate due to less wealth accumulation. They also have the ability to reduce taxes as well as the rich through techniques such as investment losses and amortization. Is not …

However, tax avoidance — using legal strategies to reduce tax amounts — is the right of all, tax experts say.

“I believe that all taxpayers must use current tax laws and have the lowest possible tax obligations,” said Stever of Jackson Hewitt. “I am not only your rights, but you. We have declared that it is an American tradition to do our best for ourselves and your family. “

– Sarah Ewall-Reported by Wice and Associated Press.

The 25 wealthiest Americans have a “true tax rate” with almost nothing: Report

Source link The 25 wealthiest Americans have a “true tax rate” with almost nothing: Report

Back to top button