Why Tax Avoidance Is A Lot Easier If You’re A Billionaire
How the IRS is being defunded, billionaires are more emboldened, and our elected officials simply shrug their shoulders
Recent tax filings published by ProPublica show from 2014 to 2018, the 25 richest Americans earned an accumulated sum of $401 billion, but only paid $13.6 billion in taxes. This is an effective tax rate of 3.4%.
During this timeframe, Warren Buffett paid a yearly average of 0.1% in federal income taxes; Elon Musk paid 3.27%; Jeff Bezos paid 0.98%; and Michael Bloomberg paid 1.3%. For comparison, the average American pays about 17.6%. It’s worth noting: most of the ultra wealthy’s income comes from investments, like stocks, meaning they don’t have to report it for tax purposes until they sell. They can also write off their taxes with large deductions when they make in charitable donations. If you’re a salaried employee, like 90% of the population, then you likely don’t receive this privilege. While there are more tax loopholes the richer you are, it also gets easier to avoid paying them, or at least partially.
The common line of thinking goes something like this: If you’re rich and evade taxes, you’re smart. If you’re broke and don’t pay taxes, you’re a deadbeat. This standard couldn’t be more clear than during the 2016 Presidential Debate when Hillary Clinton pressed Donald Trump on the fact that he hasn’t paid federal taxes for years, to which he responded, “[tax avoidance] makes me smart.”
In September 2020, the New York Times confirmed everyone’s suspicions: Trump didn’t pay taxes for 10 of the past 15 years, and when he did, it was only $750. The treatment the ex-president receives is no different than the rest of the ultra wealthy in the United States. Unfortunately, the tax laws might never be rewritten because those benefitting from these loopholes are the biggest donors of those responsible for changing them (that would refer to our elected officials who receive our tax dollars to serve us, but don’t).
While the progressive tax code was designed to tax people who earn more money with a larger share of their income, sadly, it doesn’t always work that way. To better illustrate, ProPublica used a stockpile of tax records to shed light on how the progressive tax code only works as intended for people who…