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The Economy

The Super-Rich Are Robbing Us Blind

A blockbuster report shows exactly how much the wealthiest men in the world are stealing from the rest of us.

A picture of Jeff Bezos standing around looking rich
Daniel Oberhaus, 2019

We know, on an intrinsic level, that the very rich are stealing from the rest of us. That’s capitalism baby, and so forth. But it is always worth knowing exactly how the rich are stealing from us, and that is why today’s blockbuster report from ProPublica about the tax affairs of the wealthiest people in America is so valuable.

The investigative site was handed an eye-popping trove of internal IRS files from an anonymous source (ProPublica doesn’t even know who this person is). The files are obviously complicated, but they show something simple: that the richest oligarchs in our society are getting away with paying virtually nothing in income tax. Many of them pay no income tax at all year after year.

From the report (emphasis mine):

America’s billionaires avail themselves of tax-avoidance strategies beyond the reach of ordinary people. Their wealth derives from the skyrocketing value of their assets, like stock and property. Those gains are not defined by U.S. laws as taxable income unless and until the billionaires sell.

To capture the financial reality of the richest Americans, ProPublica undertook an analysis that has never been done before. We compared how much in taxes the 25 richest Americans paid each year to how much Forbes estimated their wealth grew in that same time period.

We’re going to call this their true tax rate.

The results are stark. According to Forbes, those 25 people saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%.

It’s a completely different picture for middle-class Americans, for example, wage earners in their early 40s who have amassed a typical amount of wealth for people their age. From 2014 to 2018, such households saw their net worth expand by about $65,000 after taxes on average, mostly due to the rise in value of their homes. But because the vast bulk of their earnings were salaries, their tax bills were almost as much, nearly $62,000, over that five-year period.

The piece is long and thorough, and impossible to summarize neatly, but that is the essence of the thing: people like Mike Bloomberg, Warren Buffett, and Elon Musk all use sordid (but perfectly legal) trickery to pretend, for tax purposes, that they have no income, or even that they lost money, thus allowing them to avoid paying almost any income tax whatsoever. This while their collective wealth skyrocketed. Buffett, for instance, saw his wealth increase by $24.3 billion between 2014 and 2018, but, according to ProPublica, paid “less than 10 cents for every $100 he added to his wealth.”

High-minded expert types are sniffing that this is underwhelming and nothing we didn’t know, as though having detailed information about just how little the ultra-wealthy are contributing to our national coffers is not significant. It is very significant.

The most mind-blowing anecdote concerns Jeff Bezos. Again, from ProPublica (emphasis mine):

Consider Bezos’ 2007, one of the years he paid zero in federal income taxes. Amazon’s stock more than doubled. Bezos’ fortune leapt $3.8 billion, according to Forbes, whose wealth estimates are widely cited. How did a person enjoying that sort of wealth explosion end up paying no income tax?

In that year, Bezos, who filed his taxes jointly with his then-wife, MacKenzie Scott, reported a paltry (for him) $46 million in income, largely from interest and dividend payments on outside investments. He was able to offset every penny he earned with losses from side investments and various deductions, like interest expenses on debts and the vague catchall category of “other expenses.”

In 2011, a year in which his wealth held roughly steady at $18 billion, Bezos filed a tax return reporting he lost money — his income that year was more than offset by investment losses. What’s more, because, according to the tax law, he made so little, he even claimed and received a $4,000 tax credit for his children.

Let’s just repeat that: Jeff Bezos, a mega-billionaire, is able to declare so little income on his taxes that he qualifies for a welfare payment for his children. What’s more, he took the money!

As a person in favor of universal benefits, I cannot really begrudge the Bezos kids getting a little government money sent their way. But the child tax credit is a means-tested benefit. It is clearly not meant for Jeff Bezos. (A welfare system that locks millions out but can still be scammed by the richest man in the world: that’s the American way.)

This is infuriating on its face, but it is more than that. As I said before, these people are stealing from us. They are robbing us. They are figuring out ways to keep money that should not be theirs to keep. Billionaires got 54 percent richer during the pandemic. Oxfam estimated that the combined wealth gained by just 10 of the richest people in the world over the past year could fund the world’s vaccination program—as in, all of it. But instead of having to share more than a fraction of that ill-gotten gain for the benefit of society, these monsters get to keep all of it. What’s more, they get to peddle the fraud that they actually made little to no money at all!

We will not be a truly just society until these people have their wealth expropriated.