26 billionaires pay a fraction of the average U.S. taxes owed

  • A new analysis by American Tax Fairness found that several billionaires have paid less than 5 percent in taxes in recent years.
  • That’s because the wealth of America’s highest earners often comes from their assets, not their salaries.
  • Because of this, they pay taxes on income, which is often much smaller than the increase in wealth.

Last month, Americans were ready to sit down pay tax. Many of them may owe the government money, especially if they cash out in the big shuffle get paid more.

A group of people who see them all year round wealth growthbut not necessarily their tax rates: America’s billionaires.

America’s 26 richest people pay average federal taxes, according to a new analysis from IRS data obtained by ProPublica and Forbes Wealth Data’s Tax Equity (ATF) for left-leaning Americans

income tax

According to ATF calculations, the growth rate for 2013-2018 was 4.8%

effective tax rate

About wealth growth.

These billionaires have varied effective tax rates on wealth growth. Jeff Bezos, for example, has an effective tax rate of 1.1% on wealth growth. For Bill Gates, the ratio is 10.7%. The table below shows how the 14 billionaires reported their effective tax rate on their income compared to how much their wealth actually increased.

To calculate the effective tax rate for the growth of these billionaires’ wealth, the ATF used tax data from January 1, 2013, through December 31, 2018, published by the ProPublica IRS. Then divide it by Forbes’ estimates for February 14, 2013 and February 8, 2019, excluding Buffett, which covers wealth growth for February 12, 2014 and February 8, 2019.

Figures show that billionaires’ taxes account for only a fraction of their wealth growth. Many of the wealthiest Americans derive most of their wealth from their assets — like stocks and bonds.These are only taxed when they are sold

capital gains

. Even so, they are still taxed at a lower capital gains rate.

That means, for example, from 2013 to 2018, Elon Musk reported about $1.5 billion in revenue, according to an analysis by American Tax Fairness. He paid $411 million in taxes on that income — an effective tax rate of 27 percent. But his fortune actually grew by about $20 billion over the same period, according to an ATF analysis of Forbes billionaire data. This means that the effective tax rate on his wealth growth is actually 2.1%.

Those low tax rates found by the ATF and ProPublica are totally legaland, as the data shows, persisted for many years. For example, inequality researchers Emmanuel Saez and Gabriel Zucman established The average tax rate for the richest 400 households in 2018 was 23%, while Americans pay 28% on average.

White House I also did my own calculations: When accounting for unrealized capital gains — those assets that become more valuable but not sold — the 400 wealthiest households in the U.S. paid an average tax rate of 8.2 percent from 2010 to 2018.

The Biden administration has repeatedly tried to reform the tax code and cut some of the rules that lead to those low rates.In now-stalled ‘build back better’ plan, President Joe Biden Originally proposed Increase the top personal tax rate for taxpayers earning more than $400,000 a year from 37% to 39.6%.he also want improve

capital gains tax

Tax rate for Americans earning $1 million or more.

However, tax increases face rigid resistance From centrist Sen. Kyrsten Sinema, a key vote for Democrats by a narrow margin. Another key centrist Senator Joe Manchin, later pronounced Rebuild better “die”.

In March, Biden released another plan to tax billionaire wealth. He called it “Billionaire minimum income tax”, in which households will pay a minimum tax rate of 20% on income including unrealized capital gains. Manchin almost immediately Pour cold water on the proposal.

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