Not Enough Bullets

It turns out that wealthiest people in American pay just 3.4% in income taxes.

When Leona Helmsley said, “Only the little people pay taxes,” she was a prophet:

Between 2014 and 2018, the 25 wealthiest Americans collectively earned $401bn, but paid just $13.6bn — about 3.4% of that — in taxes, according to a bombshell ProPublica investigation into the finances of the wealthiest Americans released on Wednesday.

The investigation is the latest in a series ProPublica started in June 2021 that looks at the tax records of the top 0.001% wealthiest Americans. This installment uses a trove of tax filings from 2013 to 2018 to dive into the wealth of the 400 richest Americans, all of whom earn more than $110m a year. It found that the wealthy benefit from lower tax rates on financial assets and deductions from charitable contributions to keep their taxes low.

The difference in tax rates between the wealthiest Americans and the average worker comes down to two critical factors, according to the investigation: first, the wealthy have their income taxed at a lower rate because much of their wealth is accumulated through investments, like stocks; and second, the wealthy are able to use large charitable donations to get huge deductions.

Instead of the standard paycheck that most American workers get, which includes deductions for social security and Medicare taxes, the wealthiest Americans get their income through financial assets, like stocks, that are generally taxed at a lower rate. The long-term capital gains rate has been 20% since 2013.

Billionaires in tech pay the lowest tax rate, an average of 17% of their income, largely because their wealth comes from such investment income. Bill Gates, whose income from 2013 to 2018 was an average of $2.85bn a year, paid an average effective federal income tax rate of 18.4%. Lauren Powell Jobs, the widow of Apple co-founder Steve Jobs, earned an average of $1.57bn and paid an average tax rate of 14.8%. Ten of the top 15 earners on the list are billionaires who made their money in tech.

In comparison, the average single worker earning $45,000 paid an average tax rate of 21%. A married couple with one child who earns $200,000 paid a rate of 26%. In 2018, the highest top rate on ordinary income, which excludes investments, was 37%, yet the average tax rate for the 400 wealthiest Americans was 22% from 2013 to 2018.

………


ProPublica noted that when reached for comments, no one named in the story disputed figures reported in the investigation, and few provided responses. One spokesperson for Ken Griffin, chief executive of hedge fund company Citadel, said that the IRS data “significantly understate[s]” what Griffin pays because the rate was lowered by charitable contributions and does not include local and state taxes. A spokesperson for Mark Zuckerberg said, “Mark has always paid the taxes he is required to pay”, while a spokesperson for Bloomberg similarly said that he “pays the minimum tax rate on all federal, state, local and international taxable income as prescribed by law”.

The disparity between the sky-high incomes of the wealthiest Americans and their tax rates is something that has already caught the attention of lawmakers. Last month, Joe Biden proposed a new tax on households making more than $100m a year. The plan, called the “billionaire minimum income tax”, would impose a 20% minimum tax on an individual’s realized and unrealized income, which would cover investment income.

Of course, Biden’s proposal, as mild as it is, is dead on arrival, because the masters of the world, most of whom have made their money from subsidies like patent and copyright, own the place.

I want the guillotine concession.