Several of the richest U.S. corporate executives have either paid a fraction of their cumulative wealth in federal taxes of nothing at all, according to a new report from the nonprofit media outlet ProPublica.
What Happened: In its coverage, ProPublica said "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."
However, ProPublica did not offer evidence that the executives being spotlighted were violating the U.S. tax code.
The coverage focused primarily on four executives — Tesla Inc. TSLA CEO Elon Musk, Amazon.com Inc. AMZN CEO Jeff Bezos, Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) CEO Warren Buffett and Bloomberg LP founder Michael Bloomberg — between 2014 and 2018.
ProPublica reported that Musk's wealth grew by $13.9 billion between 2014 and 2018 and he reported total income of $1.52 billion, or 10.94% of this wealth, and paid $455 million, or 3.27% of his wealth. Musk also reportedly paid no money in federal taxes in 2018.
During the same period, Bezos' wealth grew by $99 billion and he reported $4.22 billion in total income, or 4.26% of his wealth, while paying a total of $973 million, or 0.98% of his wealth.
ProPublica noted Bezos filed his taxes jointly with his then-wife MacKenzie Scott and 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.'"
Buffett's wealth grew by $24.3 billion during this period, and he reported total income of $125 million, of 0.51% of his wealth, and paid a total of $23.7 million in taxes, or 0.1% of his wealth. ProPublica tartly commented that no other executive "avoided as much tax as Buffett, the grandfatherly centibillionaire. That's perhaps surprising, given his public stance as an advocate of higher taxes for the rich."
Buffett responded in writing to ProPublica's call for input, repeating his much-quoted insistence that "the tax code should be changed substantially" while adding that "huge dynastic wealth is not desirable for our society" — the latter not being the focus of ProPublica's coverage. He also pledged to ultimately donate 99.5% of his wealth to charity.
Bloomberg, a former New York City mayor and candidate for the 2020 Democratic presidential nomination, saw a $22.5-billion increase in his wealth between 2014 and 2018, with $10 billion in total income reported, or 44.53% of his wealth, and $292 million paid in taxes, or 1.3% of his wealth.
ProPublica observed that Bloomberg managed to "slash his bill by using deductions made possible by tax cuts passed during the Trump administration, charitable donations of $968.3 million and credits for having paid foreign taxes."
How It Happened: ProPublica stated that it "obtained a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation's wealthiest people, covering more than 15 years."
How the nonprofit gained this data is unclear, since ProPublica acknowledged this data is confidential.
ProPublica added it will continue to publish more articles on this topic by plumbing "the IRS data we have obtained to explore in detail how the ultrawealthy avoid taxes, exploit loopholes and escape scrutiny from federal auditors."
(Illustration by PublicDomainPNG / Pixabay.)
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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