Thanks to a leak of Internal Revenue Service records to ProPublica, we know just how little some of the richest people in America have been paying in

The ProPublica Revelations Show Why We Need to Tax Wealth More Effectively

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2021-06-30 19:00:09

Thanks to a leak of Internal Revenue Service records to ProPublica, we know just how little some of the richest people in America have been paying in federal income tax. “In 2007, Jeff Bezos, then a multibillionaire and now the world’s richest man, did not pay a penny,” a report published by the investigative news organization, on Tuesday, begins. “He achieved the feat again in 2011. In 2018, Tesla founder Elon Musk, the second-richest person in the world, also paid no federal income taxes. Michael Bloomberg managed to do the same in recent years. Billionaire investor Carl Icahn did it twice. George Soros paid no federal income tax three years in a row.”

Representatives for those mentioned would doubtless argue that some cherry-picking went into that news lede. The article later points out that, between 2014 and 2018, Bezos, the founder and C.E.O. of Amazon, paid nine hundred and seventy-three million dollars to the feds in taxes, while Musk, the C.E.O. of Tesla, paid four hundred and fifty-five million during the same period. Bloomberg, the media magnate and former New York City mayor, contributed $968.3 million to charitable causes in 2018, which helped to bring his over-all income tax rate down to 3.7 per cent. Still, the main thrust of the article cannot be denied. In recent decades, as the stock market has soared, the vast fortunes amassed by some members of the plutocracy have largely escaped taxation. In the words of Jesse Eisinger, Jeff Ernsthausen, and Paul Kiel, the ProPublica journalists who wrote the report, “The IRS records show that the wealthiest can—perfectly legally—pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year.”

This shouldn't be news to anybody. Unlike real estate, which is subject to local property taxes, most other forms of wealth in the United States aren’t taxed on an annual basis. The federal government supposedly takes a share whenever an asset is sold or transferred, but there are loopholes in the tax system that allow the owners of vast fortunes to minimize the capital-gains and inheritance taxes which they pay. Since the age of the economist Henry George, in the late nineteenth century, the failure of the U.S. tax system to reach large agglomerations of wealth has attracted the attention of reformers. In 1995, Edward Wolff, an economist at New York University, warned that a rising concentration of wealth represented a threat to American democracy and proposed an annual tax on the net worth of wealthy families. More recently, during the 2020 Presidential campaign, Senator Elizabeth Warren called for a wealth tax that explicitly targeted the country’s richest households. Warren revived her proposal early this year, suggesting that the I.R.S. would levy an annual tax of two per cent on fortunes of more than fifty million dollars and three per cent on fortunes of more than a billion dollars.

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