Here's how the wealthiest Americans avoid taxes legally: ProPublica investigation

Some of the world’s richest men — Jeff Bezos, Elon Musk, Warren Buffett, Carl Icahn, Michael Bloomberg and George Soros — pay just a tiny fraction of their increasing wealth in taxes, and in some cases pay no taxes in a given year, according to a report Tuesday.

ProPublica, citing confidential IRS data it obtained on thousands of wealthy people, reported that the 25 richest Americans “saw their worth rise a collective $401 billion from 2014 to 2018.”

But those people paid a total of just $13.6 billion in federal income taxes for those five years, which “amounts to a true tax rate of only 3.4%,” the article noted.

In contrast, the median U.S. household in recent years earned around $70,000 annually and paid 14% of that in federal taxes. Couples in the highest income tax rate bracket paid a rate of 37% on earnings higher than $628,300, the report said.

ProPublica pointed out that billionaires, unlike most other people whose earnings come from conventional wage income, often benefit from “tax-avoidance strategies beyond the reach of ordinary people.”

And their wealth is often largely based on the rising value of stock and real estate that is not considered taxable unless those assets are sold, the report noted.

ProPublica did not disclose how it obtained the tax information cited in the article, but did say that the outlet “went to considerable lengths to confirm that the information sent to us is accurate.” CNBC has not independently verified the information in the report.

The article said that according to ProPublica’s calculations, Buffett’s “true tax rate” was just 0.1%, or $23.7 million in taxes he paid on wealth growth of $24.3 billion, during the five-year time frame.

During that period, Buffett, CEO of Berkshire Hathaway, reported legally taxable income of $125 million.

Bezos, who as founder of Amazon has become the world’s richest person, paid slightly less than 1% in ProPublica’s true tax rate, or $973 million, on wealth growth of $99 billion during the five-year period. Bezos’ actual taxable income during that time was $4.22 billion, the report said.

In 2007, Bezos “did not pay a penny in federal income taxes,” and he also avoided any federal income tax liability in 2011, the article said.

The world’s second-richest person, Tesla CEO Elon Musk, paid a 3.27% true tax rate, or $455 million, on wealth growth of $13.9 billion, ProPublica said.

Musk, who had an actual taxable income of $1.52 billion during the five-year period, paid no federal income taxes in 2018, according to ProPublica.

Bloomberg, former New York City mayor and founder of Bloomberg LP, paid a 1.3% true tax rate, or $292 million, during the time period looked at by ProPublica. His actual taxable income was $10 billion, the report said.

Soros, an investor, paid no federal income taxes between 2016 and 2018, which was a result of him losing money on his investments, his spokesman told ProPublica.

Icahn, another investor, paid no federal income tax in 2016 and 2017, years in which his total adjusted gross income was $544 million, the article said.

Icahn told ProPublica that he registered tax losses in both of those years as a result of taking deductions worth hundreds of millions of dollars due to the interest he paid on loans.

Asked whether it was appropriate that he had paid no income tax in certain years, Icahn said he was perplexed by the question, ProPublica reported.

Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide.


Connect with CNBC News Online

#CNBC
#CNBCTV

[snyc]

The outrage should not be at them. It should be at the politicians who write the tax codes.

[sharongillesp]

We are definitely in Alice in Wonderland where everything and everybody is backward and upside down.

[damssen]

you can’t tax unrealized gains that’s ridiculous. the problem here is the borrowers that enable them. I certainly can’t put up my 7 shares of faang as collateral anywhere.

[rayray]

They avoid paying taxes because they own washington and they pay the lawmakers to make laws that benefit them. Duh.

[Dividenddream]

What I dont understand is, dont they have to pay back those loans, eventually leading to selling shares??

[edwardallen]

So much for the IRS's ability to keep all tax records confidential.

[clientinboxllc]

Even Fox News has that black woman with her show and Juan Williams. Who do you have CNBC?

[hannamaria]

... WE the people By the people For the people has changed to
WE THE FEW By the few For the few ... Oligarchy

[HilarityBribo]

At this point i dont really blame anyone for not wanting to pay taxes. Who would want to fund Biden's illegals?

[scoopbls]

Elon Musk has borrowed $1bn, not billions of dollars. So I wasted 1m 28s of my life not 2m 57s. Thanks for saving me early.

[ahlishaholloway]

A tremendous story, but considering the IRS's reaction was to investigate the leaker, I don't any substantial change is coming

[sharonsmith]

But we sending billions to other COUNTRIES. That smiling.at us.for sure.

[mrtriffid]

I like that: "We're NOT about embarrassing individuals BY EXPOSING THEIR CRIMINAL BEHAVIOR, we just want to show the crimes they commit

[jeremybrocknblue]

When i didnt pay income tax on my tiny pay checks the IRS came after they docked over half my pay for 3 months. If family didnt help me out i wouldve been homeless.

[JB-cqey]

Its definitely fair. If people arnt smart enough to learn and get to that lever who's to blame only themselves.

[KT-zxjr]

Banking fees r free for the wealthy and super high for the non wealthy and especially on a annual banking fees/income basis....Policy needs to address this as banking fees go straight up every year and especially in Canada where an oligopoly structure exists due to Federal govt regulation that protects the big banks and keeps out competition and fees high / growing...

[clientinboxllc]

If you are advertising on CNBC you could literally pay random people on the streets to listen to your ads and still reach more people and come out ahead. Their efforts are incompetency at it's finest. You can't even call their commentators talent at this point. They should all be getting minimum wages commensurate with what the results they are producing.

[MichaelPaloma]

capital gains should have a higher tax rate than income change my mind.

[MrSith-ypyq]

Why is this tax information not public by default?

[sunnycheba]

Can't wait for Maxwell's trial in November.