An investigation by ProPublica has revealed that Amazon founder Jeff Bezos paid a federal income tax rate of less than one percent on his substantial wealth growth over several years, including two years where he paid no federal income tax at all. The findings, based on a trove of IRS data, highlight how some of the wealthiest Americans legally minimize their tax obligations.
According to the ProPublica report, Bezos paid $0 in federal income tax in 2007 and again in 2011. During the period between 2014 and 2018, his wealth reportedly grew by $99 billion, yet he paid $973 million in federal income taxes. This sum amounts to a "true tax rate" of just 0.98% on his wealth accumulation, as noted by journalist Jesse Eisinger.
In 2007, despite his multibillionaire status, Bezos was able to offset his reported income with losses from side investments and various deductions. Similarly, in 2011, when his wealth was estimated at $18 billion, he reported investment losses that exceeded his income, effectively wiping out his tax liability. ProPublica further detailed that in 2011, Bezos even claimed and received a $4,000 tax credit for his children, a benefit typically aimed at working parents.
These tax outcomes are largely attributed to the nature of how the ultra-wealthy derive their fortunes. Their wealth often comes from the skyrocketing value of assets like company stock, which is not considered taxable income until it is sold. This contrasts sharply with most Americans whose income is primarily from wages, which are taxed directly.
ProPublica's analysis extended beyond Bezos, showing that other billionaires, including Elon Musk, Michael Bloomberg, and George Soros, also had years where they paid no federal income tax. The investigation underscores a fundamental aspect of the U.S. tax system, where wealth growth, particularly from unrealized capital gains, is often not taxed at the same rate as earned income. The report has fueled discussions about tax fairness and potential reforms to the tax code.
