The US tax authority IRS wants to determine how sensitive data from the super-rich like Jeff Bezos, Elon Musk or Warren Buffett could have come to the public.
“I can confirm that there is an investigation,” said IRS chief Charles Rettig on Tuesday (local time) at a Senate hearing in Washington. The unauthorized disclosure of confidential government information is illegal, said a spokeswoman for the Treasury Department.
The investigative platform “ProPublica” had previously published the results of a research which, according to it, was based on anonymously leaked IRS data on the income statements and tax payments of the richest Americans. The information is intended to show how small contributions many extremely wealthy in the US have to pay to the tax authorities in relation to their immense wealth and how much they can benefit from legal tax loopholes.
“ProPublica” compared, among other things, the federal income taxes of the 25 richest Americans for the years 2014 to 2018 with their asset growth according to the “Forbes” billionaires list and came to the conclusion that the tax quota only averaged 3.4 percent . Further details: Amazon boss Bezos – according to “Forbes” the richest person in the world – paid no US income taxes at all in 2007 and 2011. Tesla boss Musk and other multi-billionaires have also succeeded in doing this in other years.
Remarkable: Stock market guru Warren Buffett, who repeatedly speaks out in public for higher taxes for top earners, paid the lowest taxes of the 25 super-rich from 2014 to 2018, according to “ProPublica”. The assets of the 90-year-old boss of the holding company Berkshire Hathaway grew by 24.3 billion dollars during this period – but income was reported as 125 million dollars with the tax authorities and 23.7 million in taxes were ultimately paid. This results in a “true tax rate” of only 0.1 percent.
Buffett responded to the data leak with a detailed explanation, stating that he intends to donate virtually all of his wealth to charity. He believed that that way his money was more useful to society. Buffett also reiterated his support for a fairer tax system to reduce wealth inequalities among the population. Bezos was not ready to take a stand, according to “ProPublica”. When asked, Musk only started with “?” replied and then stopped responding.
The revelations are causing a stir in the USA, but ultimately show the effect of a long-known and controversial property of the tax system. In contrast to most citizens, the wealth of billionaires like Bezos and Co. usually results less from their income than from the increase in the value of assets such as stocks. However, apart from their dividends, they are only taxed when they are sold. In addition, the tax burden can be reduced, for example through loans or investment losses. Borrowing large loans with equity holdings as collateral is part of the arsenal of legal tax-abatement methods used by the super-rich, the report said.
In the US, the report could fuel the debate about taxing billions of dollars. US President Joe Biden has already announced that he will ask the rich to pay more, among other things to finance investments in social affairs and infrastructure. The top tax rate is to rise from 37 to 39.6 percent. This would provide some relief from his predecessor’s tax reform Donald Trump reversed. At the same time, there are calls for a wealth tax. In Biden’s Democratic Party, for example, the influential Senator Elizabeth Warren argues that an increase in income tax will hardly affect the billion-dollar fortunes of the super-rich. In an interview with the New York Times, Warren called the report by “ProPublica” deeply shocking.