Wealth grows by 3.8 billion but pays $0 in taxes, U.S. wealthy tax avoidance laws are exposed

  Involving Bezos, Buffett, Microsoft founder Bill Gates and other US Treasury Department to initiate investigation

  The U.S. Treasury Department confirmed on the 8th that it has launched an investigation into the exposure of the tax information of many wealthy Americans in the IRS system, involving Amazon founder Jeff Bezos, investor Warren Buffett, and Tesla Inc. CEO Elon Musk and others.

  "For the people" (ProPublica) website earlier on the 8th disclosed the information recorded by many rich people in the system of the State Administration of Taxation. This information shows that compared with their huge wealth, these global rich people pay pitifully little income tax each year. In some years, they even paid $0 in taxes.

  According to the report, these wealthy individuals did not pay personal income tax for a certain period of time. Although they did not violate the law in tax declaration, they adopted tax avoidance strategies that are difficult for ordinary people.

This organization, which advocates more taxation of the wealthy, emphasizes that the relevant information is "reliable", and does not explain how to obtain it.

  Treasury Department spokesperson Lily Adams said: “It is illegal to disclose confidential government information without approval. This matter has been referred to the Office of the Inspector General of the Ministry of the Treasury, the Director of Tax Management, the Federal Bureau of Investigation and the Office of the Federal Attorney for the District of Columbia. Disposal, any party has the power of independent investigation."

  The State Administration of Taxation under the Ministry of Finance also launched an investigation.

  Bezos earns $3.8 billion in annual taxes and pays $0, Buffett's 24.3 billion tax rate is only 0.1%

  ProPublica claims that it has acquired 15 years of massive data from the Commissioner of the Internal Revenue Service, involving the tax returns of thousands of the richest people in the United States.

Tax information shows that almost every rich person has never paid federal income tax in some years.

In 2007, Jeff Bezos, the billionaire at the time and today's richest man in the world, did not pay a penny of federal income tax, but his wealth increased by $3.8 billion.

Investor "The Wolf of Wall Street" Karl Icahn paid zero taxes for two years.

"Financial crocodile" George Soros did not pay federal income tax for three consecutive years from 2016 to 2018.

  After comparing the annual tax payments of the 25 richest Americans with the wealth growth estimated by Forbes over the same period, ProPublica came up with a surprising result: the total wealth of these 25 people increased from 2014 to 2018. For 401 billion U.S. dollars, a total of 13.6 billion U.S. dollars in taxes were paid in five years, and the actual tax rate was only 3.4%.

One of the most astonishing is Buffett. His wealth has increased by US$24.3 billion in five years, but the data shows that he paid a total of US$23.7 million in taxes, and the actual tax rate was 0.1%.

  However, the report pointed out that this does not mean that they are suspected of any illegal tax evasion.

So, how exactly do these wealthy people achieve “legal and reasonable” tax avoidance?

  method 1

  Hold a large amount of real estate

  Receive 1 USD annual salary

  According to foreign media analysis, most of the wealth of these rich people comes from the soaring value of assets such as company stocks and real estate.

However, under US law, unless these assets are sold, these proceeds are not taxable income.

Therefore, for the wealthy, the wage income that really accounts for the bulk of taxation is only “rare and rare”, and some people even pay themselves a salary of only $1 a year.

  According to the U.S. Internal Revenue Service, the 25 richest Americans in 2018 had a total salary of 158 million U.S. dollars, which was only 1.1% of their total income declared on their tax returns. Most of the rest came from dividends, stocks, and bonds. Or other investment income, but their tax rate is much lower than the wage tax rate.

  For example, Bezos' salary has always been around US$80,000 per year, which is consistent with the level of the middle class in the United States.

But since 2006, Amazon's stock price has soared.

In most years, Bezos' wealth has grown far more than his income declared to the Internal Revenue Service.

In contrast, most Americans who live on wages receive a direct tax deduction for almost every dollar of income.

  Method 2

  Tax credits for "lack of income"

  In addition, according to tax information, the losses declared by the rich in certain years can completely offset their income tax bills.

  For example, in 2007, Bezos declared income of only 46 million US dollars, but at the same time he used various deductions such as indirect investment losses and debt interest expenses to offset every penny earned.

In 2011, Bezos' wealth was approximately US$18 billion, but the tax returns he submitted showed that his investment losses exceeded his income that year.

What's more worth mentioning is that, according to the US tax law, he has successfully applied for and received a tax credit of $4,000 for his children because of his "income is too low."

  The data obtained by ProPublica also shows that the super-rich have a variety of tax avoidance options, such as offsetting their income through credits and deductions (including charitable donations), thereby reducing or even making their tax bills zero.

  For example, in 2018, Michael Bloomberg's declared income was $1.9 billion.

But he took advantage of the tax cuts adopted during the Trump administration, the $968.3 million in charitable donations, and the credit for paying foreign taxes to successfully cut his own taxes.

  Method 3

  Mortgage assets to borrow money equals making money

  So, how can billionaires pay for their huge expenses while paying low salaries and not selling their stocks?

According to public documents and experts, the answer may be to borrow a lot of money.

For these super-rich people, this may be a "coup" to get billions of assets without generating income or paying income tax.

  Specific settlement method: "If you own a company and hold a large annual salary, you need to pay 37% income tax on the annual salary. If you sell stocks, you have to pay 20% capital gains tax and lose some control of the company. Right. If you take a loan, you only need to pay single-digit interest, and you don’t have to pay taxes. And because this part of the loan must be repaid, the IRS will not count them as income. Comprehensive calculations, the interest you pay to the bank It’s much less than the income tax that needs to be paid. All you have to do is mortgage your assets to the bank."

  ProPublica said that because loans usually do not need to be disclosed to the IRS, most of these super-rich loans do not appear in tax records, but some records may appear in securities filings.

  ProPublica said that in the next few months, it will use the IRS data it has to study in more detail how these super-rich people evade taxes, exploit loopholes, and evade federal audit agencies.

  Chengdu Commercial Daily-Red Star News Correspondent Xu Song Comprehensive Xinhua News Agency