IRS Is Investigating Release of Tax Information of Wealthy Americans

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WASHINGTON—Federal authorities are investigating the release of wealthy Americans’ tax information, Internal Revenue Service Commissioner Charles Rettig said Tuesday.

ProPublica, a nonprofit news organization, published details about the reported income and tax payments of some of the richest Americans, including Amazon.com Inc. Chief Executive Officer Jeff Bezos and Berkshire Hathaway Inc. CEO Warren Buffett.

Taxpayer information is confidential, and there are potential criminal penalties for IRS employees or others who release such information. Mr. Rettig told lawmakers that there were internal and external investigations beginning, with potential prosecutions to follow.

“I share the concerns of every American for the sensitive and private nature and confidential nature of the information the IRS receives,” he said during a Senate Finance Committee hearing that had been scheduled before the information was released. “Trust and confidence in the Internal Revenue Service is sort of the bedrock of asking people and requiring people to provide financial information.”

www.wsj.com/articles/irs-is-investigating-release-of-tax-information-of-wealthy-americans-11623179470

The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax

In 2007, Jeff Bezos, then a multibillionaire and now the world’s richest man, did not pay a penny in federal income taxes. 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.
ProPublica has obtained a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years. The data provides an unprecedented look inside the financial lives of America’s titans, including Warren Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg. It shows not just their income and taxes, but also their investments, stock trades, gambling winnings and even the results of audits.

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Taken together, it demolishes the cornerstone myth of the American tax system: that everyone pays their fair share and the richest Americans pay the most. 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.
Many Americans live paycheck to paycheck, amassing little wealth and paying the federal government a percentage of their income that rises if they earn more. In recent years, the median American household earned about $70,000 annually and paid 14% in federal taxes. The highest income tax rate, 37%, kicked in this year, for couples, on earnings above $628,300.

The confidential tax records obtained by ProPublica show that the ultrarich effectively sidestep this system.

America’s billionaires avail themselves of tax-avoidance strategies beyond the reach of ordinary people. Their wealth derives from the skyrocketing value of their assets, like stock and property. Those gains are not defined by U.S. laws as taxable income unless and until the billionaires sell.

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To capture the financial reality of the richest Americans, ProPublica undertook an analysis that has never been done before. We compared how much in taxes the 25 richest Americans paid each year to how much Forbes estimated their wealth grew in that same time period.

We’re going to call this their true tax rate.

The results are stark. According to Forbes, those 25 people saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%.

It’s a completely different picture for middle-class Americans, for example, wage earners in their early 40s who have amassed a typical amount of wealth for people their age. From 2014 to 2018, such households saw their net worth expand by about $65,000 after taxes on average, mostly due to the rise in value of their homes. But because the vast bulk of their earnings were salaries, their tax bills were almost as much, nearly $62,000, over that five-year period.

Wealth Growth Total Income Reported Total Taxes Paid True Tax Rate

Warren Buffett

Berkshire Hathaway Inc.

$24.3B $125M $23.7M 0.10%

Jeff Bezos

Amazon.com Inc.

$99.0B $4.22B $973M 0.98%

Michael Bloomberg

Bloomberg LP

$22.5B $10.0B $292M 1.30%

Elon Musk

Tesla Inc.

$13.9B $1.52B $455M 3.27%

FULL STORY INSIDE WITH ALL INFORMATION ON THESE GUYS

www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax

h/t coorslight

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