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This story originally appeared on ValueWalk
A ProPublica investigation has caused outrage in the U.S. this week, by revealing that the top 25 wealthiest Americans have paid little to no federal income tax in recent years, prompting calls for an urgent rework of the current tax code.
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ProPublica’s Investigation Reveals Tax Inequality
The investigative journal discovered that, by law, the wealthiest can pay only a tiny fraction in taxes, out of the hundreds of millions, “if not billions, of dollars by which their fortunes grow each year.” According to their website, “the 25 richest Americans saw their worth rise a collective $401 billion from 2014 to 2018, for example, but paid only 3.4% of that growth in taxes.”
Upon release, Congressional Democrats urged legislative changes to make the richest ones pay accordingly.
Sen. Ron Wyden, D-Ore., chairman of the Senate finance committee, announced that he had been working on a reform, and said during a hearing on Tuesday: “The country’s wealthiest, who profited immensely during the pandemic, have not been paying their fair share.”
But Wyden was not the only member of the Senate to voice concerns over ProPublica’s tax findings. Sen. Elizabeth Warren, D-Mass., took to Twitter to express how the undisclosed information emphasizes the urgency of introducing a wealth tax on total net worth –not as much on salaries and capital gains, which, according to ProPublica, “the wealthiest largely avoid paying.”
Big Names On The List
According to ProPublica’s findings, top American Billionaires like Amazon Inc (NASDAQ:AMZN)’s Jeff Bezos, Tesla Inc (NASDAQ:TSLA) founder Elon Musk, and business giants Michael Bloomberg, Carl Icahn, and George Soros lawfully spent years not paying any federal income taxes at all.
With such big names included in ProPublica’s investigation, news and cable stations across the country replicated the findings. The New York Times echoed the information through an extensive report, while columnist Binyamin Appelbaum asserted in an opinion piece that the findings show, “how some of the wealthiest people in the United States essentially live under a different system of income taxation from the rest of us.”
Leading Manhattan DA Candidate Also Exposed
Businessmen and entrepreneurs are not the only ones with their names pinned on to these outrageous revelations. ProPublica also disclosed how the leading candidate to take over former President Donald Trump’s taxes investigation had not paid any federal income taxes in four of six recent years.
Tali Farhadian Weinstein is running for Manhattan district attorney in the Democratic primary –in which early voting has already begun– and is married to hedge fund manager Boaz Weinstein. According to a trove of tax data obtained by ProPublica, she and her husband paid no federal income tax in 2013, 2015, and 2017. In 2014, she and her husband only paid $6,584.
ProPublica’s revelations prompted her response: “In 6 of the last 11 years (the years in which we had income), we paid more than 50% of our income in Federal, State and New York City taxes. In the other years, we earned no net income and, as a result, did not pay income tax. We both benefited from many opportunities in this city and country and are glad to pay taxes at among the very highest tax rates in the entire country.”
ProPublica got hold of IRS data that showed how the couple paid 12.6% annually between 2010 and 2018, on average. According to the portal, “In two of the years in which the Weinsteins paid no federal income taxes, they reported negative income, losses that appear to be driven by the volatile performance of Boaz Weinstein’s hedge fund.”
Controversy On Either End
According to Sen. Bernie Sanders, I-Vt., the whole affair brings to public debate how “the rich have money, the rich have power, the rich have lobbyists, and the rich do not pay their fair share of taxes.”
The scandal rose to the White House, as press secretary Jen Psaki said during a briefing: “We know that there is more to be done to ensure that corporations, individuals who are at the highest income are paying more of their fair share.”
However, besides the shocking findings on some of the U.S.’ richest people, the White House, administration officials, and both sides of Congress, voiced their disbelief at how ProPublica got hold of such confidential tax data.
“There is an investigation with respect to the allegations that the source of the information in that article came from the Internal Revenue Service,” IRS commissioner Charles Rettig said at a hearing last Tuesday. “The investigators will investigate.”
Concern on how ProPublica obtained the information was also referred to by a Treasury Department spokesperson who went on media stating that “the unauthorized disclosure of confidential government information is illegal,” and that federal prosecutors in Washington, as well as the FBI, the Treasury’s inspector general, and the IRS inspector general would be called upon.
A Heated Debate
During a hearing on Wednesday, Sen. Susan Collins, R-Maine, expressed her alarm about the leak, with Attorney General Merrick Garland also saying, “These highly confidential personal documents were obtained illegally.”
Comparisons to the Nixon administration have been made, as Garland said: “I very well remember what President Nixon did in the Watergate period, the creation of enemies lists and the punishment of people through reviewing their tax returns (…) [the leak] is an extremely serious matter.”
Garland emphasized that he knew nothing more than what had been revealed by ProPublica’s story, which he was “astonished by.”
However, more than anything, the revelations have already ignited a debate about the rationality of the U.S. current tax code, which favors owners of multi-billion-dollar businesses and colossal quantities of stocks and property, over those who live on wages.
ProPublica does not know who the source of the information is, and it has not commented on when the data was obtained.
https://www.entrepreneur.com/article/375048