ProPublica: Wealthiest U.S. Individuals Avoid Paying Their Fair Share In Taxes
RACHEL MARTIN, HOST:
All right. America's wealthiest individuals are avoiding paying their fair share in taxes. A new investigation by the nonprofit ProPublica shows that the country's super rich pay only a fraction in federal income taxes compared to the average American. Over a five-year period, the 25 richest Americans paid a combined $13.6 billion in federal income taxes. That amounts to a true tax rate of only 3.4%. So how does this happen? For more on this investigation, I'm joined by ProPublica senior reporter and editor Jesse Eisinger. Thanks for being with us, Jesse.
JESSE EISINGER: Hi. Thanks so much for having me.
MARTIN: First off, how'd you do this? How did ProPublica get its hands on this tax data?
EISINGER: We obtained it, but we're not commenting further about it. We verified it very carefully with over 50 individual records, public and private, and then with the principles in the article today that are mentioned. And we're going to be doing stories about this all year, but we're not commenting further than that.
MARTIN: And these are big names. I mean, these are names we would expect when you talk about the wealthiest Americans. We're talking about Jeff Bezos, Elon Musk and others.
EISINGER: We have records on thousands of the wealthiest individuals, tax information and tax returns, covering more than 15 years. And almost all the household names - Warren Buffett, Bezos, Michael Bloomberg, Elon Musk. The list goes on and on.
MARTIN: So what are the big revelations? I mean, we said there in the intro they're not paying as much federal income tax as they "should," quote, unquote. Tell us more.
EISINGER: Yeah. Our first story is about a very basic concept, which is that you and I pay income taxes. We work to live. We get a salary. We're in the tax system. The vast majority of the listeners today are in the tax system. The ultra wealthy are not in the tax system. None of their wealth is taxed until something happens - they sell, they realize a gain. And so what happens is that they can accumulate vast, vast wealth, which is really the equivalent of income for us, and not pay taxes on it. So as you mentioned in your introduction, what we think of as their true tax rate, their tax rate on what essentially is their income - their wealth growth is 3.4%. And it's even less for somebody like Jeff Bezos or Warren Buffett. They pay even less. The typical American will pay about 14% on income. And that is what we compare to this, what we're calling the true tax rate on wealth of 3.4% for the top 25 wealthiest.
MARTIN: We should say all this is legal, though, right?
EISINGER: This is entirely legal. And sort of one of the points of the story is that they don't need exotic, illegal, evasive techniques. This is not about tax evasion. It's about legal routine tax avoidance through regular means. And that's a kind of - the system has been built up so that the ultra wealthy can easily avoid taxation.
MARTIN: So what are the significant - what are the implications of these findings for the overall U.S. economy and the culture, the society?
EISINGER: The implications are that our federal budgets have been constrained for decades. Periodically, people are worried that Social Security and Medicare will go bankrupt. Our roads and bridges are crumbling. And we have a group of the wealthiest individuals not paying their fair share. That should make everybody - you know, give everybody pause.
MARTIN: ProPublica senior reporter and editor Jesse Eisinger - he joined us on Skype. Thank you for your time.
EISINGER: Thanks so much for having me.
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