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America’s Top 15 Earners and What They Reveal About the U.S. Tax System

April 13, 2022 Creative Commons

by ProPublica

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.Series: The Secret IRS Files Inside the Tax Records of the .001%

Above: Photo Collage / Lynxotic / Adobe Stock

Periodically, we get a glimpse into the financial lives of the ultrarich. A pro athlete signs a huge contract, a tech CEO sells a boatload of shares in their company, or a billionaire heir unloads a Manhattan penthouse. Based on these nuggets of information, the media speculates as to how much income the rich might bring in every year. But nobody actually knows.

Thanks to an analysis of its unprecedented trove of IRS data, ProPublica is revealing the 15 people who reported the most U.S. income on their taxes from 2013 to 2018, along with data for the rest of the top 400.

The analysis also shows how much they paid in federal income taxes — and it demonstrates how the American tax system, which theoretically makes the highest earners pay the highest income tax rates, fails to do so for the people at the very top of the income pyramid.

The top 400 earners pay noticeably lower tax rates than the merely rich; and, if you include payroll taxes, a married couple making $200,000 a year could end up paying higher tax rates than a person making $200 million a year. (The full analysis is here; it includes selected names beyond the top 15.)

Names That Won’t Surprise You

Scan the names on the list of the top 15 income earners and you’re certain to recognize several names — or at least the names of the companies they founded. Bill Gates hasn’t been involved in the day-to-day operations of Microsoft for over a decade, yet he still earned the most during the years we studied, reporting an average yearly income of $2.85 billion — and an effective federal income tax rate of 18.4%. Steve Ballmer, his former colleague, is also a well-known public figure, both for his time as Microsoft CEO and his current ownership of the Los Angeles Clippers NBA team.

Ballmer’s average annual reported income of $1.05 billion landed him in the 10th spot on the list, and his effective federal income tax rate was 14.1%. The other side of the PC/Mac wars is represented here by Laurene Powell Jobs, widow of Apple founder Steve Jobs.

Her average reported income of $1.57 billion ranked fifth-highest; she paid an effective tax rate of 14.8%. (ProPublica sought comment from everyone mentioned in this article. Nobody disputed the numbers cited here. Unless otherwise noted, representatives for people named in this article either declined to comment, declined to comment on the record or did not respond to requests for comment.)

Another well-known billionaire sits just below Gates on the list: Media and tech mogul and former New York City mayor Michael Bloomberg, with an average reported income of just over $2 billion, paid an effective income tax rate of 4.1%, by far the lowest rate among the top 15. (A spokesperson told ProPublica for an earlier article that Bloomberg “pays the maximum tax rate on all federal, state, local and international taxable income as prescribed by law,” and cited Bloomberg’s philanthropic giving.)

The presence of Amazon founder Jeff Bezos — either the first- or second-wealthiest person in America, depending on the day — won’t shock most people, but Bezos’s annual reported income during these years of $832 million put him only at number 15. He paid an effective tax rate of 23.2%; as we’ve previously reported, Bezos had so little income in a couple of recent years that he was able to pay $0 in federal income taxes in those periods.

Who Are These Others and Why Are They Paying Higher Tax Rates?

Tech billionaires dominate the top 15, but hedge fund managers account for a full third of the names on this list, and some of their incomes were just as huge. Most of them paid relatively high effective tax rates, especially compared to most of the tech sector representatives. Hedge fund managers often make their money through short-term trades, which are taxed at a much higher rate than when tech titans cash in on long-term investments.

The highest-earning hedge funder is Ken Griffin, founder of the Chicago-based firm Citadel. From 2013 to 2018, he reported an average income of nearly $1.7 billion, putting him fourth on the list. Griffin paid a tax rate of 29.2% during these years. (A spokesperson for Griffin said the tax rates in the IRS data “significantly understate” what Griffin pays, because they were lowered by charitable contributions and do not reflect local and state taxes. He also said Griffin pays foreign taxes, which aren’t included in IRS calculations of effective tax rate.)

Israel Englander, co-founder of Millennium Management, paid at a 30.8% rate, while the co-founders of Two Sigma Investments, David Siegel and John Overdeck, paid tax rates of 31.6% and 34.2%, respectively.

Some of this variation in rates reflects how people structure their businesses under tax law. Income earned by publicly traded corporations is taxed at the company level. When it’s passed on to big shareholders, such as tech billionaires, it can come in the form of dividends, which are taxed at lower rates than ordinary income. By contrast, the income from some manufacturing companies and hedge funds flows directly to company owners, who pay taxes on it, resulting in higher effective tax rates on average.

Where Are the Heirs?

Lists of the world’s wealthiest individuals are always heavily populated by heirs, ranging from descendents of old money to scions of more recently minted fortunes. Dozens of heirs made ProPublica’s list of 400 biggest income earners. Descendents and relatives of Sam Walton, founder of Walmart, claim 11 spots.

The DeVos family, heirs to the Amway fortune, also have multiple members in the top 400. Perhaps the best known is Betsy DeVos, who served as U.S. secretary of education during the Donald Trump administration. With a reported annual income of $112 million, she was the 389th-highest earner in this period.

Much like the tech titans who top the list, most of these heirs get their income from dividends or long-term investments, which are taxed at a lower rate. Their effective tax rates ranged from as low as 10.6% for Betsy DeVos to a high of 23% paid by Walmart heirTom Walton.

Don’t Forget the Deductions

Another key way that some top earners reduced their tax liability was to claim significant deductions, often in the form of large charitable contributions. This is particularly true for wealthy investors who are able to make their donations with shares of stock. Thanks to a generous provision of the tax code, they can then deduct the full value of the stock at its current price — without having to first sell it and pay capital gains tax.

Michael Bloomberg achieved a tax rate of 4.1% from 2013 to 2018 by taking annual deductions of more than $1 billion, mostly through charitable contributions. From 2013 to 2017, he also wrote off an average of $400 million each year from what he’d paid in state and local taxes. The 2018 tax overhaul limited that deduction to $10,000 — but also introduced a huge new deduction for pass-through companies that Bloomberg benefited from.

Wait — What About the Celebrities?

The earnings of actors, musicians and sports stars are a subject of nonstop scrutiny in the media, yet few celebrities cracked the list of the top 400 earners, which would have required them to report annual incomes of at least $110 million.

ProPublica’s trove has data on many celebrities. One who came close to the top 400 is basketball superstar LeBron James, who averaged $96 million a year in reported income. Grammy-winning singer Taylor Swift also came within reach of the top 400, averaging $82 million in reported income during these years. Actor George Clooney would have had to double his average income of $55 million to crack the top 400.

THE TOP 15

Here are the details on the top 15 income earners. Read the full analysis of the top 400 here.

For the full list of America’s top 400 income earners and their tax rates, along with our methodology, click here.

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Climate Solutions, News, Observation, Politics

New Analysis Details ‘Master Class in War Profiteering’ by US Oil Giants

April 5, 2022 Creative Commons

“Oil and gas companies are feeding off humanitarian disaster and consumer suffering in order to reward Wall Street,” said Lukas Ross at Friends of the Earth.

An analysis released Tuesday by a trio of groups highlights how Big Oil has cashed in on various crises over the past year—including the Covid-19 pandemic, Russia’s war on Ukraine, and the global climate emergency—while enriching wealthy shareholders.

“Big Oil is living the second half of their unspoken mantra ‘socialize losses, privatize gains.'”

The new report from BailoutWatch, Friends of the Earth, and Public Citizen explains that there are two main tactics that fossil fuel giants use to benefit investors: “First, they repurchase shares of their own stock and retire them, reducing the number of shares outstanding and driving up the value of each share remaining in investors’ hands.”

“Second, they increase dividends, the quarterly payments investors receive for owning shares,” the report continues. “Oil and gas dividends, historically bigger than other sectors’, have spiked in recent months, outstripping every other industry group.”

“Amid high gas prices and war in recent months, oil and gas companies have kicked both tactics into overdrive,” the groups found, based on reviewing public statements and securities filings from the 20 largest U.S.-headquartered fossil fuel corporations.

During the first two months of 2022, “seven companies’ boards authorized their corporate treasuries to buy back and retire $24.35 billion in stock—a 15% increase over all of the buybacks authorized in 2021,” the report states. “Six of those decisions came in February 2022, after Russian warmongering lifted stock prices. The total since the start of 2021 is $45.6 billion.”

The analysis also reveals that in January and February, 11 companies raised their dividends—”often extravagantly”—and notes that “nine were increases of more than 15% and four were increases of more than 40%.”

“Six companies have begun paying additional dividends on top of their routine quarterly payments, including by implementing new variable dividends based on company earnings—a way of directing windfall profits immediately into private hands without any possibility of investment, employee benefits, or other uses,” the document points out.

“So far in 2022, these companies have started paying out an initial $3 billion in special windfall dividends,” the report adds. “Four of these companies—Pioneer, Chesapeake, Conoco, and Coterra—announced variable dividends beginning August 2021, as prices began to rise.”

Chris Kuveke of BailoutWatch said in a statement that “Big Oil is living the second half of their unspoken mantra ‘socialize losses, privatize gains.'”

“Two years after winning multi-billion dollar bailouts from the Trump administration, these newly flush companies are pocketing billions from an international crisis, and they don’t care how it affects regular Americans,” Kuveke added.

NEW TODAY: Big Oil is cashing in on a wartime bonus. They’re exploiting surging crude oil prices, a humanitarian disaster in Europe, and consumer pain at the pump. It needs to stop.

Read the full report from BailoutWatch, @Public_Citizen & @foe_us 🚨 https://t.co/rM9GXXaJTc 🚨
— BailoutWatch (@bailoutwatchorg) April 5, 2022

As Public Citizen researcher Alan Zibel put it: “Big Oil executives are reaping windfall profits while accelerating the climate crisis and sticking consumers with the bill.”

Zibel also acknowledged efforts to blame President Joe Biden for rising prices, rather than industry profiteering.

“The oil industry and their allies on Capitol Hill falsely claim that the Biden administration’s acceptance of mainstream climate science is stifling investment in the domestic oil industry,” he said. “But the industry’s actions show that they are intently focused on funneling cash to their shareholders rather than lowering prices for consumers.”

According to Lukas Ross, climate and energy program manager at Friends of the Earth: “This is a master class in war profiteering. Oil and gas companies are feeding off humanitarian disaster and consumer suffering in order to reward Wall Street.”

“Oil companies drove us into a climate crisis and are now price gouging us to extinction,” he warned. “Congress and President Biden must take action by passing a windfall profits tax to rein in Big Oil’s cash grab.”

The new analysis follows the introduction of multiple bills targeting Big Oil’s windfall profits, including a proposal spearheaded by Senate Budget Committee Chair Bernie Sanders (I-Vt.) designed to crack down on such behavior in all sectors, not just the fossil fuel industry.

Sanders on Tuesday morning held a hearing to call out how corporate greed and profiteering are fueling inflation. During his opening remarks, the chair took aim at Big Oil specifically while listing some examples.

“Yesterday, at a time when gasoline in America is now at a near-record high at $4.17 a gallon, guess what?” Sanders said. “ExxonMobil reported that its profit from pumping oil and gas alone in the first quarter will likely hit a record high of $9.3 billion.”

“Meanwhile,” he added, “Big Oil CEOs are on track to spend $88 billion this year not to decrease supply constraints, not to address the climate crisis, but to buy back their own stock and hand out dividends to enrich their wealthy shareholders.”

The House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations plans to hold a hearing Wednesday titled “Gouged at the Gas Station: Big Oil and America’s Pain at the Pump.” Top executives from BP America, Chevron, Devon Energy, ExxonMobil, Pioneer Natural Resources, and Shell USA are set to appear before the panel.

Originally published on Common Dreams by JESSICA CORBETT and republished under Creative Commons (CC BY-NC-ND 3.0).

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Hot-Lynx

No, the Richest One Percent Don’t Pay 40 Percent of the Taxes

September 18, 2021 Wiley Simms

NYMag Article details this deceptive talking point endlessly repeated by the Right

It’s hard to trace the origin of the partially accurate, yet highly misleading, stat that has been so often used to refute the idea that the current tax burden in the U.S. is not falling enough on the richest 1% compared to the rest of society.

The stat, which under the very narrow definition of “taxes” as federal income tax, calculated separately from any other form of tax, is, in this narrow sense, basically true. This isolated and totally meaningless fact does not address the overall taxes paid by the “top 1%” (which itself is an arbitrary category).

The reality, when overall taxes paid are taken into account, as the NT Mag article points out, is actually much less dramatic and has completely different implications for any call to “tax the rich” which was made by Alexandria Ocasio-Cortez’s Dress, as an example.

First, the top 1% represent 21% of all income, which means, by the narrow definition of declared income for tax purposes, that they “earn” more than 20% of the total income declared.

Above – :Bob Woodward’s new book: Peril – release date 09/21/2021 available to pre-order now

Further, this does not include the loopholes that allow billionaires to have virtually no declarable income and still avoid capital gains taxes via Roth IRAs and other methods, even as the calculated net worth of theses individuals increases by billions.

Opinion: ultimately, rather than defending the current system as if it is already adequate and somehow fair, the facts show that, on so many levels it’s hard to delineate them all, the system is functioning in a way that is not only unfair, but so corrupt that change would need to be nearly total before it could even be accurate to say that it was functioning fairly for the majority.

According to the article, the actual stat, with the above dodges, that are universally used, still not taken into account, is that: “the richest one percent earn about 21 percent of the income and pay 24 percent of the taxes”.

Which is a far cry from the ubiquitous sound byte that “1% pays 40% of taxes”.

Trump’s End game: Is a Moscow Asylum offer in the cards?

December 17, 2020 Eric Cho

Russia and others speculate on what will become of ‘Trumpusha’

When Trump leaves the White House come January 20th, he will undoubtedly have many obstacles to face, both legal and in his business concerns. Meanwhile, it still remains unclear if Trump has plans to try and preemptively pardon himself (and that point is moot since it only covers federal crimes), as he stands to face charges for numerous offenses related to fraud, tax evasion and sexual assault.

What will happen with Trump as he makes his likely final exit as president is a question on many people’s minds, including at the Kremlin, interestingly.

Russian state media have expressed concern about their dear “Trumpusha” or “Comrade Trump” as he is sometimes referred to. During a state-run TV talk show ‘Russia-1’, Olga Skabeeva brought up the “serious” possibility that the soon to be ex-President should seek asylum within Russia in order to avoid the prosecutions that will surely follow him at the end of his term.

Other Russian leaders also had more to say, such as Defense Ministry’s Public Council Igor Korotchenko, who also spoke out to defend Trump; which is reportedly a stark contrast to his traditionally combative stance toward other Western leaders.

“Russia can offer political asylum to the persecuted former president of the United States, Donald Trump. But let him not simply arrive to Rostov or elsewhere, but also transfer his capital here and finally build his famous Trump City somewhere in our New Moscow.”

Day by day the options for Trump dwindle and recede, it seems…

U.S. laws may or may not allow Trump to roam free after he is no longer protected by presidential immunity to prosecution. Yet in Russia, a country who’s laws have the ability to stretch and blur leaders’ accountability, like the constitutional amendment barring any criminal liability for Putin, should he ever step down, that was recently advanced.

The amendment that would secure immunity from any type of criminal prosecution not just within the tenure of the country’s former presidents, but lifetime criminal immunity. Which is just the kind of thing Trump might be wishing for right about now.

During the Russia-1 TV show, politician Vladimir Zhirinovsky spoke to the idea of potential last-minute surprises that could still be unveiled prior to the 20th of January.

“You don’t know Trump, he has plenty of tricks up his sleeve and can still cause lots of damage to America and the entire world.” This could be an indicator of the reason why Putin held out for as long as possible in acknowledging President-elect Joe Biden.

Ever the Trump cheerleader, Putin has some encouraging words

During an annual news conference, Putin, on center stage, spoke of Trump, future U.S.-Russia relations, as well as continued to deflect questions stemming from the long-standing allegations of Russia’s involvement with hacking and interference in the 2016 presidential elections.

When asked about the U.S. elections and what Trump’s future would hold, he seemed very optimistic on Trump’s possible future options when he said:

“He is an experienced man both in domestic and foreign policy, and we expect that all the problems that arose, or at least some of them, will be solved with the new administration. Trump, in my view, doesn’t have to find a job, almost 50% of the [US] population voted for him if we count the number of voters, not the electoral college. He has quite a large base of support in the U.S. and, as far as I understand, he is not going to leave the political life of his country.”
Vladimir Putin

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