ProPublica: The Secret IRS Files

April 13, 2022 12:40 PM

ProPublica: Secret IRS files reveal the top US income-earners and how their tax rates vary more than their incomes. Tech titans, hedge fund managers and heirs dominate the list, while the likes of Taylor Swift and LeBron James didn’t even make the top 400.

A trove of IRS data obtained by ProPublica has the definitive answers, revealing the incomes and tax rates of the 400 Americans with the highest incomes from 2013 to 2018. It took an average of $110 million per year in income to crack that list — with plenty of names you would expect and some that may surprise you.

We’ll also show how much the 400 paid in federal income taxes. (ProPublica is naming the 15 highest income earners, along with an assortment that represent income patterns that we’ve identified.)

posted by hippybear (35 comments total)

A spokesperson for Mark Zuckerberg said, “Mark has always paid the taxes he is required to pay.”

Therein lies the problem.

That, and that not a single one of them approach this amount of value to society. In most cases, *cough* DeVos *cough*, QUITE THE OPPOSITE.
posted by mcstayinskool at 12:53 PM on April 13, 2022 [34 favorites]

Well, its always nice to have a new goal to aspire to.
posted by pwnguin at 12:53 PM on April 13, 2022

Wasn't this posted here before? I know I've read the article before...
posted by subdee at 12:59 PM on April 13, 2022

It was just published today, so.... I don't think so?
posted by hippybear at 1:01 PM on April 13, 2022 [2 favorites]

They had a previous article or two based on IRS data.
posted by BungaDunga at 1:02 PM on April 13, 2022 [1 favorite]

This seems relevant here:

The Wall Street Journal Makes The Case For Expropriating Billionaires

The paper says redistributing the wealth of the 735 richest people would “only” give every single person $14,000. But that would be amazing.

posted by eviemath at 1:11 PM on April 13, 2022 [33 favorites]

So many Walmart heirs.
posted by ishmael at 1:14 PM on April 13, 2022 [10 favorites]

Meanwhile, last week I stumbled onto a discussion thread about a guy who had defaulted on his student loans, had his wages garnished and his life destroyed, and finally talked the collections agency into settling his $120K in debt for something like $3K... and the thread was full of people reminding him that he had to declare the written-off debt as income and pay taxes on it, or else the IRS would ruin his life some more.

Morning in America.
posted by Mayor West at 1:30 PM on April 13, 2022 [43 favorites]

When the revolution comes, this report shall be our dinner menu.
posted by DirtyOldTown at 1:45 PM on April 13, 2022 [8 favorites]

[ redacted ]
posted by seanmpuckett at 2:01 PM on April 13, 2022 [2 favorites]

Somehow, up until I read this, I hadn't realized that the DeVos fortune was from fucking Amway.
posted by Dr. Twist at 2:34 PM on April 13, 2022 [11 favorites]

Thanks Bunga Dunga! I was thinking of the previous article you linked. It's funny, because I came away from that one with the impression that even raising the capital gains tax from 20% to 40%, like Biden was proposing at the time, wouldn't fix the underlying problems since that report was focused on how billionaires avoid paying ANY taxes (by not paying themselves an income and just taking out untaxed loans against the value of their wealth until they die).

But reading this article, there were lots of stock sales this year so that capital gains increase would have made a difference, after all...
posted by subdee at 2:44 PM on April 13, 2022 [1 favorite]

Kind of maddening that even when billionaires do pay taxes, they still pay them at lower rates than non-billionaires. And they point out in the article that the lower tax rates on capital gains compared to wages means the tech guys pay less than the manufacturing guys, which seems unfair all over again even when comparing between billionaires.
posted by subdee at 2:46 PM on April 13, 2022

Somehow, up until I read this, I hadn't realized that the DeVos fortune was from fucking Amway.

And her brother is Erik Prince, who made his fortune through the private mercenary firm Blackwater.
posted by ishmael at 2:49 PM on April 13, 2022 [13 favorites]

The problem is this is all about income, but people at this level don't deal with income. They all use the "buy, borrow, die" strategy of using their assets to obtain financing that lets them be fabulously rich without counting as income for tax purposes. Sure they do earn income as shown in this article, but that's a tiny fraction of their real wealth. The tax laws need to be changed to deal with this stupid game.
posted by star gentle uterus at 2:51 PM on April 13, 2022 [19 favorites]

What's worse is that when billionaires spend their capital like income they don't sell assets and pay capital gains on it. No. Billionaires borrow against the value of their assets. They have a credit line that they pay maintenance on until their deaths where...

CAPITAL GAINS ON ASSETS HELD UNTIL DEATH ARE NOT TAXED.

The estate gets to liquidate the fucking assets used to settle the debt AND PAY NO TAXES ON THESE SALES.

You wonder how they channel so much wealth between generations? It's because they pay very smart people less money than they would pay the government to figure out how to pay the government less.
posted by Your Childhood Pet Rock at 2:51 PM on April 13, 2022 [43 favorites]

Elon Musk is #118 on the "Top 400 Income Earners" list in the FPP. "To make it into the top 400, each person on this list had to make an average of at least $110 million each year."

Elon Musk saved $143 million by reporting Twitter stake late, shareholder suit claims (NPR, April 12, 2022) Under securities laws, Musk was supposed to alert the Securities and Exchange Commission within 10 days after purchasing 5% or more of Twitter's stock. But Musk did not file his SEC paperwork until April 4, or 11 days after he was supposed to, and by that point, Musk had amassed a more than 9% stake in the social media company, becoming its largest shareholder for the price of about $2.6 billion. [...] Musk "knew or recklessly disregarded" that he had an obligation to file paperwork with the SEC, according to the suit, which estimates that the delayed filings saved Musk about $143 million, or a tiny fraction of his wealth. Musk is the richest person in the world.

Musk, who is known for frivolous and sometimes trolling content on Twitter, has teased the idea of adding an edit button to Twitter and has floated more outlandish proposals, like converting the company's San Francisco headquarters into a homeless shelter.

The suit.
posted by Iris Gambol at 2:57 PM on April 13, 2022 [6 favorites]

only tangentially related but: how is it that we all don't collectively, permanently refer to Musk as "that pedo guy"?
posted by glonous keming at 3:17 PM on April 13, 2022 [9 favorites]

Maybe we make it so you can’t get a loan unless you can prove you actually need it. Billions in stock? No loan. Sell the stock, spend the money.
posted by freecellwizard at 3:25 PM on April 13, 2022 [7 favorites]

I do wonder if we will get rid of this oligarchic class without violence. Our politics seem very very wedded to capitalism, and unless the government dismantles a good portion of that in various way for various reasons, this will never get any better.

I'm not advocating for violence at all. I just wonder what the paths toward correction are when it's pretty obvious that legislation will not happen soon enough.
posted by hippybear at 4:03 PM on April 13, 2022 [8 favorites]

It seems to me that the stepped up basis is the real "problem", because it enables the very rich to avoid all these nice increases in taxes, so that should really be the first target and perhaps after you take care of that you don't need another target.

I think that Americans tend to believe that inherited wealth doesn't stick around that long (one generation to build it, one to manage it, and one to spend it), which might be true for the merely wealthy. But for the mega-rich it's a different matter. Rockefeller died nearly a century ago, but his heirs are still a very rich bunch (not Musk rich, but billions are still billions). The Mars family has multiple generations of wealth. Ditto the Waltons and Dorrances. Families these days are much better at managing vast sums of money and keeping them intact and also at staying out of the limelight.

I don't really have a problem with the captains of industry making bucks (that's the capitalist in me), but when you have someone who is a billionaire because great-grandfather founded a company, that's when I start muttering things about socialist revolutions and inquiring about the prices of guillotines ("lightly used" Do I want to know?).

Plus, there's also the fact beyond a certain amount of money it's all just a high score. There are actually differences in life between someone with $10 million and someone with $100 million and someone with $1 billion. Someone with $10 billion vs $20 billion? Or even $100 billion? Not so much. At that point you can buy just about anything you want and live exactly the kind of life you choose to live. Doubling your money wouldn't change your life or lifestyle that much. That bugs me. Money should mean something.
posted by It's Never Lurgi at 4:29 PM on April 13, 2022 [13 favorites]

I do wonder if we will get rid of this oligarchic class without violence. Our politics seem very very wedded to capitalism, and unless the government dismantles a good portion of that in various way for various reasons, this will never get any better.

I'm not advocating for violence at all. I just wonder what the paths toward correction are when it's pretty obvious that legislation will not happen soon enough.

I think the window for non-violent solutions is rapidly closing due to environmental and climate factors.
posted by Ray Walston, Luck Dragon at 5:22 PM on April 13, 2022 [8 favorites]

I am curious about how they received this material.

ProPublica is excellent!
posted by doctornemo at 5:26 PM on April 13, 2022 [2 favorites]

I am curious about how they received this material.

They could tell you, but....
posted by hippybear at 5:29 PM on April 13, 2022

...and has floated more outlandish proposals, like converting the company's San Francisco headquarters into a homeless shelter.

To be fair, SF needs housing for the homeless. Lots of it.
posted by Thorzdad at 5:43 PM on April 13, 2022 [1 favorite]

Any Russian oligarch-owned properties in SF that could be seized and used for the unhoused people? That could be feasible.
posted by hippybear at 6:10 PM on April 13, 2022 [4 favorites]

...and has floated more outlandish proposals, like converting the company's San Francisco headquarters into a homeless shelter.

- To be fair, SF needs housing for the homeless. Lots of it.

Yes. It's the "richest man in the world" offering up sound bites and polling his Twitter followers about it that's questionable, although: The chief executive of electric vehicle maker Tesla Inc (TSLA.O), who frequently tweets about his company and other topics, has been known to leave people confused as to whether he is joking. However, Musk clarified this time he was not joking. "I'm serious about this one btw," he tweeted, following up on the topic on Sunday. (Reuters, April 10, 2022). Jeff Bezos responded to the idea with "Or do portion. Worked out great and makes it easy for employees who want to volunteer", linking to 2020 coverage of Mary’s Place Family Center, an 8-floor homeless shelter attached to an Amazon office building in Seattle. (It's the largest shelter in Washington; "Amazon estimates the collective value of its contributions to Mary’s Place and [restaurant-job-training nonprofit] FareStart — including annual rent — to be more than $130 million." Bezos, #15 on the ProPublica list, later deleted the tweet.)

Btw, Elon Musk officially ‘owns no home’. He's said he rents (from SpaceX) a 400-square-foot, 50K prefab in Boca Chica (I'm not calling the town "Starbase," that's reserved for gagillionaires), when per WSJ (via Forbes), Musk has been living in a nearly 8,000-square-foot estate owned by [Ken] Howery, the co-founder of PayPal and former U.S. ambassador to Sweden — when Howery bought it in 2018 for $12 million, it was the most expensive property then on the market in Austin.

The FPP goes into the perfectly-legal methods billionaires employ to lessen their tax bills further, including business expenses and charitable donations.
posted by Iris Gambol at 8:03 PM on April 13, 2022 [4 favorites]

Maybe we make it so you can’t get a loan unless you can prove you actually need it. Billions in stock? No loan. Sell the stock, spend the money.

We actually have the opposite of that right now, ie you can't borrow any money unless you prove you don't need it. So yeah, that would be a huge change and one for the better. Heck, minimally to even the playing field would be a positive change.
posted by The_Vegetables at 8:25 AM on April 14, 2022 [2 favorites]

Someone with $10 billion vs $20 billion? Or even $100 billion? Not so much. At that point you can buy just about anything you want and live exactly the kind of life you choose to live. [...] That bugs me. Money should mean something.

Well, can't say ol' Elon isn't working on that one. I mean the merely wealthy can buy a yacht to console themselves when they're feeling down, but only someone with Muskian Fuck You Money can afford to casually contemplate buying Twitter—that's #24 on the Fortune Future 50, #647 on the Fortune 500+, kinda a big deal—when some guy wouldn't take a measly $50k to stop tracking his private jet. That's next level.

Gotta hand it to him (sorry dril), he's done more to advance the cause of socialism than I think he credits himself with.
posted by Kadin2048 at 2:51 PM on April 15, 2022

But that would be amazing.

It seems there are several US senators and congressional reps who would be astonished to learn that $14,000 is a huge amount of money to most Americans.
posted by cinchona at 3:20 PM on April 16, 2022 [2 favorites]

Above, it is alleged that, for billionaires, CAPITAL GAINS ON ASSETS HELD UNTIL DEATH ARE NOT TAXED. This is wrong. The claim overlooks the 40% estate tax, which kicks in at around a $12m threshold and has dominion over capital gains. You could argue that the $12m threshold should be lowered, so that the estate tax would hit the rich as well as the megarich. You could argue that the figure of 40% is unsatisfactorily low. But the notion that there is some gigantic bolus of family wealth that is routinely being passed down through generations, entirely untouched by estate taxes or other semi-voluntary devices (like the tax code’s deduction for charitable contributions), is fantastical and absurd. These accumulations are being whittled down (although, to repeat, you could argue that they aren’t being whittled down rapidly or extensively enough for your taste). I promise, the estate tax counts as a tax.
posted by PaulVario at 4:35 PM on April 16, 2022 [1 favorite]

Except, of course, it seems like they are also not always paying estate taxes... ProPublica article from last year: More Than Half of America’s 100 Richest People Exploit Special Trusts to Avoid Estate Taxes
posted by Hairy Lobster at 4:48 PM on April 16, 2022 [2 favorites]

@HL: If you read the article you linked, you’ll see that it discusses strategies that avoid the estate tax by … creating other tax and spending obligations. The article uses a lot of ominous acronyms to describe what’s going on, but I think the terminology is more sizzle than steak. The overall strategy in these maneuvers is to transfer family wealth into investments and thereby shield that wealth from operation of the estate tax. Curiously, the article does not discuss the individual consequences of investment losses that might stem from this strategy, nor the broad social and economic consequences of the capital investment produced that presumably counterweigh against the “lost” estate tax revenue.

I absolutely agree that shrewd tax planning allows the megarich to reduce the burden of the estate tax! But it’s reduced by paying *other* taxes, making charitable contributions, and so forth. Big estates are going to get taxed at transmission, period — even though (again) it’s possible to reduce the effective rate. Note that the PP article is heavy on innuendo but extremely light on anything approaching an estimate of the fraction of the typical estate’s wealth that is shielded by these maneuvers.
posted by PaulVario at 5:37 PM on April 16, 2022

So I think there's a lot of confusion around about estate taxes, because it's one of the areas of tax law that has changed the most in the last decade or two.

IIRC, there actually was a way to dodge Federal estate tax on large estates ($11M+) by using a Generation Skipping Trust. For a while, anyway. Pretty sure this loophole was plugged in the 80s, and for a while the GST vehicles had a punitively high tax rate of like 50%. That dropped in the early 2000s, and was back to 0% for a brief period in 2010 or so. It's since gone back up, but I think the trigger on it is the same as regular estate tax, which as PaulVario notes, is somewhere around $12M.

Certainly if you have more than a dozen-million (dozmillion?) bucks, you can probably hire some good tax lawyers and figure out a way to minimize tax exposure. But that's indicative of a more general problem with the US tax system, which is rich people being able to evade taxes with the help of fancy lawyers due to the inherent complexity of the tax code, basically legally gish-galloping their way past the IRS's limited resources available for enforcement.

You'd think that setting up some sort of special "Billionaire Tax Investigation Office" inside the IRS, dedicated solely to running every shady tax-dodge argument presented by the ultra-rich—and only the ultra-rich, no going after regular folks—to ground, making sure they've dotted every I and crossed every T, would be a political winner. That nobody seems to go down this road, year after year, Democrat or Republican, is sort of suggestive... that perhaps they don't want to.
posted by Kadin2048 at 8:50 PM on April 19, 2022

The Trumps evaded estate taxes by just blatantly illegally siphoning money out of Fred Trump's real-estate into a sham maintenance company owned by his children by padding expenses, so it's not like these schemes have to be legal or even particularly clever, you just have to hope the IRS doesn't have the time or money to do anything about it.
posted by BungaDunga at 1:30 PM on April 20, 2022 [1 favorite]