Top 25 U.S. Billionaires Pay Almost No Income Taxes

> NOW THEY ARE SOME OF THE WEALTHIEST AND MOST POWERFUL MEN IN THE WORLD.

JEFF BEZOS, MICHAEL BLOOMBERG, WARREN BUFFETT, ELON MUSK JUST TO NAME A FEW.

PULITZER PRIZE WINNING PROPUBLICA REPORTER JESSE EISINGER HAS DELVED INTO THEIR TAX RETURNS.

THESE BUSINESS MOGULS ONLY PAY A FRACTION OF THE HUNDREDS OF MILLIONS IF NOT BILLIONS OF DOLLARS OF THEIR FORTUNE.

HERE WE ARE SPEAKING WITH THEM HOW THEY MANAGED TO LEGALLY WORK THE SYSTEM.

THANKS.

JESSE EISINGER FROM POE PUBLICA JOINS US.

THERE ARE ONLY TWO THINGS GAUR AN 250ED.

DEATH AND TAXES.

HOW DID YOU FIND THIS?

WE HAVE OBTAINED -- PROPUBLICA HAS OBTAINED OVER 15 YEARS OF INFORMATION, TAX INFORMATION, TAX RETURNS AND INFORMATION FROM SCHEDULES THAT GO INTO THE RETURNS FROM THINGS LIKE STOCK TRADING, GAMBLING THOUSANDS OF THE WEALTHIEST INDIVIDUALS.

THIS IS REALLY JUST THE 1% OF THE 1%. WE'RE NOT COMMENTING ON HOW WE OBTAIN THE MATERIAL.

WE'RE TRYING TO PROTECT THE SOURCE OR SOURCES.

WE ARE EXPLAINING THAT WE VERIFIED IT EXTENSIVELY AND ARE BEING VERY CAREFUL STEWARDS OF THE INFORMATION.

WHEN YOU LOOK AT THIS, THIS IS A FIRST OF YOUR SERIES OF REPORTS, BUT YOU SEE A GLARING PATTERN HERE.

MOST OF US ANECDOTALLY THINK, WELL, THE RICH PROBABLY HAVE BETTER ACCOUNTANTS, ET CETERA, BUT WHAT YOU'RE SHOWING IS A STRUCTURAL FLAW IN THE SYSTEM.

YEAH.

EXACTLY.

THIS ISN'T ABOUT EVADING TAXES EXOTICALLY AND ILLICITLY, THIS IS ABOUT ROUTINE AND PERFECTLY LEGAL TAX AVOIDANCE STRATEGY.

YOU DON'T NEED A FANCY ACCOUNTANT FOR THIS.

WHAT WE SHOW IS THE SYSTEM AND THE SYSTEM'S ESSENTIAL UNFAIRNESS, WHICH IS THAT AVERAGE AMERICANS ARE STUCK IN THE TAX SYSTEM.

WE HAVE NO CHOICE IN THE MATTER.

WE WORKED TO LIVE, WE HAVE TO WORK.

WE GET SALARIES AND TAXES GET EXTRACTED FROM OUR PAYCHECK.

THE WEALTHY, THE ULTRA WEALTHY ESPECIALLY ARE COMPLETELY OUTSIDE OF THE SYSTEM ENTIRELY.

THEY DON'T HAVE TO TAKE INCOME.

WHEN THEY DO TAKE INCOME, IT'S IN THE TIME AND PLACE OF THEIR CHOOSING AND, THEREFORE, THEY CAN REALLY LOWER THEIR TAX BURDEN OR NOT HAVE A TAX BURDEN AND WHAT WE SHOW IS THAT SOME OF THESE GUYS, JEFF BEZOS, ELON MUSK, MICHAEL BLOOMBERG, CARL ICAHN, THEY ACTUALLY PAY ZERO IN FEDERAL TAXES IN RECENT YEARS.

SO JEFF BEZOS, LET'S TAKE A LOOK AT HIM FOR A MOMENT.

YOU HAVE A CARD ON YOUR WEBSITE.

IT SAYS BETWEEN 2014 AND 2018 HIS WEALTH GREW $99 BILLION BUT HIS TOTAL REPORTED INCOME, WHICH IS DIFFERENT THAN YOUR WEALTH GROWING, IS $4.22 BILLION, THAT'S ABOUT 4% OF HIS WEALTH.

AND ON THAT HE PAID $973 MILLION IN TAXES.

NOW, PEOPLE ARE GOING TO LOOK AT THAT NUMBER AND SAY $973 MILLION IN TAXES.

THAT'S A LOT OF TAX.

RIGHT.

WHAT'S THE POINT YOU'RE MAKING?

RIGHT.

IT DOES -- IT'S AN ENORMOUS NUMBER.

WE CAN'T EVEN CONTEMPLATE THAT NUMBER MUCH LESS THE $100 BILLION THAT HIS WEALTH GREW, BUT THE ESSENTIAL NUMBER HERE IS THAT IT IS A FRACTION, A TINY FRACTION OF HIS WEALTH GROWTH AND WHAT WE'RE ARGUING IN THE PIECE ESSENTIALLY IS THAT WEALTH GROWTH IS THE TRUE MEASURE OF HIS INCOME.

THE EQUIVALENT OF AVERAGE PEOPLE'S INCOME.

AND SO WHEN YOU COMPARE THAT FIGURE, THAT FIGURE OF ALMOST $1 BILLION TO $100 BILLION, IT'S ABOUT 1%. IT'S SLIGHTLY LESS THAN 1%. THE AVERAGE PERSON INCOME WHEN IT'S TAKEN OUT FOR TAXES, IT'S ABOUT 14%. SO THE AVERAGE PERSON MAKING 60 OR $70,000 A YEAR IS PAYING $14 IN TAXES EACH YEAR AND JEFF BEZOS ON THE RELEVANT FIGURE IS PAYING LESS THAN $1.

WHY DO WE THINK THIS IS THE RELEVANT FIGURE?

WELL, EVERYTHING EMANATES FROM WEALTH GROWTH FOR THE ULTRA WEALTHY.

THEY -- ALL OF THEIR POWER, ALL OF THEIR INFLUENCE, ALL OF THE WAY THAT THEY CAN PURCHASE LAVISH LIFESTYLES, JEFF BEZOS IS BUILDING A YACHT FOR HIS YACHT.

A YACHT THAT WILL TAKE HIS HELICOPTERS, WORTH ABOUT HALF A BILLION.

HE BOUGHT THE WASHINGTON POST FOR HALF THAT, $200 MILLION.

IT AFFORDS HIM POLITICAL INFLUENCE.

ALL OF THAT COMES FROM HIS WEALTH.

WHAT'S INCREDIBLE TO US, WHAT'S ASTOUNDING TO US IS THAT ALL OF THIS WEALTH GROWTH IS REALLY OUTSIDE OF THE TAX SYSTEM, ALMOST ENTIRELY BEINGS AND JUST NOT TAXED BECAUSE OF WHAT WE CHOOSE TO TAX IN THIS COUNTRY AND WHAT WE CHOOSE NOT TO TAX.

IN THOSE YEARS YOU HAD JEFF BEZOS FILINGS AND HE TOOK A TAX CREDIT.

IN 2011 HE REPORTED A VERY MODEST AMOUNT OF INCOME AND WAS ABLE TO WIPE THAT OUT WITH DEDUCTIONS AND BECAUSE OF THAT, HE HAD SO LITTLE INCOME HE WAS ABLE TO CLAIM THE CHILD TAX CREDIT FOR THEN 2 CHILDREN, $4,000.

SO HE ACTUALLY HAD NEGATIVE INCOME.

HE HAD CREDIT FROM THE U.S.

GOVERNMENT.

HE WAS THEN IN 2011 CLEARLY ONE OF THE RICHEST PEOPLE IN THE WORLD BUT EVERY DOLLAR COUNTS.

WHERE DO THE ULTRA WEALTHY GET THEIR MONEY TO SPEND, RIGHT?

I MEAN, YOU AND I HAVE CHECKING ACCOUNTS, SAVINGS ACCOUNTS, MAYBE A RETIREMENT ACCOUNT IF WE'RE LUCKY.

WE HAVE AN INCOME THAT COMES EVERY COUPLE OF WEEKS AND WE SAY, OKAY, THIS IS MY BUDGET.

IF YOU'RE SUPER WEALTHY AND YOU AREN'T GETTING AN INCOME, A LOT OF TECH BILLIONAIRES WILL ACTUALLY JUST WORK FOR A DOLLAR A YEAR, WHERE ARE THEY GETTING THAT MONEY?

YEAH, THAT'S A VERY GOOD POINT.

THEY DON'T TAKE SALARIES.

OSTENTATIOUS DISPLAYS OF SALARIES LIKE MARK ZUCKERBERG, SERGEI BRANDON.

WHERE DO THEY GET THE MONEY?

THE ANSWER IS, NOT FOR EVERYBODY, BUT OFTEN THEY'RE BORROWING.

THEY'RE BORROWING AGAINST THEIR STOCKS.

THEY PUT UP THEIR STOCK COLLATERAL AND THEY'RE BORROWING.

SOMEBODY LIKE ELON MUSK DISCLOSES IN A SECURITY FILING THAT HE'S PLEDGED TENS OF MILLIONS OF DOLLARS OF STOCK AND BORROWED AGAINST IT AGAIN FOR TENS OF BILLIONS OF DOLLARS.

AND THIS IS HOW THEY FUND THEIR LIFESTYLES.

THERE'S NO -- WE DON'T HAVE ANY EVIDENCE BEZOS IS BORROWING.

HE MAY BE, HE MAY NOT BE.

NOT EVERYBODY HAS THE SAME HYMN BOOK.

WHEN THEY BORROW THEY'RE NOT TAKING INCOME, THEY'RE NOT SELLING THEIR STOCKS, THEY'RE NOT PAYING CAPITAL GAINS ON THAT STOCK THAT THEY'RE NOT SELLING.

THEY'RE KEEPING CONTROL OF THEIR COMPANIES AND WHEN YOU BORROW, YOU DON'T PAY ANY INCOME TAX ON THE BORROWING.

SO IT'S A WIN WIN WIN IN ALL OF THE WAYS THAT YOU CAN IMAGINE.

SO IF I AM A BILLIONAIRE, I DECIDE TO GO TO A BANK AND SAY, YOU KNOW I'M GOOD FOR IT.

I'VE GOT MULTIPLE BILLIONS OF DOLLARS IN STOCK, WHY DON'T YOU JUST, WHAT, LOAN ME A COUPLE OF HUNDRED MILLION AT 2 OR 3% BECAUSE THAT'S CHEAPER FOR ME TO PAY YOU BACK THAN IT IS TO PAY UNCLE SAM IF I ACTUALLY CASH THAT OUT AND LOOK LIKE I MADE 200 MILLION?

YOU ARE THINKING SMALL, COUPLE HUNDRED MILLION.

CARL ICAHN HAS ESSENTIALLY SOMETHING LIKE A MORTGAGE FOR A BILLION TWO THAT WAS IN HIS TAX FILINGS, AND AS I SAY, ELON MUSK HAS TENS OF BILLIONS AND LARRY ELLISON OF ORACLE DISCLOSED IN SECURITY FILINGS YEARS AGO THAT HE HAD A $10 BILLION CREDIT LINE.

START THINKING A LITTLE BIGGER BUT, YES, BANKS ARE HAPPY TO OFFER THESE GUYS, THEY ARE GOOD FOR IT, AND THEY CHARGE RELATIVELY LOW INTEREST RATES AND YOU JUST ROLL OVER THAT DEBT ALL THE WAY -- SOMETIMES ALL THE WAY UNTIL YOU DIE.

WE'LL GET TO THAT IN A SECOND, BUT THE WHOLE STRATEGY IS ENCAPSULATED BY THE PHRASE BUY, BORROW, DIE.

THAT'S ED McCAFFREY PHRASE, HE'S A PROFESSOR FROM USC.

YOU BUY YOUR ASSETS, BUILD YOUR ASSETS.

OBVIOUSLY BEZOS AND MUSK BUILT THEIR COMPANIES.

YOU INHERIT, THE WALTON AND MARS FAMILIES HAVE INHERITED GREAT FORTUNES.

THEN YOU BORROW AGAINST IT.

THEN YOU CAN EVADE OR ESCAPE OR AVOID -- NOT REALLY EVADE BECAUSE IT'S ALL LEGAL.

YOU CAN AVOID TAXATION AT DEATH.

YOU CAN ESCAPE THE TAX MANEUVERS.

THEN ESSENTIALLY YOUR GREAT FORTUNE HAS BEEN ALMOST UNTAXED THROUGHOUT YOUR LIFE AND INTO DEATH.

HERE'S THE THING.

SOME OF THE PEOPLE THAT YOU PROFILED, YOU MADE BASEBALL CARDS OUT OF WARREN BUFFETT, MICHAEL BLOOMBERG.

THESE ARE PEOPLE WHO MICHAEL BLOOMBERG ON THE CAMPAIGN TRAIL CAMPAIGNED FOR CHANGES IN TAXES.

WARREN BUFFETT FAMOUSLY HAS COME OUT AND SAID THIS DOESN'T MAKE ANY SENSE THAT I PAY LESS TAX AS A PERCENT THAN MY SECRETARY DOES, RIGHT?

SO WHAT DID YOU FIND ABOUT WHAT THEY'RE DOING LEGALLY?

YEAH.

WELL, THAT'S A VERY INTERESTING QUESTION, BUFFETT, BECAUSE WHAT WE FOUND IS THAT NO ONE HAS AVOIDED MORE TAX FOR AS LONG AS WARREN BUFFETT.

AND HE'S REGARDED AS KIND OF GRAND FAIRLY FIGURE.

HE'S BELOVED AND OF COURSE HE HAS COME OUT, TO HIS CREDIT, AND SAID THAT THE WEALTHY DON'T PAY ENOUGH IN TAXES, BUT WHEN HE'S TALKING ABOUT THAT, HE'S TALKING ABOUT IT IN THIS EXTRAORDINARILY NARROW WAY WHERE HE SAYS, TAXES ON INCOME ARE TOO LOW FOR THE WEALTHY AND CAPITAL GAINS TAXES ARE TOO LOW.

HE SAID I HAVE CAPITAL GAINS SOMETIMES AND I PAY A VERY LOW RATE COMPARED TO MY SECRETARY.

HE'S RIGHT, HE PAYS A RELATIVELY LOW RATE.

BUT WHAT'S REALLY EXTRAORDINARY ABOUT WARREN BUFFETT, HE TAKES SO LITTLE INCOME.

HE TAKES TINY FRACTIONS OF HIS ENORMOUS WEALTH.

NOW HE'S WORTH OVER $100 BILLION.

HE TAKES TINY, TINY FRACTIONS OF THAT IN INCOME AND PAYS A VERY SMALL PERCENTAGE OF THAT.

WHEN WE MEASURED HOW MUCH HE PAID IN TAXES COMPARED TO HIS WEALTH GROWTH, HE ACTUALLY PAID 10 CENTS FOR EVERY $100 THAT HIS WEALTH GROSSED.

10 CENTS FOR EVERY $100 THE WEALTH GROSSED.

THE WEALTHY, THE TOP 25 PAID 3.40 DWZ FOR EVERY $100 THEIR WEALTH GREW.

THE RICHEST 25 PEOPLE IN AMERICA.

MEANWHILE, AS I SAY, THE AVERAGE AMERICAN WHEN YOU TALK ABOUT INCOME TAX, WHICH IS REALLY THE WAY THEY ARE TAXED, IT'S $14 FOR EVERY $100 THEY BRING.

IN YOUR ANALYSIS, THE 25 RICHEST AMERICANS SHOWED BY THE END OF 2018, THOSE 25 WERE WORTH $1.1 TRILLION, IT WOULD TAKE 14.3 MILLION ORDINARY AMERICAN WAGE EARNERS PUT TOGETHER TO EQUAL THAT SAME AMOUNT OF WEALTH.

THE PERSONAL FEDERAL TAX BILL FOR THE TOP 25 IN 2018, JUST THOSE 25 PEOPLE, WAS $1.9 BILLION.

THE BILL FOR THOSE WAGE EARNERS, THE 14 MILLION WAGE EARNERS PUT TOGETHER WAS $143 BILLION.

THOSE AVERAGE WAGE EARNERS ARE NOT ONLY PAYING A DISPROPORTIONATE SHARE OF THEIR OWN TAXES, THEY'RE PAYING MORE IN RAW NUMBERS AS WELL TO THE FEDERAL GOVERNMENT.

ABSOLUTELY.

AND THAT ASTONISHING FIGURE WAS DONE BY MY COLLEAGUE WHO HAS WORKED WITH ME ON THE STORY, AND WE REALLY WANTED TO HIGHLIGHT THIS BASIC IMBALANCE, THIS STUNNING IMBALANCE WHERE THE ULTRA WEALTHY CAN DEVELOP ENORMOUS SUMS FROM WHICH, AS I SAID, ALL OF THEIR POWER AND INFLUENCE EMANATES AND ALL THEIR MEANS EMANATES.

THOSE 14 PLUS MILLION PEOPLE ARE INSIDE THE TAX SYSTEM.

THEY'RE PAYING THEIR FAIR SHARE.

WE HAVE STRUGGLED TO ADEQUATELY FUND THE FEDERAL GOVERNMENT.

PERIODICALLY THEY ARE CONVULSED IN FEAR MEDICARE WILL GO BROKE.

ROADS AND BRIDGES ARE CRUMBLING.

WE NEED TO PROVIDE NATIONAL DEFENSE.

IF THE FEDERAL GOVERNMENT IS CONSTRAINED BECAUSE THE PEOPLE WITH THE MOST WEALTH ARE NOT PAYING THEIR FAIR SHARE, THEN WE WANTED TO HIGHLIGHT THAT SYSTEM AND REALLY SHINE A LIGHT ON IT.

THERE ARE A LOT OF WEALTHY PEOPLE, WARREN BUFFETT INCLUDED, WHO SAY I DON'T WANT TO GIVE IT TO UNCLE SAM.

I'M GOING TO GIVE 99.5% OF MY WEALTH AWAY, PHILANTHROPIC GIVING.

I THINK I'M A BETTER STEWARD OF MY HARD EARNED MONEY THAN THE GOVERNMENT IS.

WHAT'S WRONG WITH THAT IDEA?

HE SAID EXACTLY THAT.

I DON'T WANT TO HAVE MY MONEY BEING PAID -- HAVE THE DEBT PAID DOWN TO CHINA WHEN I CAN ALLOCATE IT TO SOMETHING THAT WILL DO MORE FOR SOCIETY.

ONE ANSWER IS, BOY, I WOULD LIKE TO ALLOCATE MY TAX DOLLARS THE WAY I WANT TOO.

I BET MOST PEOPLE HAVE PRETTY STRONG OPINIONS ABOUT HOW THE DUFUSSES IN WASHINGTON ARE SPENDING MY MONEY AND I COULD DO IT BETTER THAN WE DO.

THAT'S WHY WE HAVE ELECTIONS, WHY WE HAVE A DEMOCRATIC SOCIETY.

WE HAVE A SHARED DEMOCRATIC SOCIETY TO ELECT LEADERS TO ALLOCATE OUR TAX DOLLARS THE WAY THE MAJORITY THEORETICALLY WANTS.

THE OTHER THING IS PHILANTHROPY DOESN'T SOLVE THINGS.

PHILANTHROPY FOR THE ULTRA WEALTHY ARE WAYS THAT THEY CAN PUT FORWARD THEIR OWN POLICY CHOICES, TRY TO DOMINATE THE CONVERSATION, HAVE DISPROPORTIONATE INFLUENCE.

SOMETIMES THEY FUND POLITICAL CAMPAIGNS.

SOMETIMES THEY RIDE THEIR HOBBIES AND OBSESSIONS.

IT'S NOT REALLY THE WAY WE WANT TO RUN SOCIETY.

IT'S A DISTORTION OF SOCIETY TO HAVE BILLIONAIRES AND ALSO BE SUBSIDIZED BY TAXPAYERS.

ONE OF THE PUSH BACKS IS GOING TO BE CORPORATE TAXES, RIGHT?

WARREN BUFFETT SAYS BERKSHIRE HATHAWAY PAYS A TON OF CORPORATE TAXES.

WHAT'S YOUR PROBLEM HERE?

IF I HAVE MY MONEY IN THAT, MY CORPORATION IS ACTUALLY PAYING THOSE TAXES, I'M NOT TRYING TO STEAL FROM THE GOVERNMENT.

YEAH, THAT'S A VALID POINT AND THERE'S A LOT OF DEBATE AMONG ECONOMISTS ABOUT THIS.

WHAT I WOULD SAY ARE TWO THINGS.

ONE IS WE'RE IN A GOLDEN AGE OF CORPORATE TAX AVOIDANCE SO COMPANIES LIKE AMAZON, APPLE, FACEBOOK HAVE GONE TO GREAT LENGTHS TO MOVE OPERATIONS OVERSEAS AND AVOID AMERICAN TAX.

SOMETIMES THEY ALSO PAY ZERO IN TAX.

SO, YOU KNOW, AMAZON IS A TAX AVOIDER BOTH AT THE CORPORATE LEVEL AND AT THE OWNERSHIP LEVEL.

THE SECOND THING IS THAT CORPORATE TAXES DON'T SOLELY FALL ON THE OWNERS OF THE CORPORATIONS.

PROBABLY, THIS IS A MATTER OF DEBATE, BUT CONSUMERS PAY CORPORATE TAXES.

WORKERS PAY CORPORATE TAXES.

AT LEAST SOME ECONOMISTS THINK SO.

SO THIS IS SORT OF DISBURSED.

THAT'S NOT A DIRECT TAX ON THE OWNERS OF THE COMPANY.

NOT A DIRECT TAX ON BEZOS OR MUSK.

SO ONE WAY TO SOLVE THIS WOULD BE TO HAVE MORE DIRECT TAXES ON THE OWNERS OF THE COMPANY.

JESSE EISINGER, PROPUBLICA, THANK YOU VERY MUCH.