WASHINGTON — The wealthiest Americans – including Warren Buffett, Elon Musk and Jeff Bezos – paid little in federal income taxes at times in recent years despite soaring fortunes, according to Internal Revenue Service data obtained by ProPublica.

The tax information published Tuesday shows how billionaires are able to legally reduce their tax burden, highlighting how the American tax system can hit ordinary wage-earners harder than the richest people in the country. That’s often because the richest Americans tend to have their wealth tied up in stocks and real estate, allowing them to avoid taxes on unrealized profits.

Some tax experts said the ProPublica report fits with previously documented critiques of the U.S. tax system, but they were nonetheless surprised by the disclosure of such detailed personal information about some of the country’s richest individuals and how they benefit from the current tax laws.

“I think this is big because it tells the story of wealth and the way it is taxed in a way everybody kind of expected but didn’t know,” said Philip Hackney, a former IRS official who teaches tax law at the University of Pittsburgh.

The report comes after President Biden and other Democrats have complained the U.S. tax system is unfair and tilted to benefit corporations and the wealthy. There has been a fierce debate in Washington for decades about how much money the wealthy should pay in taxes, but little was known publicly about the tax payments of individual billionaires.

White House press secretary Jen Psaki declined to comment directly on the ProPublica report, calling it an inappropriate disclosure of confidential information. But, she said, “We know that there is more to be done to ensure corporations, individuals who are at the highest income are paying more of their fair share.”


ProPublica analyzed the data by focusing on the soaring fortunes of the country’s wealthiest members in recent years and alleged they were paying a “true tax rate” of just 3.4 percent. The news organization came up with this rate by calculating estimates of the value of their stock portfolios and other assets and then how much they paid in federal income taxes. This is not how tax rates are normally measured.

The core issue for many of these billionaires is how their income grows compared with how their wealth grows. The U.S. tax system focuses on income, not so-called “unrealized gains” from unsold stocks, real estate or other assets.

“These are extremely well-known facts,” said Jeffrey Hoopes, a tax expert and associate professor at the University of North Carolina at Chapel Hill.

“If you don’t realize [the income], you don’t pay,” Hoopes added.

Hackney, the former IRS official, echoed this point, noting the current tax system puts wage earners at a disadvantage.

“We are structured in an unequal way,” Hackney said. “The basic game if you’re very wealthy is, hold a lot of wealth, let it go up in value and generally to support your lifestyle, just borrow money.”


This wouldn’t change under Biden’s proposals for altering the U.S. tax code. Biden wants to nudge the top income tax from 37.9 percent to 39.6 percent for Americans earning more than $400,000 a year and raise taxes on the sale of certain assets – known as capital gains – from 20 percent to the top income rate.

Biden has rejected a so-called wealth tax, such as the one proposed during the presidential campaign by Sen. Elizabeth Warren, D-Mass., which would institute a tax on unsold assets for the ultra-rich. Biden has also proposed raising taxes on corporations, a number of which pay little if any corporate income taxes, according to some estimates. The president has also pushed to require wealthy people to pay taxes on all previously untaxed capital gains when they die, a change from current policy.

Another way of taxing wealth has been floated by Sen. Ron Wyden, D-Ore., who has proposed an annual tax on unrealized gains on stocks and bonds for wealthy individuals.

The Trump administration and congressional Republicans slashed taxes across the board in 2017, and Republicans have vowed to block any efforts by the Biden administration to roll back those changes. Their position has created a big roadblock for key pieces of Biden’s agenda, including the White House’s push to approve an infrastructure package.

There already was some data about taxes paid by the wealthiest Americans, but not with the detail found in what ProPublica said it obtained.

The IRS publishes a report on the taxes paid by the top 400 taxpayers based on adjusted gross income. The most recent version, which uses anonymous data, showed that in 2014 these richest Americans paid an average 23.13 percent federal income tax rate.


Information from individual IRS tax forms are closely guarded secrets and, in recent years, have loomed large in political fights after President Donald Trump refused to release his personal income tax forms in the run-up to and during his presidency, claiming his tax forms were under an IRS audit.

ProPublica did not disclose how it obtained the records, beyond saying it was from an anonymous source. Hoopes said he was surprised that someone was willing to take the legal risk. Just last week, a former Treasury Department official was sentenced to six months in prison after pleading guilty to leaking banks’ suspicious activity reports to a Buzzfeed News reporter.

The leak of individual tax information is illegal and has been referred to investigators at the IRS and FBI, Psaki said.

The records, though, purport to show Warren Buffett, head of Berkshire Hathaway, as having paid $23.7 million in federal income taxes on total income of $125 million from 2014 to 2018, which would indicate a personal income tax rate of 19 percent. ProPublica estimated that Buffett saw his wealth soar by $24.3 billion during that period and so his “true tax rate” was 0.10 percent.

Buffett has in the past called for tougher restrictions on the wealthy to prevent them avoiding paying taxes.

Likewise, Elon Musk, chief executive of Tesla, paid $455 million on $1.52 billion in income during the same period, when his wealth grew by $13.9 billion, accounting for a “true tax rate” of 3.27 percent, according to ProPublica.


Jeff Bezos, chief executive of Amazon and the owner of The Washington Post, paid $973 million in taxes on $4.22 billion in income, as his wealth soared by $99 billion, resulting in a 0.98 percent “true tax rate.”

Bezos filed a tax return in 2011 reporting he lost money due to bad investments, allowing him to claim and receive a $4,000 tax credit for his children, according to ProPublica.

Spokespeople for Musk and Bezos did not immediately respond to a request for comment.

In a statement to ProPublica, Buffett said that his company, Berkshire Hathaway, pays a large amount of corporate income tax and that he has planned for more than 99 percent of his personal wealth to go to taxes and philanthropy.

“I believe the money will be of more use to society if disbursed philanthropically than if it is used to slightly reduce an ever-increasing U.S. debt,” Buffett wrote in the statement.

“But that will be for Congress to determine,” through changes to U.S. tax policy, he added.

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