On Wednesday morning, Jeff Bezos said in an interview on CNBC that Americans earning in the bottom half of incomes should not pay taxes.
“Why is a nurse in Queens who makes $75,000 a year paying more than $1,000 a month in taxes?” Bezos said. “That’s $1,000 that could help with rent, or groceries, or anything… To me, it’s kind of absurd that we’re doing this. We shouldn’t be asking this nurse in Queens to send money to Washington. They should be sending her an apology.”
Bezos argues that the lower half of earners only pay 3% of total taxes, so people like that nurse are struggling to make ends meet while devoting about 16% of their salary (per Bezos’ estimation) to pay taxes that barely move the needle in Washington.
This moment of empathy may be surprising coming from Bezos, one of the wealthiest people in the world. Billionaires like Bezos have taken advantage of holes in the tax system so that they pay income tax on just a small percentage of their annual gains. In 2007 and 2011, Bezos didn’t pay income tax at all. According to a ProPublica investigation, Bezos’ wealth increased $127 billion from 2006 to 2018, but he reported $6.5 billion in income. While this amounted to a huge $1.4 billion tax payment, this represented a tax rate of only about 1 percent.
This isn’t illegal. Americans are not taxed on unrealized capital gains, meaning that if Amazon’s stock balloons to make Bezos even more wealthy, he will only pay taxes once he sells that stock. The ultra-wealthy do whatever they can to hold onto their investments. Instead, they take out massive loans using their stock as collateral, live off of those loans, and avoid paying taxes on them, since those loans are technically debt.
Has Jeff Bezos finally realized how unfair this is? Does he now understand the frustration of the middle class, who can’t just take out loans on their heaping piles of company stock to avoid reporting capital gains?
“[Senator] Elizabeth Warren has made this point repeatedly… you and others are able to pay a lower tax rate — even though you’re paying an enormous sum in taxes — a lower tax rate than maybe I am, for example,” CNBC reporter Andrew Ross Sorkin asked Bezos.
Bezos is hardly likely to invite Senator Warren for dinner at one of his many mansions. In his words, the United States has a spending problem, not a revenue problem.
“We already have the most progressive tax system in the world,” Bezos said. “The top 1 percent of taxpayers pay 40 percent of all the tax revenue. The bottom half pay only 3 percent.”
Yet Bezos still pays taxes at a lower rate than most Americans. That fact remains true, even after he paid taxes on the Amazon stock he sold to fund Blue Origin, his space exploration company.
“If people want me to pay more billions, then let’s have that debate. But don’t pretend that that’s going to solve the problem,” Bezos said. “You could double the taxes I pay, and it’s not going to help that [nurse] in Queens.”
It’s fundamentally difficult to imagine that we couldn’t find some productive use of the billions more dollars Bezos could be paying in tax, even when juxtaposed with a gargantuan $7.4 trillion federal budget.
That nurse in Queens would probably find it helpful if she could reliably take public transit to work, or if she could send her children to public schools that actually have enough supplies to go around. She would probably appreciate it if she could go to the hospital in an emergency without having to worry about how she will pay thousands of dollars in medical bills.
Of course, these fantastical scenarios depend on our faith in the government to adequately distribute our tax dollars in ways that would help.
Bezos added, “If you really want to have a progressive tax system, you also want that money to actually be helping and not just dissolving in, you know, in like administrative bureaucracy.”
But money looks different when it’s a real, tangible thing — a finite number that appears in your bank account every other week, which must immediately cover rent, groceries, car payments, student loans, and other debts.
If it’s naive to dream of what we could accomplish if billionaires paid their fair share in taxes, then so be it. It’s also naive to think we can build data centers on the moon.
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