Bezos, for example, got $77 billion richer in 2020, according to the Bloomberg Billionaires Index. But in the U.S., gains on stock are only taxed when they’re sold, at a far lower rate than well-off workers pay, meaning that Bezos owed at most a few billion dollars in taxes to the U.S. Treasury last year.
“This country’s wealthiest, who profited immensely during the pandemic, have not been paying their fair share,” Senate Finance Committee Chairman Ron Wyden said after ProPublica reported on Tuesday that several of the world’s billionaires, including Bezos, didn’t pay any federal income taxes in some years.
The media organization said it obtained confidential tax documents on thousands of the wealthiest Americans, including for Warren Buffett and Michael Bloomberg, owner of Bloomberg LP, the parent company of Bloomberg News. Bloomberg and others told ProPublica they had paid the taxes they owed.
To remove advantages in the U.S. tax code that benefit the ultra-wealthy, Biden has proposed taxing inherited assets that currently escape levies, and boosting the top rate on investment income so that well-paid workers and investors pay the same.
On an international scale, the administration is seeking a global minimum tax of at least 15% for the world’s most profitable companies -- the deal expected to be pushed forward at the G-7 meeting this weekend.
The G-7 deal would change other rules for taxing multinationals, in order to undercut efforts to shift profits to low-tax countries. Biden is also advocating to increase the U.S. corporate rate to 28%, partly reversing Trump’s tax overhaul.
Tech companies could see their effective tax rates jump if a global tax deal is reached, according to research from Morgan Stanley. Facebook and Alphabet’s Google could both pay 28% on their profits worldwide, up from 18% and 17% respectively under current rules, the report found.
For all the talk of taxing the rich, Biden’s proposals, and the international tax deal, face serious hurdles before they’re adopted.
While some of his fellow Democrats, who narrowly control Congress, are pushing for more radical changes to the taxes of estates and wealth, others are hesitant.
The next step for the global tax negotiations, which were launched years ago by the Organization for Economic Cooperation and Development and have involved roughly 140 nations, is to win agreement among the Group of 20 countries. Finance ministers for the G-20, which collectively oversee about 90% of the world’s economy, will meet in July in Venice.
Stumbling blocks to reaching a deal by year-end include China, which may seek exemptions from the minimum tax.
Still, there are hopes the global effort “puts an end to the craziness,” said Pascal Saint-Amans, director of the center for tax policy at the OECD. “You had loopholes everywhere and nobody was taking care of that. It’s undermining the very goal of capitalism and a free-market economy.”
This article was provided by Bloomberg News.