Following a high-stress tax season, many Americans are fed up with billionaires' legal maneuvers through tax loopholes. Even the government is getting itchy, as leaders of the G7 nations propose a corporate tax that could impact international businesses like Amazon and Tesla. With Elon Musk's leaked tax returns now in public view, the reality of taxes on the wealthy is coming into light.
What do Musk's tax returns say about his own payments to the U.S. government?
ProPublica reports tax returns from Elon Musk and others
ProPublica's report, titled "The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax" leaves practically no stone unturned. Musk, Jeff Bezos, and Warren Buffett are of key concern in the report. Others include former NYC Mayor Michael Bloomberg and wealthy businessman Carl Icahn.
While ProPublica didn't release the returns, it took the onus of comparing its findings to that of the typical American household. The billionaires' wealth grew at a much more rapid rate compared to their total taxes paid. In contrast, the average household saw their total taxes paid grow largely in line with their wealth. When home values tanked, the average household's wealth shrunk while taxes continued to increase.
What Elon Musk's tax returns look like
From 2014–2018, Musk's wealth grew by $13.9 billion. He reported a total income of $1.52 billion and paid $455 million in taxes. That's a true tax rate of 3.27 percent.
According to the U.S. arm of the Organisation for Economic Cooperation and Development (OECD), the average single worker in America faced a net average tax rate of 22.4 percent in 2020.
Interestingly, Musk's quaint tax rate is actually much higher than his fellow big-name billionaires. Of Buffett's $24.3 billion wealth growth, he reported just $125 million in income and paid $23.7 million in taxes—for a true tax rate of 0.10 percent.
According to the report, Bezos's true tax rate was 0.98 percent, while Bloomberg paid out 1.3 percent.
Despite the fact that Musk is paying a higher rate than his peers, he's still skipping out on what many Americans would consider his fair share of taxes. Large corporations and stock market investments allow for wealth retention and he's definitely taking advantage of his position.
The tax return leak for Musk and others is illegal
Many people knew that billionaires paid less in taxes, but seeing the numbers is a totally different story. Their evasion isn't bound to put them behind bars, though. They're using legal methods to minimize their taxes. It's the structure of U.S. business that allows for this.
The Biden administration is digging into the leaked tax returns. According to U.S. Treasury spokeswoman Lily Adams, "The unauthorized disclosure of confidential government information is illegal."
What's next? Tax return data for Musk and others will be in the hands of the Office of the Inspector General, Treasury Inspector General for Tax Administration, FBI, and the U.S. Attorney's Office for Washington D.C.
As of the morning of June 10, Musk hasn't tweeted since the tax returns were leaked.