Newly published Internal Revenue Service data reveals that Michael Bloomberg, an illionaire and former New York City mayor who failed to win the Democratic presidential primary, pays less than half of the federal income tax rate that the average American taxpayer pays.
This revelation is part of ProPublica’s broad investigation that reveals the tax loopholes used by the 400 richest Americans every year to avoid paying the billions in federal income taxes most Americans must pay.
According to the investigation, “To be in the top 400, each person must make at least $110 million per year.” To earn $40,000, a typical American would need to work 2,750 years in order to equal the income of the lowest-earning member of this group.
ProPublica reports that Bloomberg “achieved one the lowest tax rates among the top 400” wealthiest Americans between 2013 and 2018, “partly because he took annual deductions greater than $1 billion, mainly through charitable contributions.”
Bloomberg paid an average federal income rate of only four percent during that period — less than half what the average American taxpayer (13.3%) pays each year. Bloomberg’s average rate actually is just 0.5% higher than the average of the bottom 50 percent income earners.
Bloomberg’s huge tax breaks stem from provisions that were signed into law by Donald Trump and George W. Bush.
Bush’s 2003 provision was made when his administration increased the long-term capital gains tax rate to include stock dividends. ProPublica reports that this alone helped to save $1.9 billion per year for the 400 richest Americans, including Bill Gates and Larry Ellison.
Trump’s provision, which was inserted into the Tax Cuts and Jobs Act by Sen. Ron Johnson (R.WI), allows owners of “pass-through” businesses to deduct up 20 percent of their profits. The owner receives seven cents per dollar in additional profits.
ProPublica reports that Bloomberg, who Forbes rates as the 20th richest person in the world in 2018, got the largest tax deduction under the new provision. This slashed his tax bill by almost $68 million.
Bloomberg isn’t the only billionaire who has received a tax boost through the provision. The Treasury Department economists found that 60% of the provision’s tax savings went to the top 1% of American income earners.
ProPublica reports that although there are many small pass through businesses, the majority of country’s pass-through profits flow to the wealthy owners a select few large companies.
Breitbart News reported for years that research consistently shows that Americans who are the most wealthy pay a lower overall tax rate than all Americans. The American middle class has fallen to an historic low.