But Bezos’s assets appreciated by $99 billion during that period. For example, the ProPublica article reveals that Bezos reported $4.2 billion in income to the IRS during the five-year period examined, a substantial sum by most measures. This arcane point is hugely consequential. Billionaires like Warren Buffett, Jeff Bezos, Michael Bloomberg, and Elon Musk can avoid paying income tax by simply holding on to their assets.
Tax rules count capital gains as income only if and when the owner of an asset sells it, at which point the appreciation is calculated as the profit from the asset sale, also called a “realized” capital gain. But if that person’s net worth grew only because their assets appreciated, tax rules do not count that $1 million as income.
Most economists consider unrealized capital gains to also be a type of income, even though it is not taxed under our current laws.įor example, if someone’s net worth was $4 million last year and is $5 million this year, an economist would say that person must have had income of at least $1 million. The exposé presents the income these billionaires report to the IRS as well as their asset appreciation, which is called unrealized capital gains.
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