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Jeff Bezos says America has a tax problem \u2014 but not the one critics of billionaires usually point to.<\/p>\n
In a recent CNBC interview, the Amazon founder and executive chair argued that the federal government should stop collecting income taxes from the bottom half of U.S. earners altogether.<\/p>\n
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\u201cThe top 1% of taxpayers pay 40% of all the tax revenue. The bottom half pay only 3%,\u201d Bezos said (1). \u201cI think it should be zero. I don\u2019t think it should be 3%.\u201d<\/p>\n
According to the Tax Foundation (2), the top 1% of taxpayers earned 20.6% of total adjusted gross income in 2023 and paid 38.4% of all federal income taxes. Meanwhile, the bottom half of taxpayers paid just 3.3% of federal income taxes.<\/p>\n
That helps explain Bezos\u2019s argument: If the bottom 50% account for only a small slice of federal income-tax revenue, eliminating that burden could matter far more to struggling households than it would to Washington\u2019s overall revenue picture.<\/p>\n
He used a Queens nurse as an example.<\/p>\n
\u201cWhy is a nurse in Queens who makes $75,000 a year paying more than $1,000 a month in taxes?\u201d he asked. \u201cThat\u2019s $1,000 a month that could help with rent or groceries \u2026 We shouldn\u2019t be asking this nurse in Queens to send money to Washington. They should be sending her an apology.\u201d<\/p>\n
To be sure, individual income taxes are the single largest revenue source for the U.S. federal government \u2014 so even a relatively small drop in that category could still amount to a meaningful sum. But Bezos argued that Washington could make up the difference by cutting waste.<\/p>\n
\u201cThe Amazon CFO could find 3% in the federal budget on a Tuesday afternoon,\u201d he said. \u201cThere is so much waste in government spending.\u201d<\/p>\n
Bezos says taxing him more isn\u2019t the answer <\/p>\n
Bezos also addressed the criticism often aimed directly at billionaires like him: that the ultra-wealthy should pay more.<\/p>\n
With a net worth estimated at about $275 billion, Bezos has long been a target for critics who argue billionaires benefit from a tax system that treats wealth more favorably than wages.<\/p>\n
Bezos rejected the idea that simply raising his tax bill would solve the problem facing lower-income Americans.<\/p>\n
\u201cThese people sometimes say that I don\u2019t pay taxes,\u201d he said. \u201cThat\u2019s not true. I pay billions of dollars in taxes.\u201d<\/p>\n
He added that he is willing to have a debate over whether he should pay more. But he argued that linking higher taxes on him to direct relief for ordinary workers is misleading.<\/p>\n
\u201cDon\u2019t pretend you know that that\u2019s going to solve the problem,\u201d he said. \u201cYou could double the taxes I pay, and it\u2019s not going to help that teacher in Queens \u2014 I promise you.\u201d<\/p>\n
Read More: Non-millionaires can now hoard property like the 1% \u2014 how to start with as little as $100<\/a><\/p>\n The rich play a different tax game <\/p>\n Bezos\u2019s comments put a spotlight on one of the biggest debates in America\u2019s tax system.<\/p>\n Most workers earn wages. Taxes come out of every paycheck. Their income is visible, regular and hard to shield.<\/p>\n Yet for decades, high-net-worth individuals have used proven strategies \u2014 and specific types of assets \u2014 to legally slash what they owe to the IRS. According to a ProPublica report (3), some U.S. billionaires \u2014 including Bezos \u2014 paid little or no federal income tax in certain years relative to the vast wealth they accumulated over time.<\/p>\n That\u2019s largely because billionaires build their wealth through assets \u2014 not wages. As the value of these assets rises, their net worth grows, but the U.S. tax system isn\u2019t designed to fully capture those gains. Capital gains are typically taxed at lower rates than regular income, and taxes aren\u2019t owed until the assets are sold.<\/p>\n In fact, as NYU Stern professor Scott Galloway<\/a> once put it, if you\u2019re trying to build wealth, you have \u201can obligation to pay as little tax as possible.\u201d<\/p>\n One asset class America\u2019s wealthy have relied on for decades is real estate \u2014 in part because of the generous tax treatment it receives.<\/p>\n When you earn rental income from an investment property, you can claim deductions for a wide range of expenses, such as mortgage interest, property taxes, insurance and ongoing maintenance and repairs.<\/p>\n Real estate investors also benefit from depreciation \u2014 a tax deduction that recognizes the gradual wear and tear of a property over time. Investors can also use tools like refinancing and 1031 exchanges to keep their capital compounding instead of cashing out.<\/p>\n Today, you don\u2019t need to be a millionaire \u2014 or even to buy a single property outright \u2014 to invest in real estate. Crowdfunding platforms like mogul<\/a> offer an easier way to get exposure to this income-generating asset class.<\/p>\n Mogul is a real estate investment platform offering fractional ownership in blue-chip rental properties<\/a>, which gives investors monthly rental income, real-time appreciation and tax benefits \u2014 without the need for a hefty down payment or 3 a.m. tenant calls.<\/p>\n Founded by former Goldman Sachs real estate investors, the team hand-picks the top 1% of single-family rental homes nationwide<\/a> for you. In other words, you gain access to institutional-quality offerings for a fraction of the usual cost.<\/p>\n Each property undergoes a rigorous vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Offerings often sell out in under three hours<\/a>, with investments typically ranging between $15,000 and $40,000 per property.<\/p>\n You can sign up for an account and then browse available properties here<\/a>.<\/p>\n Keep more of what you earn <\/p>\n The wealthy don\u2019t just focus on what they invest in. They also pay close attention to where those investments sit. Using tax-advantaged retirement accounts can be a powerful way to keep more capital compounding over time.<\/p>\n For instance, traditional IRAs and Roth IRAs allow investments to grow either tax-deferred or tax-free, depending on the account type.<\/p>\n While many retirement accounts primarily hold stocks and mutual funds, some investors choose to diversify further. Ray Dalio, founder of the world\u2019s largest hedge fund, Bridgewater Associates, has repeatedly warned that many portfolios lack one key safe-haven asset: gold.<\/p>\n \u201cPeople don\u2019t have, typically, an adequate amount of gold in their portfolio,\u201d Dalio told CNBC<\/a> last year. \u201cWhen bad times come, gold is a very effective diversifier.\u201d<\/p>\n Long seen as the ultimate safe haven, gold isn\u2019t tied to any single country, currency or economy. It can\u2019t be created at will by central banks like fiat money, and in times of economic turmoil, market turbulence or geopolitical uncertainty, investors tend to pile in \u2014 driving up its value.<\/p>\n Despite a recent pullback, gold prices have surged by more than 40% over the last 12 months.<\/p>\n One way to invest in gold that can also provide significant tax advantages is to open a gold IRA with the help of Goldco<\/a>.<\/p>\n Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold<\/a>, making it a compelling potential option for those wanting to ensure their retirement funds are diversified during rough economic times.<\/p>\n Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver<\/a>.<\/p>\n If you\u2019re curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today<\/a>. Just keep in mind that, typically, gold is best used as one part of a well-diversified portfolio.<\/p>\n Work with an expert <\/p>\n The ultra-wealthy often have teams of professionals helping them structure their finances, manage investments and think through the tax consequences of major decisions.<\/p>\n But you don\u2019t need a billionaire\u2019s balance sheet to benefit from expert guidance.<\/p>\n A qualified financial advisor can help you look at the full picture \u2014 your income, investments, retirement accounts, real estate, tax situation and long-term goals \u2014 and build a strategy that\u2019s designed to keep more of what you earn working for you.<\/p>\n That can be especially important when the tax code treats different types of income differently. Wages, capital gains, dividends, retirement withdrawals and real estate income can all come with different rules \u2014 and the right strategy can help you make smarter decisions before tax season arrives.<\/p>\n If you have a portfolio of $250,000 or more, platforms like WiserAdvisor<\/a> can connect you with vetted professionals who specialize in this kind of planning.<\/p>\n Simply answer a few questions about your savings, retirement timeline and overall investment portfolio.<\/p>\n From there, WiserAdvisor reviews its network to match you \u2014 for free \u2014 with up to three vetted, reputable advisors aligned with your specific needs.<\/p>\n You can then schedule no-obligation consultations<\/a> with your matches to determine who is the best fit for your long-term goals.<\/p>\n WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.<\/p>\n You May Also Like <\/p>\n Join 250,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/p>\n Article Sources <\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines<\/a>.<\/p>\n CNBC Television\/ YouTube (1)<\/a>; Tax Foundation (2)<\/a>; ProPublica (3)<\/a><\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. 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