Jeff Bezos Once Claimed Child Tax Credit Even Though His Net Worth Was $18 Billion
When Jeff Bezos was worth $18 billion in 2011, he owed nothing in federal income taxes. That same year he also received a $4,000 child tax credit, according to Business Insider, per ProPublica.
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ProPublica, a nonprofit newsroom focused on investigative journalism and public interest, recently obtained and shared the confidential tax records of Bezos and other wealthy individuals including Warren Buffett, Bill Gates, Rupert Murdoch, Elon Musk and Mark Zuckerberg.
The data that was shared shows that Bezos paid nothing in federal income taxes in 2007 and again in 2011 because he lost more money in investments during those years than he earned. His income was so low that he was able to receive a tax credit of up to $1,000 per child for each of his four children. Insider pointed out that to claim the credit households cannot earn over $100,000 per year.
So how did Bezos get the credit? Investment losses can help reduce taxes by offsetting income or gains. Specifically, Bezos’ wealth is tied to stock which doesn’t affect your tax bracket until shares are sold. Sold shares count towards taxable income for that year.
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Furthermore, between 2006 and 2018, while Bezos’ overall wealth increased by $127 billion, his reported income was $6.5 billion so he only paid $1.4 billion in federal income taxes, according to Forbes, as reported by Insider. This equates to a 1.1% tax rate on his wealth increase, per ProPublica.
In contrast, the average American household actually pays more in taxes than it has in accumulated in wealth. According to ProPublica, a person making $65,000 will pay a year’s salary in taxes every five years.
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