Amazon CEO Jeff Bezos, Tesla CEO Elon Musk, and former New York City Mayor Mike Bloomberg are all among the list of billionaires who have avoided paying any federal taxes for certain years, according to the outlet.
How Little the Top 25 Actually Pay
ProPublica released private tax information on Tuesday of some of the country’s wealthiest people, including Jeff Bezos, Elon Musk, Warren Buffet, and Mike Bloomberg.
The report details just how little they’ve paid in federal taxes and how they have managed to do so.
For example, Musk, the CEO of Tesla and SpaceX, paid $68,000 in federal income taxes for 2015. For 2017, he paid $65,000. For 2018, he paid nothing. ProPublica also noted that, between 2014 and 2018, Musk’s total taxes paid amounted to only 3.27% of his personal wealth — even though his wealth during that same time period grew by nearly $14 billion.
Meanwhile, the outlet reported that Bloomberg, a former mayor of New York City, has paid a “true tax rate” of only 1.30% compared to his wealth growth. Even slimmer than that, Amazon CEO Bezos clocked in at 0.98% and business magnate Buffet paid an ultralow 0.10%.
Like Musk, several of those billionaires have also managed to avoid paying anything in federal taxes for certain years. For example, in 2007 and 2011, Bezos paid nothing. Neither has Bloomberg in recent years.
“Taken together, it demolishes the cornerstone myth of the American tax system: that everyone pays their fair share and the richest Americans pay the most,” the reporters behind the ProPublica article said. “The IRS records show that the wealthiest can — perfectly legally — pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year.”
It’s no secret that there’s a staggering divide between the country’s richest and the median American household, which earns around just $70,000 in wages a year and pays 14% in federal taxes, but ProPublica’s findings demonstrate just how extensive it can be.
By the end of 2018, the top 25 were worth $1.1 trillion. Notably, it takes the wages of 14.3 million ordinary American workers to equal that same amount, yet the top 25 only paid a total of $1.9 billion in federal taxes that year, while the ordinary workers paid $143 billion.
How Billionaires are Avoiding Federal Taxes
As ProPublica reports, the key to how these billionaires pay so little lies in the difference between wages and total income.
For example, wages are a part of income, but just one part. Stocks, bonds, and other investments are also included in total income but are taxed at lower rates.
That’s how people like Bezos can become the richest person in the world while still only receiving a salary of $80,000 a year from Amazon. In fact, in 2018, the top 25 wealthiest Americans reported $158 million in wages, but that was just 1.1% of their total reported income.
Instead, these billionaires retain their wealth by holding shares of companies they own. Two economists from the University of California, Berkeley have estimated that U.S. billionaires are sitting on $2.7 trillion in unrealized gains.
Still, that begs the question: How do these billionaires actually spend money if they’re earning small salaries and hoarding massive amounts in the stock market?
According to ProPublica, the answer lies in loans.
“The tax math provides a clear incentive for this,” reporters for the outlet said. “Take out a loan, and these days you’ll pay a single-digit interest rate and no tax; since loans must be paid back, the IRS doesn’t consider them income. Banks typically require collateral, but the wealthy have plenty of that.”
Further, those billionaires can often deduct the interest they’ve paid on loans from their taxes.
Last year, Musk pledged around 92 million Tesla shares as collateral for personal loans.
Is Publishing Private Tax Info Ethical?
As ProPublica noted, the publishing of this tax information hasn’t been without pushback.
When the outlet asked billionaire Carl Icahn whether it was appropriate that he hadn’t paid any income tax in certain years, he responded, “There’s a reason it’s called income tax. The reason is if, if you’re a poor person, a rich person, if you are Apple — if you have no income, you don’t pay taxes. Do you think a rich person should pay taxes no matter what? I don’t think it’s germane. How can you ask me that question?”
Meanwhile, a spokesperson for Bloomberg said he “pays the maximum tax rate on all federal, state, local and international taxable income as prescribed by law. Taken together, what Mike gives to charity and pays in taxes amounts to approximately 75% of his annual income.”
“The release of a private citizen’s tax returns should raise real privacy concerns regardless of political affiliation or views on tax policy…” the spokesperson added. “We intend to use all legal means at our disposal to determine which individual or government entity leaked these and ensure that they are held responsible.”
While ProPublica didn’t reveal its source, it did say that it believes “the public interest in knowing this information at this pivotal moment outweighs that legitimate concern.”
See what others are saying: (The Washington Post) (Chicago Tribune) (Associated Press)
Mental Health Startup Cerebral May Have Harmed Hundreds of Patients, Leaked Documents Reveal
The company is being investigated by multiple federal agencies for its questionable practices, which have come under increasing scrutiny in recent weeks.
Over 2,000 Incident Reports Shed Light on Recklessness
A Silicon Valley mental health startup called Cerebral may have harmed hundreds of patients by flagrantly disregarding medical standards, according to a cache of documents reviewed by Insider, as well as over 30 interviews with current or former employees by the outlet.
Founded in 2020, Cerebral provides mental health treatment to customers through talk therapy and medication for conditions such as depression, anxiety, insomnia, and ADHD.
With people quarantined during the pandemic, it became one of the largest virtual therapy firms in the United States, attracting some $462 million from investors.
Cerebral employees filed at least 2,060 incident reports during seven months in 2021, according to Insider. They show that the company enrolled patients with complex conditions like bipolar disorder, then assigned them to clinicians and other staff members with insufficient training, oversight, and support to treat such cases.
It also put dozens of patients on questionable treatment plans and misdiagnosed many others, the reports say, with company medical providers prescribing potentially lethal combinations of drugs or addictive drugs to patients with histories of addiction.
Additionally, many patients were left stranded without care for extended periods due to technology issues or the company’s failure to retain clinicians.
As a result, Cerebral shuffled patients from one provider to the next and even bungled their prescriptions, sometimes leading them to suffer drug withdrawal or take the wrong medication.
Patients Tell Their Stories
One patient reportedly spent two weeks waiting for a referral to a clinician, later saying she spent eight days in a psychiatric ward.
Another patient told CBS News she was prescribed a drug for her anxiety but afterward could not reach her prescriber for instructions on how to switch to the new medication safely.
“Any time I needed help, she was never available,” she said.
After she did not get a response for six days, she began taking the drug anyway, which caused her to break out in a rash.
“I messaged back,” she said, “letting them know it was spreading and getting worse, and they said that they were still trying to get a hold of that prescriber… They make it seem like they want to help, and then they get you, and then they’re gone.”
A Cerebral spokesperson told Insider that the reports did not highlight enough patients to accurately reflect the company.
“Any incident reports you obtained show Cerebral’s dedication to quality,” the spokesperson said. “You can’t take a relatively small group of incident reports and draw conclusions about our care.”
Two former senior employees told the outlet those reports were monitored by just a couple of people who had other responsibilities at the company, adding that leadership frequently pushed off solving the systemic issues flagged.
Cerebral’s practices are currently being investigated by the Drug Enforcement Administration, the Department of Justice and the Federal Trade Commission.
See what others are saying: (Business Insider) (CBS News) (Fierce Healthcare)
Instagram Testing New Tools To Verify Users Are Over 18
The new tools include AI software that analyzes video footage of a person’s face to verify their age.
Instagram Cracks Down on Underage Users
Instagram is testing new features in the United States to verify the age of users who claim to be over 18 years old.
According to a statement from Instagram’s parent company, Meta, the tools will only apply to users who seek to change their age from under 18 to over 18. The platform previously asked for users to upload their ID for verification in this process, but on Thursday, it announced there will be two new methods for confirming age.
One of the strategies was referred to as “social vouching.” Using this option, people can request that three mutual Instagram followers over the age of 18 confirm their age on the platform.
The other method allows users to upload a video selfie of themselves to be analyzed by Yoti, third-party age verification software. Yoti then estimates a person’s age based on their facial features, sends that estimate to Meta, and both companies delete the recording.
According to Meta, Yoti cannot recognize or identify a face based on the recording and only looks at the pixels to determine an age. Meta said that Yoti “is the leading age verification provider for several industries around the world,” as it has been used and promoted by social media companies and governmental organizations.
Still, some question how effective it will be for this specific use. According to The Verge, while the software does have a high accuracy rate among certain age groups and demographics, data also shows it is less precise for female faces and faces with darker skin tones.
Issues With Kids on Instagram
Meta argues that it is important for Instagram to be able to discern who is and is not 18, as it impacts what version of the app users have access to.
“We’re testing this so we can make sure teens and adults are in the right experience for their age group,” the company’s statement said.
“When we know if someone is a teen (13-17), we provide them with age-appropriate experiences like defaulting them into private accounts, preventing unwanted contact from adults they don’t know and limiting the options advertisers have to reach them with ads,” it continued.
These changes come as Instagram has been facing increased pressure to address the way its app impacts younger users.
Only children 13 and older are allowed to have Instagram accounts, but the service has faced criticism for not doing enough to enforce this. A 2021 survey of high school students found that nearly half of the respondents had created a social media account of some kind before they were 13.
The company also recently came under fire after The Wall Street Journal published internal Meta documents revealing that the company knew that it harmed teens, including by worsening body image issues for young girls and women.
See what others are saying: (The Verge) (The Wall Street Journal) (Axios)
Elon Musk Threatens to Fire Employees Unless They Work in Person Full-Time
The world’s richest man in the world previously suggested that the popularity of remote work has “tricked people into thinking that you don’t actually need to work hard.”
“If You Don’t Show up, We Will Assume You Have Resigned”
On Wednesday, Electrek published two leaked emails apparently sent from Elon Musk to Tesla’s executive staff threatening to fire them if they don’t return to work in person.
“Anyone who wishes to do remote work must be in the office for a minimum (and I mean *minimum*) of 40 hours per week or depart Tesla,” he wrote. “This is less than we ask of factory workers.”
“If there are particularly exceptional contributors for whom this is impossible, I will review and approve those exceptions directly,” he continued.
Musk then clarified that the “office” must be a main office, not a “remote branch office unrelated to the job duties.”
“There are of course companies that don’t require this, but when was the last time they shipped a great new product? It’s been a while,” he wrote in the second email.
Later on Wednesday, a Twitter user asked Musk to comment on the idea that coming into work is an antiquated concept.
He replied, “They should pretend to work somewhere else.”
The Billionaire Pushes People to Work Harder
Musk has a history of pressuring his employees and criticizing them for not working hard enough.
“All the Covid stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard. Rude awakening inbound,” he tweeted last month.
Three economists told Insider that remote work during the pandemic did not damage productivity.
“Most of the evidence shows that productivity has increased while people stayed at home,” Natacha Postel-Vinay, an economic and financial historian at the London School of Economics, told the outlet.
Musk is notorious for criticizing lockdown mandates and went so far as to call them “fascist” during a Tesla earnings call in April 2020.
Not long before that, Tesla announced that it would keep its Fremont, California plant open in defiance of shelter-in-place orders across the state.
In an interview with The Financial Times last month, Musk blasted American workers for trying to stay home, comparing them to their Chinese counterparts whom he said work harder.
“They won’t just be burning the midnight oil. They will be burning the 3 a.m. oil,” he said. “They won’t even leave the factory type of thing, whereas in America people are trying to avoid going to work at all.”
That same day, Fortune published an article detailing how Tesla workers in Shanghai work 12-hour shifts, six days out of the week, sometimes sleeping on the factory floor.