Tech billionaires earning more while paying less taxes

Tech billionaires like Bill Gates make up 10 of the top 15 incomes among the top 400 American income-earners and yet, they do not pay high taxes as their income generally came from selling stock amid their ability to muster large deductions, a new ProPublica investigation has revealed.

The report, which scanned secret Internal Revenue Service (IRS) files, revealed the top US incomeearners and how their tax rates vary more than their incomes.

Collectively, the top 400 Americans paid an average tax rate of 22 per cent from 2013 to 2018.

Tech titans, hedge fund managers and heirs dominate the list, while the likes of celebrities like Taylor Swift and LeBron James didn't even make the top 400.

"In an era of widening gaps between the rich and everyone else, the analysis shows that the US tax system is making inequality worse," said the report that came out on Wednesday.

Many of the top 400 hit the sweet spot of high incomes and low taxes on much of that income.

"Their income mostly stems from stock sales taxed at the lower rate. Since 2013, that long-term capital gains rate has been 20 per cent, about half the top rate on ordinary income (37 per cent in 2018)," the findings showed.

Tech billionaires made up 10 of the top 15 incomes and their income generally came from selling stock.

"This pattern is especially true of tech billionaires like Bill Gates, whose income came predominantly from sales of Microsoft stock during this period. Every penny of Gates' taxable income was eligible for the lower rate. That was generally true of the other tech billionaires as well," the report mentioned.

Jan Koum, Co-founder of WhatsApp; Laurene Powell Jobs, widow of Steve Jobs who was co-founder of Apple; Larry Ellison, Co-founder of Oracle; Michael Bloomberg, Cofounder of Bloomberg; Jeff Bezos, founder of Amazon; Steve Ballmer, former CEO of Microsoft; are other tech billionaires who pay less taxes while earning more.