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IRS investigating leak revealing Elon Musk and other billionaires paid little in federal taxes

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The IRS is investigating the leak of years of tax returns from wealthy Americans

(Copyright 2021 The Associated Press. All rights reserved.)

Federal authorities are investigating the leak of years of tax returns from billionaires like Elon Musk following a bombshell report by an investigative news outlet, Internal Revenue Service Commissioner Charles Rettig said on Tuesday.

ProPublica published the reported income and tax payments made by some of the richest Americans, including Mr Musk, Amazon’s Jeff Bezos, Warren Buffett and Michael Bloomberg.

In the report, the publication found that the billionaires paid a significantly lower percentage of their income to the federal government compared to the average American.

The news organisation said it did not know the source of the leaked information, which included tax returns of thousands of wealthy Americans over the last 15 years, but described the information it received as IRS data.

Private citizens’ tax information is confidential and IRS employees could face prosecution for sharing the information.

“I can confirm that there is an investigation with respect to the allegations that the source of the information in that article came from the Internal Revenue Service. Upon reviewing the article, the appropriate contacts were made, as you would expect,” Mr Rettig told US senators during a hearing on Tuesday.

Both an internal and external investigation are being conducted following the release of the report, and those involved could face prosecution. The leak has been referred to the FBI and the US Attorney’s office in Washington DC.

“I share the concerns of every American for the sensitive and private nature and confidential nature of the information the IRS receives,” Mr Rettig said. “Trust and confidence in the Internal Revenue Service is sort of the bedrock of asking people and requiring people to provide financial information.”

It was not immediately clear if an IRS employee leaked the information or if the tax returns were accessed by an outside group.

When asked about the leak, White House Press Secretary Jen Psaki said the Biden administration was taking it “very seriously”.

“Any unauthorised disclosure of confidential government information by a person with access is illegal and we take this very seriously,” she told reporters on Tuesday during a White House press briefing.

News of the investigation came hours after the ProPublica report revealed Mr Musk, the CEO of Tesla, paid a 3.27 per cent true tax rate, or $455m, for his wealth growth of $13.9m over the five-year period between 2014 and 2018.

His taxable income during that five-year period was $1.52bn, the publication added, but Mr Musk didn’t pay anything in federal income taxes in 2018.

The 25 richest Americans “saw their worth rise a collective $401bn from 2014 to 2018,” the publication reported. But collectively those Americans paid a total of $13.6bn in federal income taxes over those five years, which was a collective true tax rate of just 3.4 per cent.

This compared to the median US households that earned about $70,000 annually but paid a 14 per cent tax rate to the federal government. Couples in the highest tax bracket paid 37 per cent to the federal government for annual earnings of higher than $628,300, the analysis added.

Warren Buffett, Jeff Bezos and Michael Bloomberg all held a true tax rate that was lower than 1.5 per cent, despite reporting income in the billions between 2014 and 2018.

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