America’s wealthiest billionaires have spoken out following the leak of their tax returns in a bombshell report, which revealed how little they pay to the federal government compared to the average household.
Billionaire investor Carl Icahn declared a total income of $544 million in 2016 and 2017, according to tax returns obtained by ProPublica, but he paid nothing to the federal government for those years.
When contacted by the news organisation, Mr Icahn denied that he did anything wrong those years in filing his taxes because he claimed he had no earned income for the federal government to tax.
“In no way were any of my activities even remotely questionable or designed for the purpose of tax avoidance,” Mr Icahn told ProPublica.
Mr Icahn, who has an estimated net worth of $15 billion, added that he carefully followed US tax laws and paid federal income tax during the years where his investment income exceeded his investment costs. But some years, such as in 2016 and 2017, his expenses exceeded his income returns – allowing him to not pay taxes.
“There’s a reason it’s called income tax,” he said when asked if it was appropriate to not pay taxes during specific years. “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.”
He added: “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?”
This defense has also been echoed by billionaire investor George Soros, who paid no federal income taxes for three years in the tax returns reviewed by ProPublica.
“Between 2016 and 2018 George Soros lost money on his investments, therefore he did not owe federal income taxes in those years. Mr Soros has long supported higher taxes for wealthy Americans,” a spokesperson to Mr Soros told the news organisation.
Billionaire Warren Buffett has faced scrutiny following ProPublica’s report because he has paid the lowest percentage of his wealth to the federal government out of all other wealthy Americans.
The report revealed that Mr Buffett had a reported income of $125 million over the five years despite his wealth growing 24.3 billion in that same timeframe, but he paid a true tax rate of just 0.10 per cent.
The Berkshire Hathaway CEO was able to pay such low federal income taxes because he kept 99 per cent of his wealth in his company’s stocks.
In a statement to ProPublica, Mr Buffett defended his tax avoidance by stating he already gave half of his wealth to charitable causes and said the rest of his wealth would similarly be given away.
“I continue to believe that the tax code should be changed substantially,” he said, adding that he thought “huge dynastic wealth is not desirable for our society.”
The IRS has announced an internal and external investigation into the leak of thousands of wealthy Americans’ tax returns to ProPublica following the release of the report on Tuesday.
The news organisation said the source of the leaked information, which included tax returns of thousands of wealthy Americans over the last 15 years, was anonymous but confirmed the information to be accurate 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,” Internal Revenue Service Commissioner Charles Rettig told US senators during a hearing on Tuesday.
It was not immediately clear if an IRS employee leaked the information or if the tax returns were accessed by an outside group.