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Ten Ways Billionaires Avoid Taxes on an Epic Scale



After a year of reporting on the tax machinations of the ultrawealthy, ProPublica spotlights the top tax-avoidance techniques that provide massive benefits to billionaires.

Last June, drawing on the largest trove of confidential American tax data that’s ever been obtained, ProPublica launched a series of stories documenting the key ways the ultrawealthy avoid taxes, strategies that are largely unavailable to most taxpayers. To mark the first anniversary of the launch, we decided to assemble a quick summary of the techniques — all of which can generate tax savings on a massive scale — revealed in the series.

1. The Ultra Wealth Effect

Our first story unraveled how billionaires like Elon Musk, Warren Buffett and Jeff Bezos were able to amass some of the largest fortunes in history while paying remarkably little tax relative to their immense wealth. They did it in part by avoiding selling off their vast holdings of stock. The U.S. system taxes income. Selling stock generates income, so they avoid income as the system defines it. Meanwhile, billionaires can tap into their wealth by borrowing against it. And borrowing isn’t taxable. (Buffett said he followed the law and preferred that his wealth go to charity; the others didn’t comment beyond a “?” from Musk.)

2. The $5 Billion IRA

Other billionaires used less conventional ways to avoid income, we found. Tech mogul Peter Thiel amassed a $5 billion Roth IRA, a type of account that shields income from taxes and is intended to help low- and middle-class savers prepare for retirement. Back in 1999, Thiel stuffed low-valued shares of the company that would become PayPal into the account, a maneuver tax lawyers said risked running afoul of IRS rules. (It’s not clear if the government ever challenged the move.) He set himself up to reap billions in untaxed gains. (Thiel did not respond to questions for the original article.)

3. The $1 Billion Parlor Trick: Turning High-Tax-Rate Trading into Low-Tax-Rate Income

Even when tech billionaires do show income on their tax return, they tend to pay relatively low income tax rates. That’s because of the type of income they have: Gains from long-term investments, such as from stock sales, are taxed at a lower rate. But what do you do if you’re making over $1 billion every year, and it’s largely from short-term trading? Do you just accept that you’ll pay the higher rate on all that income? As we reported this week, Jeff Yass, head of one of the most profitable firms on Wall Street, did not meekly accept this fate. Instead, his firm, Susquehanna International Group, found creative ways to transform the wrong sort of income into the right kind, generating tax savings that exceeded $1 billion over just six years. (Susquehanna declined to comment but in a court case that centered on similar allegations, it maintained that it complies with the law.)

4: The Magic of Sports Ownership: Make Money While (Legally) Reporting Losses

The tax code offers business owners a slew of methods to erase income through deductions, none more awesome than buying a sports team, as former Microsoft CEO Steve Ballmer did with the Los Angeles Clippers. It doesn’t matter whether the team is actually profitable and growing in value. It can still be a write-off. (In some cases, we found, owners could effectively deduct a given player’s contract not once, but twice. They’re allowed to take deductions comparable to those for factory equipment that loses value as it ages, even as teams almost inevitably gain in value.) That’s one reason owners tend to pay far lower tax rates than the athletes they employ, or even the people serving beer in the team’s stadium. In our story, we found a Clippers arena worker who made $45,000 a year and paid a higher tax rate than the billionaire Ballmer. (Ballmer said he pays the taxes he owes.)

5. Build, Drill and Save: The Real Estate and Oil Businesses Can Both Be Tax Havens

In certain industries, like real estate or oil and gas, the tax breaks are so plentiful that billionaires can erase their income entirely even as they grow richer. That’s how real estate developer Stephen Ross (who also happens to own the Miami Dolphins) went 10 years without paying any income tax. Ross said that he followed the law. Another mogul, this one in the oil business, managed to tap a near bottomless well of write-offs via one of the biggest oil spills in history. (The mogul’s representatives did not respond to requests for comment.)

6. Even a Billionaire’s Hobbies Can Pay Off at Tax Time

Deductions from hobbies and side projects, which the ultrawealthy can structure as businesses, are another fun option. For some billionaires, it’s race horses: We found that six owners of thoroughbreds at the 2021 Kentucky Derby had taken a combined $600 million in tax write-offs on their horse racing operations. For others, like Beanie Babies founder Ty Warner, it’s luxury hotels. The billionaire splurged on a couple of landmark Four Seasons locations and then went 12 years without paying any income tax. (Representatives for Warner did not respond to requests for comment.)

7. Think Your Taxes are Too High? Change the Tax Laws

Sometimes, it pays to fight for a new tax break. For the billionaires who contributed millions to Republican politicians, the payoff came in the form of Trump’s “big, beautiful tax cut” for passthrough businesses. We found the change sent $1 billion in tax savings in a single year to just 82 ultrawealthy households. Some business owners also boosted their savings with a trick: They slashed their own salaries and categorized the money instead as passthrough income.

8. Why Tech Billionaires Pay Less Than Hedge-Fund Managers

With so many options to reduce taxes, the richest Americans often manage low income tax rates. We analyzed the incomes and taxes of the country’s top 400 earners, those averaging over $110 million in income per year. Overall, the group paid relatively low rates, but certain segments (tech billionaires, heirs, private equity executives) stood out even within this elite population because they were able to draw on the sorts of techniques detailed above. (Also drawing on these techniques were wealthy politicians, like the governors of Colorado and West Virginia.)

9. Brother, Can You Spare a Stimulus Check?

But the real standouts were the billionaires who reported such low incomes that they qualified for government assistance. At least 18 billionaires received stimulus checks in 2020, because their tax returns placed them below the income cutoff ($150,000 for a married couple).
How Billionaires Have Sidestepped a Tax Aimed at the Rich

10. Trust This: How Wealthy Families Pass Billions to Heirs While Avoiding Taxes

The holes in the estate tax, we found, are even more remarkable. There are well-worn ways to make sure Uncle Sam doesn’t get his cut of a fortune being passed on to heirs, and the most common is through a trust. How common no one can say, but we found evidence that at least half of the nation’s 100 richest individuals had used estate-tax-dodging trusts. In another story,we followed three century-old dynasties down through the generations, showing how they used trusts to avoid taxes, so that a fortune could pass all the way from the original early 20th century tycoon to, for example, the great-great-granddaughter who recently collected $210 million before her 19th birthday.

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Amazon effect...
Foot traffic is down for almost all retailers.

 

Please Stop…. Not acknowledging the obvious is a very poor trait to show in public.

 

Really as they are in the Discount Retail Category (really only two in that Category) with Walmart, Immure Walmart is eating their launch. Team, they are losing some to Amazon but Walmart, is their nemesis.

 

The Political Fight of the Century



For the first time in decades, America has a chance to define its next political order. Trump offers fear, retribution, and scarcity. Liberals can stand for abundance.

Donald Trump has promised a “golden age of America.” But for all his bluster about being the champion of an American century, Trump’s actual policies point to something different: not an expansive vision of the future, but a shrunken vision of the present.

Throughout the opening months of his administration, the Trump White House has consistently pointed to existing shortages to demand new sacrifices. The administration says America cannot afford its debt, and therefore we cannot afford health care for the poor. The administration says America doesn’t have a healthy economy, and therefore we have to accept economic “hardship.” The administration says America doesn’t have enough manufacturing, and so we must suffer the consequences of less trade. The administration says America doesn’t have enough housing, and so we need fewer immigrants. The administration says American scientists aren’t focused on the right research, and so we have to gut our federal science programs. Again and again, Americans are being fed the line that everything that we don’t have requires the elimination of something that we need.
The cover of Abundance by Ezra Klein and Derek Thompson
This essay has been excerpted from Derek Thompson and Ezra Klein’s new book, Abundance

The MAGA movement might try to justify its wrecking-ball style by arguing that its extreme approach is commensurate with the level of anger that voters feel about the status quo. But just because Trump is a product of American rage does not mean he is a solution to it.

In housing, for example, Americans have every right to be furious. Home construction has lagged behind our national needs for decades. Today, the median age of first-time homebuyers has surged to a record high of 38. Large declines in young homeownership have likely prevented many young people from dating, marrying, and starting a family. Although Trump was swept into office on a wave of economic frustration, his initial foray into economic policy has done little to help the situation. As the National Association of Home Builders pointed out in an alarmed March 7 memo, his persistent threat of tariffs on Mexico and Canada could drive up the cost of crucial materials, such as softwood lumber and drywall gypsum, which are “largely sourced from Canada and Mexico, respectively.” Meanwhile, Trump’s anti-immigrant policies foretell new labor shortages in the construction industry, where roughly 25 percent or more workers are foreign-born.

This is where Democrats should be able to stand up and show that they have a winning response to the less-is-less politics from the right. But in many places run by Democrats, the solution on offer is another variety of scarcity. Blue cities are laden with rules and litigation procedures that block new housing and transit construction. As my colleague Yoni Appelbaum has noted, in California cities where the share of progressives votes goes up by 10 points, the number of housing permits issued declines by 30 percent. Where the supply of homes is constricted, housing prices soar, and homelessness rises. As of 2023, the five states with the highest rates of homelessness were New York, Hawaii, California, Oregon, and Washington—all run by Democrats.

From the March 2025 issue: How progressives froze the American dream

As the cost of living rises in blue states, tens of thousands of families are leaving them. But the left isn’t just losing people. It’s losing an argument. It has become a coalition of Kindness Is Everything signs in front yards zoned for single-family homes. Liberals say they want to save the planet from climate change, but in practice, many liberal areas have shut down zero-carbon nuclear plants and protested solar-power projects, leaving it to red states such as Texas to lead the nation in renewable-energy generation. Democrats cannot afford to become the party of language over outcomes, of ever more lawn signs and ever fewer working-class families.

If Trump’s opponents are going to win at the polls, they will need to construct a new political movement, one that aims for abundance instead of scarcity. Such a movement would combine the progressive virtue of care for the working class and a traditionally conservative celebration of national greatness, while taking a page from the libertarian obsession with eliminating harmful regulations to make the most important markets work better. It would braid a negative critique of Trump’s attack on the government with a positive vision of actual good governance in America—while providing a rigorous focus on removing the bottlenecks that stand in the way.

Abundance begins with specific goals for America’s future. Imagine much more housing where it’s most in demand. An economy powered by plentiful clean energy. A revitalized national science policy prioritizing high-risk discoveries that extend lives and improve health. And a national invention agenda that seeks to pull forward technologies in transportation, medicine, energy, and beyond that would improve people’s lives.

Sometimes what stand in the way of abundance are special interests, powerful incumbents, and conservatives. Oil and gas companies have at times thwarted the rise of renewable energy. The MAGA faithful seem to care much more about protecting their own than the rule of law and redirecting income into their own pockets rather than redistributing it to the poor.

But if Democrats want to understand why they’re failing to achieve their goals in the places they control, they need to concede that the faulty party also lives in the mirror. Look at California. Its most populous cities are run by Democrats. Every statewide elected official in California is a Democrat. Liberals should be able to say: “Vote for Democrats, and we’ll turn America into California!” Instead, with the state’s infamously high cost of living and stark homelessness crisis, it is conservatives who can say: “Vote for Democrats, and they’ll turn America into California.” Liberal governance should be an advertisement for itself, not for its opposition.

Saying for sure what has gone wrong is difficult, because so much has clearly gone wrong. But undoubtedly the character of liberalism has changed in the past few decades. New Deal liberalism believed in building. After the industrial explosion of World War II, the war machine was transformed into a peacetime growth machine. The construction of houses, energy, roads, bridges, and infrastructure boomed. Then came the backlash; the growth machine became an anti-growth machine. Environmental laws arose in the 1960s and ’70s that both helped counteract the real problem of pollution and created new problems for anybody who wanted to alter the physical world. New legal norms and court decisions made it easier and more common for citizens to sue to block the state. As the historian Paul Sabin argued in his book Public Citizens, the result was a liberalism that regarded government not as a partner in the solution of societal problems but rather as the source of those very problems. "It was as if liberals took a bicycle apart to fix it but never quite figured out how to get it running properly again," Sabin wrote.

I can imagine somebody opposed to the MAGA movement reading all of this and thinking: Why, at a time when Trump presents such a clear threat to the American project, is it appropriate to focus such criticism on the Democratic side?

First, to make the argument for a liberal alternative to Trumpism, Democrats have to show Americans that voting for liberals actually works. Often, to be sure, it works beautifully. The cliché of the “tax-and-spend liberal” belies the good that taxing and spending can do. Social programs such as Medicare, Medicaid, Social Security, public education, and housing vouchers are essential parts of a modern state, and they require, yes, taxes on the wealthy. But people on the left are sometimes so fixated on spending money that they lose sight of what that spending does in the world. In 2008, California approved $33 billion for a high-speed rail system that has lingered in construction purgatory for more than a decade. San Francisco’s procedural kludge somehow drove up the cost of a public toilet to $1.7 million. New York City’s archaic laws have combined with modern complacency to make the Long Island Rail Road home to the world’s most expensive mile of underground track. Chicago’s mayor recently bragged that his city “invested $11 billion in contracting to build 10,000 more units to offer affordable housing”—that is, $1.1 million per affordable unit. The Biden White House passed “the biggest infrastructure bill in generations”—but states found using the money so onerous that billions of dollars in broadband expansion were simply never spent. If Democrats want to represent the coalition that believes in government, they have to guarantee that government can actually build what it intends to.

Second, Americans are furious about the status quo—the youngest voters are “more jaded than ever about the state of American leadership,” according to the Harvard Political Review—and liberals need a new style of politics for the age of anti-establishment anger. The right’s answer to rage is chaos in search of an agenda. MAGA acts like a drunk toddler with a chain saw, carelessly slashing through state programs with a high risk of self-harm. But Democrats should not allow the forces of negative polarization to turn them into the party that reflexively defends the status quo at every turn, even when it means refusing to reform institutions that have lost the public’s trust. Quite the opposite: Abundance should be a movement of proud, active, and even obsessive institutional renewal.

Consider U.S. science policy, an area that is under attack from the right at this moment. As the centerpiece of U.S. biomedical funding, the National Institutes of Health has accomplished extraordinary things; you will have a hard time finding many scientific breakthroughs in the past 50 years—in heart disease, genetics, epidemiology—that were not irrigated by its funding.

Read: Inside the collapse at the NIH

But many of the same factors that have infamously plagued our housing and energy markets—paperwork, bureaucratic drift, entrenched incumbent interests—have become fixtures in American science. It is practically a cliché among researchers that the NIH privileges incremental science over the sort of high-risk, high-reward investigations that would likely uncover the most important new truths. Surveys indicate that the typical U.S. researcher spends up to 40 percent of their time preparing grant proposals and filling out paperwork rather than actually conducting science. As John Doench, the director of research and development in functional genomics at the Broad Institute, told me: “Folks need to understand how broken the system is.”

As the nation’s preeminent scientific institution, the NIH should take a page from science itself and run more experiments to find new ways to encourage researchers to pursue their most promising inquiries. To reduce the paperwork burden, it could run pilots that eliminate major parts of the application process. For some applications, it could replace the existing selection process with a lottery. And then, over years and decades, it would collect data and study the results, and determine if in fact there is a better way to fund science and cure disease.

It is a travesty that the Trump administration has brought biomedical research to the brink of crisis by attempting to freeze grants, fire workers, slash overall funding, and bully universities. But in an age of institutional anger—when, as NBC pollsters recently put it, “we have never before seen this level of sustained pessimism”—liberals cannot allow themselves to be painted as America’s true conservatives, the party that readily and blindly defends a flawed status quo.

The news is full of political strife. But the University of Cambridge historian Gary Gerstle believes that the parties’ subtle agreements about the direction of economic and foreign policy are what really shape American history. He coined the term political order to refer to the “constellation of ideologies, policies, and constituencies that shape American politics in ways that endure beyond the two-, four-, and six-year election cycles.”

Two political orders have defined the past 100 years. Each was forged by an internal crisis and external threat. From the 1930s until the 1960s, the New Deal reigned over American life. It enlarged the government in response to the Great Depression and provided an American reply to the global specter of communism. In the 1970s and ’80s, stagflation converged with the gradual decline of the Soviet Union to make way for the rise of a second era: neoliberalism. For decades, conservatives fought to make government smaller, while progressives such as Ralph Nader found ways to make government weaker by submerging the state in lawsuits. If the New Deal birthed the age of bureaucracy, neoliberalism produced an age of vetocracy. Now we are living with the consequences of both. We have a government that is, oddly, both big and weak.

Today, we seem to be in a rare period in American history, when the decline of one political order makes space for another. This crackup was decades in the making. It started with the Great Recession, which shattered a broad belief in free and unregulated markets. It continued throughout the 2010s, as slow economic recovery fueled public resentment of inequality, and an affordability crisis gathered steam. In 2020, the pandemic obliterated many Americans’ trust in government, or what was left of it. And from 2021 to 2024, inflation brought national attention to the interlocking crises of scarcity, supply, and unaffordability. For years, the boundaries of American politics had felt fixed, even settled. But now they are falling.

“For a political order to triumph, it must have a narrative, a story it tells about the good life,” Gerstle told me. Today’s politics are suffused with pessimism about government because “a way of living sold to us as good and achievable is no longer good, or no longer achievable.” In 2016, the rise of Bernie Sanders on the left and Donald Trump on the right revealed how many Americans had stopped believing that the life they had been promised was achievable. What both the socialist left and the populist-authoritarian right understood was that the story that had been told by the establishments of both parties, the story that had kept their movements consigned to the margins, had come to its end.

Political movements succeed when they build a vision of the future that is imbued with the virtues of the past. Franklin D. Roosevelt pitched his expansive view of government as a sentinel for American freedoms: of speech, of worship, from want, from fear. Decades later, Ronald Reagan recast government as freedom’s nemesis rather than its protector. Abundance, too, is about redefining freedom for our own time. It is about the freedom to build in an age of blocking; the freedom to move and live where you want in an age of a stuck working class; the freedom from curable diseases that come from scientific breakthroughs. Trump has defined his second term by demolition and deprivation. America can instead choose abundance.

This essay has been excerpted from Ezra Klein and Derek Thompson’s new book Abundance.

 

...right along with everyone else...