World’s Richest Man Jeff Bezos could pay $10,148 a year in Social Security Taxes
The world’s richest man, Amazon CEO Jeff Bezos could pay $10,148 a year in Social Security taxes.
To explain, CNN Money claims Bezos’ base salary is $81,840 a year. Thus, if Bezos only pays Social Security taxes on his base salary, he would pay a 6.2% Social Security tax. Meanwhile, as Bezos’ “employer” Amazon (NASDAQ: AMZN) will match that 6.2% equaling 12.4%, the IRS reports. I calculate that 12.4% of $81,840 is $10,148.
However, Bezos could pay a little more if the IRS taxes him at the maximum rate. Poor Jeff could pay $16,479.60 in Social Security taxes. To explain, the federal government only taxes $132,900 of income for Social Security in 2019, the Social Security Administration (SSA) reports.
How Income Inequality Threatens Social Security
Thus, Bezos pays no Social Security tax on most of his $1.682 million compensation from Amazon and his $159.5 billion fortune. Consequently, the world’s richest man pays almost nothing to maintain America’s Social Security system.
Bezos’ example shows why Social Security could run short of money by 2035. ABC News reports Trump administration officials think revenue short falls could lead to Social Security benefit cuts by 2035.
However, the Bezos example shows America has the money to pay for Social Security. Unfortunately, the political will to use taxes to get that money is lacking.
How we can Save Social Security and Reduce Income Inequality by Taxing the Rich
For example, Social Security could collect $208,568 a year from Bezos’ compensation if we taxed it at the full 12.4% rate. Additionally, Social Security could collect $19.78 billion if we taxed all of Bezos’ fortune at the 12.4% rate.
Okay, I realize that most of Bezos’ fortune is Amazon stock. However, we could save Social Security and reduce income inequality by applying the full 12.4% FICA tax to all personal fortunes.
To explain, we could force Bezos to sell $19.78 billion worth of Amazon stock to pay the tax. This, would not hurt poor Jeff because he would still have $139.72 billion worth of Amazon stock. Thus, Bezos will still have plenty of money to spend on toys like private rockets.
However, it could reduce income inequality; and help investors, by forcing Bezos to sell Amazon stock. Likewise, we could reduce the power of the rich by forcing them to sell large amounts of their assets.
How to Fight Income Inequality and Save Social Security
Income Inequality is a major problem in America. For instance, Deutsche Bank Securities’ chief economist Torsten Sløk estimates the richest 10% of US households controlled 70% of America’s wealth in 2019.
Plus the Federal Reserve estimates the richest 1% of Americans now control 32% of the country’s wealth. Consequently, 3.27 million people control nearly one third of the money in America. A nation of 327.167 million people in 2018, according to the US Census Bureau.
There were 17,350 millionaires in the United States in 2018, a number that could grow to 20,478 by 2023, Credit Suisse’s Global Wealth Report 2018 estimates. Just imagine how much money we could raise for Social Security if every millionaire had to pay a 12.4% tax on each dollar he or she had?
For instance, we cannot tax 32% of America’s wealth or $31.32 trillion for Social Security under the current system. To explain, Credit Suisse estimates America’s total wealth at $98 trillion, and 32% of that is $31.32 trillion. I estimate if we taxed the 1% at the 12.4% FICA rate we could collect $3.88 trillion for Social Security.
Moreover, I imagine we could reduce income inequality because we could force many millionaires; and billionaires, to sell off large portions of their assets to pay the tax. This could help ordinary people by driving down the cost of overpriced assets including real estate and stocks.
Another Way to Save Social Security
Additionally, we could give Bezos a tax break by letting him donate $19.58 billion worth of Amazon (NASDAQ: AMZN) stock to a sovereign wealth fund.
A sovereign wealth fund is a hedge fund a government owns and administers. Assets in the fund raise money to finance government activities such as pensions for elderly citizens.
Notably, the world’s largest sovereign wealth fund; the Norway Government Pension Fund Global, contains $1.073 trillion for the financing of pensions for Norwegian citizens.
America Needs a Sovereign Wealth Fund
Why not create a US sovereign wealth fund to finance Social Security? The wealthy and corporations could forgo taxes by donating assets like stock to the fund. Additionally, the IRS could confiscate the assets of rich tax cheats and donate them to the fund.
Such a fund could increase America’s power in the world by giving the government more money and influence over the economy. Notably, the world’s second largest Sovereign fund the China Investment Corporation, belongs to the People’s Republic of China, The Sovereign Fund Institute estimates. The China Investment Corporation currently controls $941.417 billion in assets.
However, if you add the amount in another fund China controls the Hong Kong Monetary Authority Investment Portfolio; the People’s Republic controls $1.423 trillion. To explain, Hong Kong is part of China and its sovereign wealth fund is worth $509.353 billion worth assets.
America is at a serious economic disadvantage to China because it has no Sovereign Wealth Fund. However, America could quickly build the world’s largest Sovereign Wealth Fund if Congress had the courage to tax the rich.
Blame the Politicians not Bezos for the Social Security Crisis
The curious case of Jeff Bezos shows why America has a Social Security crisis and demonstrates why the United States could become a second or third rate power within my lifetime. Our political leaders lack the backbone to tax the wealth.
Finally, this sorry situation is not Jeff Bezos’ fault. Bezos’ is merely taking advantage of an opportunity stupid politicians in Washington created. I imagine most Americans would do the same thing in Bezos’ place.
If you get mad, get mad at Congress, they are the ones responsible for America’s income inequality and the Social Security crisis, not Bezos.