Jeff Bezos on Wednesday called for eliminating federal income taxes for the bottom half of earners, noting that he would “advocate” for the proposal, but did not outline how such a sweeping tax overhaul could be implemented by lawmakers.
As CNBC’s Andrew Ross Sorkin informed that ‘top 1% of taxpayers pay about 40% of all the tax revenue, and the bottom half pay 3%’, the Amazon founder said, that “I think it should be zero, and not 3%”
Bezos further asserted the income tax paid by lower earners is “a small amount of money for the government”
Exemplifying his proposal, Jeff Bezos pointed to a healthcare worker earning $75,000 a year, he said “We shouldn’t be asking this nurse in Queens to send money to Washington,. They should be sending her an apology. It really makes no sense.”
Where the real challenge lies?
Despite the fact that the bottom half of earners pay lower taxes, the real challenge is dealing with high inflation and broader concerns about affordability.
Federal Reserve Bank research shows that the expiration of pandemic-era subsidies for low- and middle-income households created a noticeable divergence in 2023. More recently, sharply higher gasoline prices amid the Iran war are exacerbating the K-shape, researchers found. Lower earners spend a greater share of their incomes on gasoline relative to higher earners, the CNBC report said.
“I think what’s going on is that it’s kind of a tale of two economies, so you have a bunch of people in this country who are doing really well, but you also have a bunch of people in this country who are struggling,” Bezos said.
What IRS statistics shows about household income vs tax payment
The bottom half of taxpayers had an adjusted gross income of nearly $54,000 in 2023, according to the Tax Foundation, as per the most recent IRS statistics. By contrast, households in the top 1% earned at least $676,000 of income that year.
The average income tax rate in 2023 was 14.1%, according to a Tax Foundation analysis of IRS data. The top 1% of taxpayers paid an average rate of 26.3%, seven times higher than the 3.7% average rate paid by the bottom half of taxpayers.
There were more than 76 million households in the bottom half in 2023, according to the Tax Foundation. They paid $913 of federal income taxes, on average, that year.
Bezos’, world’s fourth-richest person, with a net worth around $269 billion, according to Forbes, comments come as a number of Democratic states explore higher taxes on the wealthy.
US lawmakers push tax relief for lower-income Americans
Several US lawmakers are also pushing for tax relief aimed at lower-income Americans. Among them, Cory Booker has introduced the “Keep Your Pay Act,” which proposes making the first $75,000 of income tax-free for couples filing jointly, with proportional tax relief for single filers and heads of households.
“No income tax on the first $75,000 families earn would be a game changer for working people,” said Bookersaid in a statement earlier this year.
“This tax cut would immediately put more money in your pocket every month to deal with the high price of everyday expenses, an unexpected emergency, or to plan for the future.”
