Jeff Bezos proposes eliminating income tax for the bottom half of earners, citing $75K nurse example

(SeaPRwire) –   Federal income taxes could eventually be eliminated for approximately 76 million households in the United States, should a proposal by Amazon’s billionaire founder, Jeff Bezos, ever be implemented.

During a recent appearance on CNBC, the Blue Origin founder suggested that the lower 50% of American earners should be exempt from income taxes. He argued that working-class citizens should not face such financial strain, particularly since their contributions represent a minimal portion of the nation’s overall tax revenue.

“The lower half of earners in this nation contribute only 3% of the taxes,” Bezos stated, adding that he believes they should pay nothing at all.

To support his argument, Bezos used a hypothetical medical professional as an example, asking why a nurse in Queens earning $75,000 annually should have to pay upwards of $1,000 a month in taxes.

Bezos described the situation as unreasonable, arguing that the government should not be demanding money from a Queens nurse. Instead, he suggested they owe her an apology, calling the current system nonsensical.

Although Bezos did not provide the specific breakdown for his figures, American workers are typically subject to federal income, Social Security, and Medicare taxes, along with state income taxes in most regions. When combined, these obligations can amount to thousands of dollars annually.

Due to the progressive nature of the U.S. tax system, wealthier individuals generally shoulder a larger percentage of federal taxes. According to Tax Foundation analysis of IRS data, the lower half of taxpayers (earning roughly under $54,000) generated about 12% of total adjusted gross income in 2023 but paid only 3% of all federal income taxes. The typical household in this bracket paid roughly $913 in federal income tax. Nevertheless, CNBC noted that when refundable tax credits are taken into account, the bottom 40% of taxpayers already pay an average effective federal income tax rate of zero.

Bezos, who maintains a friendly rapport with President Donald Trump, indicated his intention to pitch this concept to political figures, asserting that exempting lower-income earners from federal taxes would result in only a minor revenue loss for the government.

According to Bezos, it is the responsibility of citizens and business leaders to propose new ideas, especially those that could directly benefit the public.

Bezos—whose net worth stands at $280 billion—claims doubling his own taxes would not solve the issue

Bezos’s focus on financial relief might seem unexpected given his estimated fortune of over $280 billion, making him the world’s fourth-richest individual. Furthermore, while he claims to pay “billions of dollars” in taxes, his personal tax history has frequently been a point of contention.

A 2021 report by ProPublica revealed that Bezos, along with other ultra-wealthy Americans, utilized tax avoidance strategies that significantly minimized his tax liabilities in certain years. For instance, he paid zero federal income tax in 2007 and 2011, largely because his investment losses exceeded his reported income. By comparing Bezos’s wealth accumulation with his reported income and taxes paid from 2014 to 2018, ProPublica estimated his “true tax rate” to be a mere 0.98%.

Even so, Bezos expressed willingness to engage in discussions regarding what constitutes a fair tax rate for high earners. In 2023, the top 1% of earners brought in nearly 21% of total adjusted gross income but paid approximately 38% of all federal income taxes.

While Bezos acknowledged that debating what constitutes a fair tax share is a valid policy discussion, he argued that demonizing the wealthy serves as a mere distraction.

Nonetheless, Bezos believes that closing tax loopholes or raising taxes on the wealthy fails to address the core issue of government spending inefficiencies. He cited the management of New York City’s public school system as a prime example.

He remarked that if Amazon were managed similarly to the New York City school system, deliveries would take six weeks, customers would face a $100 shipping fee, and the wrong items would ultimately be delivered.

He asserted that even doubling his own tax contributions would do nothing to assist a teacher in Queens.

In response, New York City mayor Zohran Mamdani countered on social media platform X, stating that he knows several Queens teachers who would disagree with that claim.

Bezos intends to donate the bulk of his fortune during his lifetime—though his former wife MacKenzie Scott is far ahead

Although Bezos has not committed to The Giving Pledge—a philanthropic campaign started by Warren Buffett, Bill Gates, and Melinda French Gates that urges billionaires to donate the majority of their wealth during their lives or through their wills—the Amazon founder has stated his commitment to giving away most of his fortune while he is alive.

At the same time, he noted the difficulties of executing effective philanthropy, echoing sentiments from other billionaires like Buffett and Elon Musk, who have pointed out that distributing massive fortunes wisely is often more challenging than it seems.

Meanwhile, his ex-wife, MacKenzie Scott, has already made significant progress. Since 2020, she has distributed over $26 billion to organizations dedicated to DEI, education, and disaster relief. In contrast, Forbes estimates that Bezos and his current wife, Lauren Sánchez Bezos, have made lifetime donations totaling around $4.7 billion.

Bezos suggested to CNBC that the enduring societal contributions of enterprises like Amazon and Blue Origin might ultimately hold more value than traditional philanthropy. He advised that aspiring business owners should focus on creating products and services that enhance people’s lives.

He urged aspiring entrepreneurs to prioritize customer satisfaction, noting that succeeding in this area is how businesses generate true value for society.