Jeff Bezos is worth $100 Billion and he may pay $7,979.40 in Social Security Taxes
Amazon (NASDAQ: AMZN) CEO Jeff Bezos may have had an income of $100.3 billion on 24 November 2017, because of his company’s ridiculous stock price. What’s truly outrageous is that Bezos might pay just $7,979.40 in Social Security taxes next year.
The Social Security tax only applies to the first $128,700 a person makes; and as an employee of Amazon Bezos would pay a 6.2% Old-Age, Survivors, and Disability (OASDI) tax, the Social Security Administration (SSA) reported. According to the SSA 6.2% of $128,700 is $7,979.40.
Bezos might have to pay a little more if he is considered “self-employed” by the SSA. The OASDI tax rate for the self-employed is 12.4%, but the taxable income is capped at $128,700. That means Bezos would pay $15,985.80 in OASDI tax if he was self-employed.
These figures demonstrate how unfair our tax system is, working families are forced to fork over 6.2% or 12.4% of their income while billionaires get a 100% tax break on most of their income. Note: I’m not blaming Bezos here he did not create this horrendous system.
Billionaires get Tax Breaks Seniors get Poverty
The $100.3 billion fortune Bloomberg Technology estimated Bezos accumulated by 24 November raises serious questions. We are constantly bombarded with claims Social Security is running out of money, yet the tax that supports it does not apply to much of the wealth in the country.
If Bezos had to pay the OASDI employees tax on all of his money, he’d be sending an extra $6.2186 billion a year to Social Security. At the self-employed rate Bezos would be paying Social Security $12.4372 billion for 2018.
That would be enough to cover Social Security payments for several million Americans. Many of whom have no other source of income. The average Social Security payment for a retired person in the US is $1,240 a month in 2017; and the average payment for a disabled person is $1,498 a month, according to our friends at the SSA.
Unfortunately, some seniors get far less because of the arcane ways in which Social Security payments are calculated. Many retired women receive $300 to $500 a month; because they took time off from work to raise kids or take care of elderly parents.
One thing is clear here, Bezos can easily afford to pay the Social Security tax on all his money and it would not affect his lifestyle. At the employee rate Bezos would still have $94.0814 billion of his fortune left over, at the self-employed rate he would have $87.86 billion to play with.
Nor is Bezos the only billionaire this applies to; the world’s second and fourth richest men Bill Gates and Warren Buffett also live in the United States. That means they and 537 other American billionaires pay the same ludicrously low OASDI tax. Forbes estimated that there were 540 billionaires in the United States in 2016.
How Bezos Profits from Senior Poverty
What’s truly disgusting is how Bezos and Amazon are profiting from senior poverty and low Social Security payments. In her excellent book, Nomadland: Surviving America in the Twenty-First Century, Jessica Bruder exposed something called Amazon Camper Force.
The Camper Force is a group of broke and homeless retired people; with nothing but Social Security to live on, and no place to live but recreational vehicles or trailers. They drive around from place to place and many of them do seasonal work at Amazon fulfillment centers for $10 to $12 hour to augment the “income” Social Security pays. Amazon has; or had, a program called Camper Force designed to recruit and exploit such people, Wired reported.
Bezos profits from the serious flaws in our Social Security system in two ways. First; he avoids the OASDI tax on over 99.9% of his income, and second Amazon gets a pool of desperate people to exploit at low wages.
How to Fix Social Security and Fight Income Inequality
This brings us to four obvious Social Security reforms that would help preserve the system and improve the lives of average Americans.
The first reform would be to simply eliminate the OASDI income cap, and collect the Social Security tax on all individual income. This makes financial sense because it would raise revenue from those with the most money. The richest 1% of Americans; that controlled 22% of the nation’s wealth in 2015 according to inequality.org, would pay more for Social Security.
A good way to sell this reform would be to tie it to a reduction in corporate income taxes. A real tax reform bill; not the current Republican Reward the Rich nonsense, would be to lower the corporate income tax to 15% and eliminate the OASDI cap completely. This would shift the tax burden from the corporations that produce the income, to the wealthy individuals that hoard it.
The second reform; which has been proposed by some conservatives; including former Secretary of Health and Human Services Dr. Tom Price (R-Georgia) and Congressman Sam Johnson (R-Texas), would be to base Social Security benefits on annual income. Individuals that made less than 150% of the federal poverty limit of $12,100 would automatically receive the full Social Security benefit. The benefit would fall as the amount of income increased.
The third reform would be to raise the standard Social Security benefit to a level that would fund a decent working or lower middle class lifestyle. A good round figure would be $2,000 a month; or $24,000 a year, for an individual.
With that benefit, a married couple would have a $48,000 a year income. They wouldn’t be able to buy a new Tesla S series; but they could afford a decent house, plenty of groceries, and a reliable car with that money. Obviously, this number would be adjusted for inflation to prevent future poverty.
The fourth reform would be to have a base Social Security payment that everybody would receive regardless of income; say $800 a month. Yes, under this system Jeff Bezos would be eligible for Social Security, but that sounds like a good deal to me.
Billionaires are People Too
Uncle Sam would pay Bezos $9,600 a year and get $6.2186 billion or $12.4372 billion a year in return. That sounds like a wonderful investment society would benefit from. It is also an investment I would love to make.
It would also be fair, people who pay taxes should get something in return — even if they are billionaires. If Bezos’ house caught on fire, and the tax-supported fire department responded, nobody would complain; why should Social Security be any different. Billionaires are people and Americans too; they should pay their fair share, and enjoy all the benefits of citizenship.
There would be one tremendous benefit from this system it would grow the economy because tens of millions of Americans would have more money to spend. That means Jeff Bezos would make more money from it because a lot of that money would be spent at Amazon.
One thing is clear; Social Security needs to be reformed now, unless America wants to face levels of social unrest and poverty rivaling those of the Great Depression.
This article first appeared at Market Mad House.