Opinion: On Claiming The Child Tax Credit
The phrase, "Poor Jeff Bezos..." is probably not much uttered. I won't try to say it now without irony.
But when ProPublica reported this week that Jeff Bezos, Michael Bloomberg, Warren Buffett, Bill Gates, Rupert Murdoch, Elon Musk, George Soros and Mark Zuckerberg were among billionaires who paid little or no income tax in recent years, Bezos took most of the social media vitriol. The founder of Amazon had a net worth of about $18 billion in 2011, but reportedly paid no taxes. And he got $4,000 in child tax credits.
Bezos paid no taxes because most of his wealth came from company stock, which isn't taxed until it's sold. He has four children with his then-wife MacKenzie Scott, which entitled them to a $1,000 tax credit for each child.
Why would someone worth $18 billion be given any child tax credits?
We spoke with Elaine Maag, principal research associate in the Urban-Brookings Tax Policy Center at the Urban Institute, who also once worked at the IRS.
"Did we intend for Jeff Bezos to get this credit?" she asked. "Probably not. I can't imagine he had too much trouble finding and paying for child care."
She says that when the child tax credit was introduced in 1998, its purpose was to aid low and middle-income families. Ninety percent of U.S. taxpayers with children receive that credit, now set at $2,000 per child — and even higher this year with a temporary increase from the American Rescue Plan — "which I think is good for the country," Maag told us.
To keep the percentage of families who receive the credit high, all any taxpayer — including Jeff Bezos — has to do is enter their income on their tax form, and the number of dependent children.
"People claim the credit as part of the regular tax filing process," Maag said. "I don't even know how anyone would opt out."
Maag, like many tax analysts who spoke out this week, said the crucial question isn't why a billionaire gets a child tax credit. It's how can so many wealthy people, utterly legally, avoid paying taxes by getting paid in stocks — rather than wages — then borrow against their total assets to purchase multiple estates, private aircraft, historic artwork and the services of attorneys and tax consultants who, I'll just guess, charge more for their services than a $2,000 child tax credit?
"I think the child tax credit is good for us all," Maag said. "I just wish more people would pay more taxes on what is their real income. That would be fair." [Copyright 2021 NPR]
