Even if you have a lot of money, it doesn’t always mean you like to give it away. When it comes to making money, some wealthy people will do anything they can to hold on to their dollars.
From the former president to famous CEOs, the rich have tricks for dodging high tax bills.
Last updated: Jan. 15, 2021
Net worth:$182.9 billion
The Tesla CEO, who currently holds the title of the world’s richest man, recently moved from California, a high-tax state, to Texas, which has no income tax. However, Musk will almost certainly still have to pay some California income tax, in addition to federal taxes.
Musk is paid heavily in stock options, which are not taxed until he exercises them. Plus, much of his compensation is incentive-based. Most of his massive wealth is in the form of Tesla and SpaceX stock.
In 2019, The New York Times reported that Musk made $2.3 billion as the Tesla CEO in 2018, but the company reported he had no taxable earnings.
Net Worth: $4.9 billion
As the founder of Virgin Records and Virgin Atlantic airlines, Richard Branson is a business mogul sitting on a cool $4.9 billion fortune. Although he hails from the U.K., his primary residence is Necker Island, an island in the Caribbean that he purchased for $180,000. Branson has repeatedly been accused of escaping to Necker Island as a way out of paying taxes due to the lack of income taxes there, but the Virgin mogul has denied this.
“I have not left Britain for tax reasons but for my love of the beautiful British Virgin Islands,” Branson wrote on the Virgin website in 2013, according to The Telegraph.
As a resident in the U.K., Branson would have to pay 50 percent of his income in taxes, compared to zero percent income taxes as a permanent resident on Necker Island.
In April 2020, Branson also moved $1.1 billion of U.S. holdings in Virgin Galactic to the British Virgin Islands, thereby avoiding a huge tax hit. Although a representative for Branson told Bloomberg the move was “an internal reorganization,” the transaction looked bad because Virgin Atlantic, the mogul’s airline, was requesting a bailout from the British government at the same time.
Net Worth: $182 billion
As the CEO of Amazon and one of the richest people in the world, Jeff Bezos definitely knows a thing or two about how to build a successful business. He also knows how to get around not paying high taxes.
After two years of paying zero income taxes, Amazon paid $162 million in taxes in 2019, CNBC reported. Of course, that’s a tiny portion of the $13.9 billion (with a b!) the company reported in pre-tax income and $280 billion in total revenue for the year.
In 2018, Amazon tallied $11 billion in pre-tax income and received $129 million in tax refunds because of deductions and tax credits, according to CNBC.
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Net Worth: $2.5 billion
Before Donald Trump was president of the United States, he earned most of his money as a real estate developer based in New York. However, the president has been repeatedly accused of failing to pay taxes.
In September 2020, The New York Times published a bombshell report that showed that Trump paid $750 in taxes in 2016 and 2017 and paid no taxes at all for 10 of the past 15 years. The newspaper’s analysis of Trump’s tax returns showed that he used tax write-offs to avoid paying income taxes, although he did pay other taxes such as Social Security and Medicare.
Trump also is in a lengthy battle with the IRS over an audit of his claim of a $72.9 tax million refund.
In a 2016 presidential debate, Trump acknowledged that he used the existing tax codes to avoid paying more than he needed to. The New York Times further exposed the strategy that Trump might have used to offset the losses of his Atlantic casinos to escape paying taxes, which totaled more than $900 million.
Net Worth: $89 billion
Business mogul Warren Buffett is not just a genius investor — he’s also smart when it comes to paying his taxes. In 2011, the multibillionaire admitted that he used the 30 percent maximum charity tax deduction to help offset his regular income and “offset his lower long-term capital gains income,” according to Forbes.
At the same time, Buffett is also able to dodge high taxes due to counting much of his income as “stock price appreciation.” Due to a tax loophole that states “any gains in the price of stock do not count as income until that stock is sold,” Buffett is able to be taxed at a relatively low rate compared to his net worth, according to Millennial Moola.
In 2019, Buffett told CNBC that he thinks he — and other super-wealthy people — should pay more in taxes. “The wealthy are definitely undertaxed relative to the general population,” he said. Buffett also has pointed out in the past that his tax rate is lower than his secretary’s — in 2007 Buffett’s tax rate was 17.7%, while the average employee at Berkshire Hathaway paid 32.9%.
Net Worth: $25 million
Country singer Willie Nelson might be known as one of America’s music legends, but he also has famously short-changed the IRS. In 1990, the music star found himself in trouble with Uncle Sam after the IRS accused Nelson of tucking away most of his income in hidden tax shelters. As a result, he was left with a $32 million tax debt. Three years later, Nelson was ordered to pay $16.7 million, but ultimately settled and agreed to pay just $9 million.
Net Worth: $230 million
The late iconic musician David Bowie was not a fan of paying high taxes in the U.K., especially because his home country charged a 95 percent tax rate on income for the wealthy. This punitive tax rate affected many musicians, including American singer Rod Stewart and the rock ‘n’ roll legend himself. To avoid the hefty tax bill, Bowie relocated to Switzerland.
Net Worth: $42.5 billion
The late founder of Ikea, Ingvar Kamprad not only established one of the biggest furniture stores in the world, but also managed to avoid paying taxes in Sweden for over 40 years. In 1973, Kamprad moved to Switzerland as a way out of paying the Swedish tax rate of up to 85 percent for the country’s top earners. At the time, Switzerland’s tax rate hovered around 12 percent for federal income taxes and 1 percent for the wealth tax. Before he died, Kamprad returned to his home country of Sweden and paid a portion of his taxes to his home country.
The Rolling Stones
Legendary rock band the Rolling Stones owes its multimillion-dollar success to its fans — but also to clever tax-dodging strategies throughout the years.
In 1971, the band famously moved from England to France as tax exiles to escape the British’s government’s high tax rate of 93 percent for its top earners. During that time, they recorded their highly praised album “Exile on Main Street.” The band also managed to save big under the guidance of their financial manager, Rupert Loewenstein. With his direction, the band dodged millions in taxes and paid a mere 1.6 percent on their earnings.
Additionally, the Rolling Stones made moves to open a business in the Netherlands and avoided rehearsing in the U.S. to keep their tax bills low, according to AOL.
U2 appears to be no stranger to dodging high tax rates. In 2006, the band came under criticism after they moved part of their business from their native Ireland to the Netherlands, as it appeared they were trying to escape the new tax rules for musicians in Ireland. Up until that time, artists had been allowed a 250,000-euro cap on tax-free earnings such as album royalties, according to the Irish Times. Not too long after the cap was lifted, the band set up shop in Holland.
The Netherlands has clamped down (somewhat) on that by limiting the tax exemption to 50,000 euros now.
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George Malone contributed to the reporting for this article.
Net worth information was sourced from Forbes and Celebrity Net Worth and is accurate as of Jan. 15, 2021.
This article originally appeared on GOBankingRates.com: Elon Musk, Donald Trump and Other Super-Wealthy People Who Got Out of Paying Taxes