Amazon CEO Jeff Bezos is now officially the richest man in modern history, according to Bloomberg, which has made a beat out of tracking such things. Bezos’s wealth surged to more than $150 billion Monday in advance of Amazon Prime Day, a shopping holiday fabricated by Bezos to make more money for Bezos.
That means the 54-year-old now has more money than his neighbor Bill Gates has ever had. Gates topped out at $100 billion back in 1999. Adjusted for inflation, Gates’s 1999 wealth would have been worth $149 billion in today’s dollars.
And because Bezos lives in Washington State, none of his income went to state government.
A shocking $52 billion of Bezos's $150 billion was made this year alone. For comparison, about one in five Americans have negative personal wealth, meaning they owe more money than they have.
The stark brutality of this income inequality should be shocking to people across the world, but Bezos’s extreme wealth should be especially offensive to the residents of Washington, where the e-commerce baron pays no state income tax, which means Bezos record-setting income growth does essentially nothing for the schools, roads, and public health of Washington.
This is largely by Bezos’s own design. Remember, Bezos is not from Washington but rather moved to the regressive tax haven called Seattle in 1994 with a loot of cash he made on Wall Street. And since moving to Washington, he has fought hard to ensure that the state’s finances were put on the backs of the poor instead of the gilded rich like himself.
Bezos, along with fellow members of the tech patriarchy Steve Ballmer and Paul Allen, spent hundreds of thousands of dollars in 2010 opposing an initiative that would have created a 9 percent income tax on individuals making more than $200,000 a year. The tax would have generated at least $2 billion a year, according to the state’s 2010 estimate. That’s $16 billion of income from the ultra-rich that Bezos has helped keep from the state.
But what about Bezos’s personal stake in the game? Bezos is a shrewd businessman, so how prudential was his $100,000 bet against the state income tax in 2010?
Based on my conservative calculations, Bezos would have personally paid the state of Washington $250 million over the last two years alone.
Almost all of Bezos’s income comes from the value of Amazon stock. He owns about 16 percent of the company, which is why his wealth surges with any perceived Amazon good news. If Washington had an income tax, Bezos would pay a tax on this wealth only when he sold some of his stock. The increased value on these stock sales is referred to as a capital gain—a loftier and less taxable form of wealth than the meager hourly wage or salary most Americans receive.
In the last two years, Bezos has sold about $2.78 billon worth of Amazon stock, according to Nasdaq. If Bezos were paying the proposed 9 percent tax on those sales, he would be sending more than $250 million to the state.
If he were living in California, where capital gains are taxed at 13.3 percent, he would have sent the state $370 million in just two years.
Because Bezos has income outside of his Amazon stock, and could possibly reduce his tax burden with crafty accounting practices, these are simply estimates. But it's unlikely Bezos would owe Washington much less than these estimates, and this $250 million number is also only for the last two years—Bezos’s state income tax burden over the full eight years would be far higher.
Shrewd business people like Bezos (remember he uses computers to track the bathroom time of his warehouse employees and recently held the city of Seattle ransom over a paltry tax to house some homeless people) like to calculate their business decisions based on their “return on investment.” The ROI, as it’s called, is simply the difference between the cost and gain from an investment (the “return”), divided by that investment’s cost. ROI is calculated as a percentage, so different investments, say a savings account and a mortgage, can easily be compared against each other.
Poor investments have low or negative ROIs. If you put your money into a savings account at a bank, it would return just 0.01 to 0.06 percent ROI. If you were lucky enough to buy a home in Seattle in 2011, the average ROI today would be at about 116.24 percent. But what’s the ROI on Bezos’s bet against the teachers, roads, and public health in Washington?
Right around 250,668.03 percent.
It turns out that it makes a lot of financial sense to fight a progressive income tax when you're on the verge of becoming the richest human in modern history.