20% capital gains rate + 3.8% NIIT to the federal government.

(And another 7.9% to WA under governor Inslee's December 2016 proposal — which, to be clear, has not actually become law.)

Is that all though? I'm guessing that plus whatever regular income tax for his bracket is...which is higher than all that combined.

Edit: Why downvote a question? I appreciate the answers, and suspect I'm not the only interested party.

It's long term capital gains and does not get taxed at ordinary income rates. If you are in a state with income tax, they will usually tax your capital gains at your ordinary state income tax bracket.

Provided the security/asset is held for a year or more, it is taxed as Long-Term Capital Gains, and given quite the tax break.

It is even possible to pay 0% federal rate on sale of stock, I did it on my 2016 return.

> It is even possible to pay 0% federal rate on sale of stock, I did it on my 2016 return.

Up to the top of the 15% bracket, yes, or $37,950 in total income for single earners in 2017 ($75,900 joint). It's easy to pay little in long-term cap. gains taxes if you are retired (or unemployed) with a cheap-to-moderate lifestyle.

But not possible for ~$1 billion in gains, like Bezos' sale :-).

It is also possible that he never realized the gain. An example would be to gift the shares directly to a trust which sells and then 'loans' BO the money. Tada! You made a billion dollars disappear. That is, I believe, lawful. Consult a qualified legal representative, however.

One problem with this plan is that the debtor is obligated to repay the principal with interest.

If billionaires could do this, they would be doing it all the time. And the IRS would be screaming about it. Instead, they're stuck with higher risk options like illegal tax evasion or just paying the tax they owe.

The above should count as tax avoidance and interest rates can be decided by the parties involved. Tax evasion is illegal. Tax avoidance is legal.

Consult a qualified tax professional and legal council.

I believe I was very explicit about illegal tax evasion being a separate, a higher risk option. I am careful with my terminology.

But the interest rate between two private parties is entirely arbitrary. 0.01% over 25 years, say.

As a creditor, you're obligated to pay taxes as if you charged a fair market rate, regardless of what you actually charge the debtor. So the actual floor rate at which the creditor isn't losing money is more like 33% (presuming business tax rate, or higher for individuals) of 3-4% (for 25 year loans), or about 1-1.3%.

Also, 100% + 0.01%^25 is still more than the sum loaned. And realistically, the interest rate must be higher than 0.01% annually. Sure, you could invest it over 25 years and theoretically beat the interest floor, but this adds a lot of unnecessary risk. When you've already won the game, I think paying the 25% in tax for a guaranteed cash return is worth it over dabbling in high risk, gray area legality tax avoidance.

>> But not possible for ~$1 billion in gains

Quite possible given enough trust lawyers and accountants. Mitt Romney managed to own a lot of his stock in his Roth IRA. The PayPal gang is famous for paying almost zero taxes though the same tricks. Yes, you dont get to spend it until retirement, but he isnt spending the billion, he is just reinvesting it.

No, the Romney move is still not possible in Bezos' shoes. Bezos couldn't have invested in Amazon in his IRA when it was worth nothing:

https://en.wikipedia.org/wiki/Self-directed_IRA#Permitted_in...

> IRA funds are allowed to be invested in private companies. ... The IRS puts restrictions on private equity investments that can be made by an IRA. It cannot purchase stock that the IRA holder already owns. ... In most cases, neither the IRA holder nor any disqualified persons to the plan can be employed by the company while the IRA has an equity position in that company.

Bezos founded Amazon, so he's definitely had them for over a year :)

> I assume that plus whatever regular income tax for his bracket is

No. Capital gains aren't income.

Yes they are.

Ordinary income = salary/wages, bonuses, commissions, etc.

Capital gains are income, but short-term (within a year) are taxed at ordinary income rates, while long-term (greater than a year) are charged at special capital gains tax rate.

I would much rather that Bezos be allowed to keep all of his capital gains but have appropriate antitrust enforcement step in and reduce Amazon's market power a bit.

The recent upsurge of counterfeit products are evidence that Amazon is abusing its market power to the point of harming consumers.

What market does Amazon have a monopoly, and how are they abusing it or what prohibited practices did they use to establish such a monopoly?

It looks like they may have 44% of internet retail by public companies; and that's big, but it doesn't include private companies, and it doesn't fit my definition of a monopoly. It is certainly large enough that they should be scrutinized and attempts to increase share through prohibited practices should result in enforcement actions.

I don't think Amazon has fully crossed any lines just yet, but I do think it's bound to happen fairly soon just due to scale.

My point is meant to compare antitrust enforcement to the other mechanisms that are viewed by some as necessary to prevent large corporations from causing negative externalities.

Arguably if proper antitrust enforcement had been done in the finance industry, then no firms would have become too big to fail and all of the perverse incentives underscored by regulators post 2008 could have been avoided.

The problem is that since our regulatory state rewards size, there is a strong incentive to become large and hence too big to fail. As Amazon becomes a bigger and bigger part of the economy, it could start using the same rent-seeking tactics that financial firms used in 2008 to get major corporate welfare.

Seriously, all the bait and switches happening on Amazon is crazy. So many people getting screwed because a product built up good reviews then switches out for a counterfeit.

Indeed. I've been burned enough times that I'd actually join a class action lawsuit at this point. It's pretty ridiculous.

Amazon needs to take full responsibility for counterfeiting. I'm tempted to charge back certain purchases instead of going through the normal highly annoying process.

Being able to return an item no questions asked is not an appropriate remedy for getting a counterfeit product. It's a major hassle to box something back up and return it, and Amazon does not have a good solution for situations when the product that arrives is completely broken or is total junk/DOA.

> I've been burned enough times that I'd actually join a class action lawsuit at this point.

Joining a class action lawsuit usually takes no action at all, but some action is required to opt-out.

So you've basically just said your been burned enough to do precisely nothing about it.

Now, if you were willing to initiate a lawsuit, whether class- or direct-action, that would be saying something meaningful.

I don't disagree with your points; I am not quite that up-in-arms just yet.

Pretty sure offering those things to Bezos didn't cost the gov't $200M.

And at any rate, most of the money will probably go for an airport that will never be used in some influential senator's state.

The highways that carry his shipments cost a lot.

The Commerce Clause that protects his sales from state sales tax and made his mail-older company competitive against local stores made him a bundle too.

Most Federal tax revenue is spent on military (low gas prices for Amazon deliveries) and entitlements, not infrastructure projects.

Looking up Bezos' salary data, I'm wondering why chose to take a salary of ~$81,840

If he was under the $37,950 mark, his Long Term Capital Gains rate would have been 0%

That's not how it works. The capital gains themselves count toward the $37k cap. $1B in cap gains puts him a bit out of range to fall under the $37k max.

Also, he likely received tens of millions of dollars in company stock, which will be taxed at regular income rates, not capital gains.

20% does seem like a good deal for all those things, but it's important to remember that the top 20% already pays 95% of the taxes. So if those things are good they're only good because he's already been paying for them.

So if you enjoy the stable political system, strong asset protection, your free education, and relatively unpolluted environment it might be time to add Jeff Bezos to your Christmas card list to thank him for funding all that for you.

The real question is: how much do the top 20% make and/or own? If it's 95% or more, then those taxes seem quite fair, don't they?

Found some data: https://en.m.wikipedia.org/wiki/Wealth_inequality_in_the_Uni...

Top 20% owned 93% of wealth in 2014, and I don't see why that number wouldn't go up.

It's a bit harder to find numbers for income, though.

I don't take incident with the 20% mark. I only take incident with the insinuation that the great societal benefits Bezos enjoys for his 20% was provided by someone else.

If Amazon does shenanigans to hide money you and I couldn't hide from the taxman, then that might still be true.

That doesn't matter unless you believe that Bezos/Amazon is pulling some unique shenanigans compared to every other wealthy person/company. Because even after the cumulative shenanigans of all the wealthy people they're still paying 95% of the taxes.