Jeff Bezos says bottom half of earners should pay zero in income taxes

On Wednesday, Amazon Executive Chairman Jeff Bezos advocated for the elimination of federal income taxes on the bottom half of earners.

During an interview with CNBC's Andrew Ross Sorkin on "Squawk Box," Bezos highlighted that the top 1% of taxpayers contribute approximately 40% of total tax revenue, while the bottom half contributes only 3%. "I don't think it should be 3%," Bezos remarked. "I think it should be zero."

According to the Tax Foundation, the bottom half of taxpayers reported an adjusted gross income of nearly $54,000 in 2023, based on the latest IRS data. In sharp contrast, households within the top 1% earned a minimum of $676,000 that same year.

Bezos referred to the income tax levied on lower-income individuals as "a small amount of money for the government," providing a theoretical scenario involving a healthcare professional earning $75,000 annually. "We shouldn't be asking this nurse in Queens to send money to Washington," he stated. "They should be sending her an apology. It really makes no sense."

While he expressed his support for this change, Bezos did not provide specifics regarding how lawmakers could implement such a policy shift.

As the fourth-richest individual globally, Bezos' net worth is estimated to be around $269 billion, according to Forbes.

Tax burden on low earners

Bezos' remarks come amid growing discussions among various Democratic states regarding potential tax increases on wealthy individuals. Additionally, several federal legislators have recently introduced measures aimed at reducing taxes for lower-income earners. For instance, Senator Cory Booker, D-N.J., proposed the Keep Your Pay Act, which suggests making the first $75,000 of income tax-free for married households filing jointly, along with proportional tax reductions for single filers and heads of households.

"No income tax on the first $75,000 families earn would be a game changer for working people," Booker stated during the announcement of the proposed legislation on March 9. "This tax cut would immediately put more money in your pocket every month to address the high cost of everyday expenses, prepare for unexpected emergencies, or plan for future needs."

As per a Tax Foundation analysis of IRS data, the average income tax rate in 2023 stood at 14.1%. Notably, the top 1% of taxpayers faced an average tax rate of 26.3%, which is seven times the 3.7% average rate imposed on the bottom half of taxpayers.

In 2023, there were over 76 million households in the bottom half, according to the Tax Foundation. Collectively, they paid an average of $913 in federal income taxes that year.

A tale of two economies

Despite the lower tax burden borne by the bottom half of earners, their financial difficulties have been amplified due to rising inflation and broader affordability issues.

The so-called K-shaped economy exemplifies the diverging experiences of Americans: higher-income households are reaping benefits from increasing markets and wages, while a significant number of lower- and middle-income families are grappling with rising costs and financial distress.

Research from the Federal Reserve Bank of New York indicates that the cessation of pandemic-related subsidies for low- and middle-income households has contributed to a marked divergence in 2023. Furthermore, heightened gasoline prices in the wake of the Iran war have intensified the K-shaped recovery, as lower-income individuals allocate a greater portion of their incomes toward gasoline compared to their higher-earning counterparts.

"I think what's going on is that it's kind of a tale of two economies," Bezos observed. "So you have a bunch of people in this country who are doing really well, but you also have a bunch of people in this country who are struggling."

Do the rich pay their fair share?

The question of whether affluent individuals contribute a fair share of their income through taxes, in comparison to lower earners, has long spurred intense debate.

Opponents of tax hikes for higher earners frequently argue for the progressive nature of the federal tax code. For instance, in 2023, the top 1% of taxpayers represented nearly 21% of total adjusted gross income but contributed a significantly larger share—approximately 38%—of all federal income taxes that year, as per the Tax Foundation utilizing IRS data. In contrast, the bottom half accounted for 12% of total income but only contributed 3% of total income taxes.

Imposing a greater tax burden on wealthier individuals may potentially diminish their capacity to save and invest, as articulated by Thomas Savidge, a research fellow at the American Institute for Economic Research, a think tank advocating for limited government. He suggests that such saving and investment activities generate capital access for all, fostering innovation and increasing collective wealth.

However, high-income earners often exploit the complexities of the tax code to minimize their IRS liabilities, which leads to effective tax rates that can be "far less" than the statutory rates they are obliged to report, based on a 2024 evaluation from the Yale University Budget Lab.

Moreover, tax liabilities can vary considerably even within the top 1% of income earners. Some individuals within this group may encounter an effective tax rate as low as 3%, while others may be subject to rates as high as 45%, according to analytics from the Budget Lab.

Proponents of increasing taxes on wealthy Americans argue that the U.S. tax system may not be as progressive as it appears if assessed from a comprehensive perspective of household taxes beyond just personal income tax.

Payroll taxes represent a significant financial burden for many individuals, and those owed for Social Security contributions are not applicable to earnings exceeding $184,500, as highlighted by Jessica Vela, a federal policy analyst at the Institute on Taxation and Economic Policy, a progressive think tank. The Center for Economic and Policy Research approximated that individuals earning over a million dollars ceased making contributions to Social Security in early 2026.

Furthermore, lower-income households also incur a higher percentage of their income in sales taxes at the state and local levels compared to wealthier individuals, reinforcing a more regressive tax system, Vela noted.

When accounting for the entirety of federal, state, and local taxes paid by U.S. households, the top 1% represents 24% of total tax revenue—marginally higher than their share of total income, which stands at 20%, according to an ITEP analysis conducted in 2024. This, however, does not factor in unrealized capital gains or unreported profits from stocks and other assets that are disproportionately held by wealthy individuals, as highlighted in the analysis.