One for people who earn a paycheck. One for people whose wealth lives in stock. They are not the same system. The gap between them is not an accident.
The ProPublica finding
ProPublica obtained actual IRS records for America's 25 wealthiest people. Between 2014 and 2018, their wealth grew by $401 billion. They paid $13.6 billion in federal taxes. A true tax rate of 3.4%.
The median American household paid 14%. That's not a loophole. That's the system working exactly as designed, for people wealthy enough to use it.
Source: ProPublica — "The Secret IRS Files" ↗Person / Group
Wealth Growth
Taxes Paid
True Rate
Jeff Bezos
$99.0B
$973M
0.98%
Elon Musk
$13.9B
$455M
3.27%
Top 25 Wealthiest
$401B
$13.6B
3.4%
Median U.S. household
~$70K income
~$9,800
14%
Elon Musk, Mark Zuckerberg, Larry Page, and dozens of other billionaires take an official salary of $1 per year. This isn't charity. It's tax strategy. A $1 salary means almost no ordinary income tax. Their actual compensation comes through stock grants and options, which are taxed at the lower capital gains rate (20%) instead of the income tax rate (up to 37%).
Zuckerberg has taken a $1 salary since 2013. In that time, his net worth grew by more than $100 billion. The salary is irrelevant. The wealth is in the stock, and as long as he doesn't sell it, it's never taxed.
This is the name tax attorneys, academics, and the IRS use for the coordinated strategy that lets the ultra-wealthy live extravagantly while paying almost no taxes. It has three steps.
Invest heavily in stocks or real estate. As long as you don't sell, there's no taxable event. The asset can grow from $1M to $1B and you owe nothing. This is called an "unrealized gain": real wealth, zero tax.
Real example
The 25 wealthiest Americans watched their collective net worth grow by $401 billion over four years. Because they didn't sell, almost none of that growth triggered a taxable event.
Instead of selling stock to pay for your lifestyle, you use it as collateral for a loan. Loans are not income. They are never taxed. You can borrow tens or hundreds of millions of dollars and owe zero income tax on any of it. Major banks like Morgan Stanley, JPMorgan, and Schwab offer these "securities-backed lines of credit" to clients with $100K+ in assets.
Real example
The Federal Reserve tracked $138 billion in outstanding securities-backed loans as of early 2024. That's $138 billion in tax-free spending power.
When you die, your heirs inherit your assets at their current market value. The IRS calls this a "stepped-up basis." Decades of appreciation, the gains you never paid taxes on, are permanently erased. Your heirs can sell immediately and owe nothing on that growth.
Real example
The stepped-up basis loophole costs the federal government $72.5 billion in foregone tax revenue in 2026 alone, about one-quarter of all capital gains tax income. 56% of that benefit goes to the wealthiest 20% of estates.
The idea that taxes should reflect total wealth, not just declared income, is the basis of the most serious current reform proposals in Congress.
Wyden's Billionaires Income Tax Act (reintroduced 2025)
Would require annual taxation on gains from tradable assets, treating stock appreciation as income even if not sold. Targets fewer than 1,000 Americans with $100M+ annual income or $1B+ in assets. Projected to raise $500B+ over 10 years. Has 20+ Senate cosponsors. Has not passed.
Senate Finance Committee announcement ↗Biden's Billionaire Minimum Income Tax (proposed 2022)
Would have required a 20% minimum tax on "true income," including unrealized capital gains, for billionaires. Projected to raise $500B over 10 years. Never passed Congress.
Why this matters in Nebraska
Nebraska's state income tax is based on federal adjusted gross income, which means Nebraska's tax system inherits all the same loopholes. If a wealthy Omaha executive uses Buy, Borrow, Die to pay a 3% federal rate, they're also paying a fraction of what their median employees pay in state taxes.
Meanwhile the Nebraska legislature cut income taxes (LB 9) in ways that benefit higher earners more, handed out $1.5B in corporate tax incentives, and gutted paid sick leave for 140,000 workers. Many of them pay a higher effective tax rate than the CEOs of the companies they work for.
Sources & Further Reading