Which people and professions rake in the most income year after year? Which are most adept at shielding that money from the taxman? And what does this tell you about America?
Thanks to IRS data obtained by ProPublica, we showed readers the definitive answers in an engaging, graphical way, revealing the incomes and tax rates of the 400 Americans with the highest incomes from 2013 to 2018. The data reveals a system where the very highest earners, on average, pay far lower tax rates than the merely affluent do. And even among the wealthiest, some have it better than others.
“America’s Highest Earners And Their Taxes Revealed” was part of ProPublica’s “Secret IRS Files” series, which began in 2021 and continues today.
It’s hard to separate out the effect of one article in the series, which now exceeds 30 stories. But as a whole, the series ignited a debate about wealth and inequality, starting from the day the first article was published, when the White House was forced to answer questions about tax inequality and the IRS commissioner was grilled in Congress. At one point, the Biden administration’s proposed Build Back Better legislation would’ve closed a massive IRA loophole identified by ProPublica in another article in the series and included a wealth tax (an idea doomed by the opposition of Sen. Joe Manchin). That legislation stalled.
Then, in March 2022, the [Biden administration proposed a new minimum tax on the wealthiest](https://wapo.st/3Nw1H5c), [a departure from past federal tax practices](https://bit.ly/3tWy0m6) and one whose philosophy aligned with the analysis. The odds of major changes are always long — tax policy can take decades to materially alter — but it’s clear that ProPublica’s series [changed the national conversation](https://nyti.ms/3DsZVxa) on the subject.
The data was provided in raw form and contains millions of rows. ProPublica reporters spent months processing and analyzing the material to transform it into a SQL database that reflected key aspects of the tax code in plain English. Given the sensitivity of the material, this was done in a way that allowed for the highest level of data security, a challenge that added considerable logistical hurdles, given the size of the reporting team.
For the America’s Highest Earners analysis, we created queries specifically designed to allow us to follow the flow of taxes for thousands of taxpayers, from income through various deductions and credits to their final tax bill. In addition to this, we set out to compare the highest-income Americans to typical Americans. To do that, we constructed the financial profile of a typical American, based on an analysis of public IRS data, and then calculated the taxes of those Americans.
To transform the income analysis into a visual story, the reporters and the news apps team held brainstorming meetings to sketch out and iterate upon a visual outline. Those sketches were revised into digital mockups using R, Google Sheets, and Adobe Illustrator. Once we finalized the story direction, the interactive charts and tables were created using D3.js and Svelte.
Context about the project:
One extraordinary day, ProPublica received a trove of data that disclosed the income taxes paid by thousands of the nation’s wealthiest citizens over more than 15 years. It was the biggest leak of tax information in U.S. history, and it revealed that America’s titans had paid a stunningly small amount of taxes. In some years, billionaires like Jeff Bezos and Elon Musk owed not a penny in federal income tax.
Tax experts have long understood that the ultrarich don’t pay their fair share. The data brought to light a pattern fully understood only by the ultrarich and their advisers. These billionaires weren’t cheating. They were avoiding the burdens borne by nearly every other wage-earning American using legal strategies far beyond the reach of ordinary wage earners. This series aimed to use the IRS data to reveal that larger story.
We confronted formidable challenges. The source (or sources) of the leak did not identify themselves to ProPublica, so the first question was whether the information was genuine and accurate. Two reporters spent months transforming a largely undifferentiated mass of data, with millions of rows of information scattered across scores of tables, identified only by the IRS’ internal jargon, into a searchable database. Four other reporters and researchers combed through everything from SEC filings and lawsuit records to announcements of lottery winnings, to verify numbers attributed to specific taxpayers.
ProPublica understood it was taking risks in publishing the tax information of some of the world’s wealthiest people, several of them ProPublica donors. Many are litigious. Federal law authorizes the government to prosecute anyone who publishes tax data. ProPublica weighed those risks and concluded it was in the public interest to reveal selected taxpayers’ information, a position we explained in an [editor’s note](https://bit.ly/36IaaBG). We believed, but couldn’t be certain, that the courts would view our stories as protected by the First Amendment. The government has pledged to punish our source but has thus far made no move to prosecute ProPublica. (Several subjects have threatened lawsuits against ProPublica but have not filed any to date; one billionaire sued the IRS for allowing the leak.)
We aimed to put the trove in the largest possible context. That meant moving away from the traditional focus on percent of income, or tax rate, that people pay. Warren Buffett once acknowledged that his tax rate was lower than his secretary’s. Our data told a more powerful story: The ultrawealthy could live lavishly without receiving salaries or other income the IRS deems taxable. We calculated that Buffett and the other 25 richest Americans paid a paltry 3.4% of their wealth growth in taxes, far less than ordinary wage earners paid on their incomes.
In “America’s Highest Earners And Their Taxes Revealed,” we went beyond our initial focus on wealth and examined taxation through the more traditional prism of income. The data and examples revealed profound disparities and showed that, even when assessed by the standard tax measurement, there are vast inequities in the U.S. tax system.
What can other journalists learn from this project?
Taxes are often a dull and arcane subject. Confronting the audience’s resigned cynicism took a massive team effort, the largest group ProPublica has ever assembled to tackle one story. We had teams of text reporters working side-by-side with data, visuals, and audience reporters with the goal that readers read with their intestines and hearts first. When every part of the organization puts ego and any quest for individual glory aside, great journalism can happen.