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Emma Freer is a senior reporter for Austonia, where she covers the local pandemic response, policy, Project Connect and homelessness. She previously worked for Community Impact Newspaper. A native Clevelander, she graduated from Columbia Journalism School in 2017 and the University of St. Andrews in 2016. Email: firstname.lastname@example.org. Twitter: @freer_emma.
Elon Musk, Tesla founder and new Austinite, paid a true tax rate of 3.27% between 2014 and 2018, according to a bombshell report published by ProPublica this week. The investigative newsroom tallied up how much he paid in taxes relative to how much his wealth grew over the four-year period to come up with what it is calling a "true tax rate."
Austinites, regardless of their income bracket, paid a higher federal income tax rate than this. The only question is: How much higher?
The median family income in the five-county Austin metro is $98,900, according to the city of Austin's housing and planning department. A married couple filing jointly who earned this amount would pay $9,325 plus 22% of the amount over $80,250 in federal income tax, according to NerdWallet. This equals $13,428, or 13.6% overall—four times the true tax rate paid by Musk.
The lowest federal income tax rate is 10%, for single filers earning up to $9,875 or joint filers earning up to $19,750 annually—otherwise known as "extremely low-income." This is more than triple Musk's true tax rate.
The highest federal income tax rate is 37%, which kicks in for single filers earning $518,401 or more in income and joint filers earning $622,051 or more—roughly speaking, the 1%.
Using "a vast cache" of never-before-seen IRS data sent in from an anonymous source, ProPublica showed how the 25 richest Americans pay little—and sometimes none at all—in income tax relative to their massive wealth. "Taken together, it demolishes the cornerstone myth of the American tax system: that everyone pays their fair share and the richest Americans pay the most," the reporters wrote.
How do some of America’s ultra-rich live luxurious lives while claiming little to no taxable income? A little tax… https://t.co/hygW4MaHBH— ProPublica (@ProPublica)1623150001.0
It's worth noting that the U.S. tax system taxes income but not wealth.
Musk is the second richest person in the world with an estimated net worth of $151 billion, according to Forbes. Between 2014 and 2018, his wealth grew by $13.9 billion. Over the same period, he reported $1.52 billion in income and paid $455 million in taxes, producing what ProPublica called a true tax rate of 3.27%.
Although a fraction of the rate the median Austin household pays, Musk's true tax rate was still higher than that of other billionaires spotlighted by the story: 0.10% for Warren Buffett, 0.98% for Jeff Bezos and 1.30% for Michael Bloomberg, according to the report.
How did Musk and the other featured plutocrats swing this?
Mega-billionaires often eschew salaries, which are taxed at a high rate; take advantage of rules regarding deductions and debt; hold onto their company stock, allowing wealth to accrue without transforming into taxable income; and form "opaque and complicated trusts" that allow them to leave inheritances free from pesky estate taxes, according to ProPublica's report. All of these tactics are legal.
Without a wage or dividends, they often take out huge loans—which the IRS does not consider to be income—to cover their expenses. Musk pledged some 92 million Tesla shares, worth about $57.7 billion, as collateral for such loans last year, according to a securities filing cited by ProPublica. The interest paid on such loans can often be deducted.
As the New York Times pointed out Wednesday, "comparing the billionaires' tax bills with estimates of their wealth isn't how the U.S. tax system works." ProPublica published ts reasoning for the publication of private information stating that the report "will help readers understand the magnitude of the tax advantages the ultrarich enjoy," adding it hopes people will "participate in the public debate about the future of our tax system."
When asked to comment by ProPublica, Musk responded enigmatically, as is his wont, with a single character—"?"—and did not respond to follow-up questions.
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Six months into vaccine rollout, Travis County still seeing wide racial disparities compared to state
More than 55% of Travis County residents 12 and older are fully vaccinated, compared to less than 45% of Texas residents 12 and older, according to the Texas Department of State Health Services. Despite outperforming the state in terms of overall vaccination rates, the county is reporting starker disparities across its demographic groups.
Black residents, who make up nearly 9% of the Travis County population, account for only 3.6% of Travis County residents who are fully vaccinated. Black residents make up 12.9% of the Texas population and 7.55% of fully vaccinated Texans.
Latino residents, who make up around one-third of the Travis County population, account for only one-fifth of Travis County residents who are fully vaccinated. The difference is less stark statewide: Latino residents make up 39.7% of the Texas population and 30.94% of fully vaccinated Texans.
Asian residents make up roughly equal shares of the county population and those vaccinated: 7.4% and 8%, respectively. The same is true for white residents, who make up 49% of the county population and 46% of those vaccinated.
Community leaders in the Black and Latino communities have been advocating for more equitable access to vaccines since before the rollout began last December. Austin Public Health has been offering pop-up community vaccine clinics and working with local business partners to make sure the hardest-hit communities can get time off to go get vaccinated.
But still, it's been a lasting issue. "We were 1st to be infected & last to receive equitable access to vaccines," Austin Latino Coalition member Paul Saldaña tweeted Tuesday in reference to the county's disparate vaccine rates. He has criticized Austin Public Health and local elected officials for not doing enough throughout the pandemic to address these inequities.
Similar issues arose during the testing rollout earlier in the pandemic, and Black and Latino residents have been disproportionately likely to be hospitalized with or die from COVID, according to Austin Public Health data.
"At this point in the fight against COVID we are using a very intentional outreach strategy to make sure that our communities of color, who have been hardest hit by this disease, but still have the lowest rates of vaccine uptake, are not only getting equitable access to vaccine … but also we are working in a way that supports and incentivizes them to get vaccine," Austin-Travis County Health Authority Dr. Desmar Walkes said during a press conference last week.
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Austin City Council voted to double the city's property tax homestead exemption to 20%, the maximum allowed by state law, on Thursday. City staff estimate that the median homeowner would save $141 in Fiscal Year 2021-22 under this new rate.
Homeowners pay property taxes to multiple entities, including Austin ISD, Travis County, Central Health and Austin Community College District, in addition to the city of Austin. The city's tax rate accounted for less than a quarter of the combined tax rate levied by these five entities.
Supporters say the increased homestead exemption provides necessary tax relief as home values continue to skyrocket—and after council approved approximately $50 million in pandemic-related rental relief. But opponents raised concerns about the percentage-based exemption, which they say disproportionately benefits high-value homeowners and shifts the tax burden onto commercial property owners, who could push it onto renters.
"I know this doesn't come, as with all things, some measure of concern, especially with respect to renters," Adler said. "I think the impact is negligible, but in any event we're doing focused things for renters."
Costs and benefits
Most council members supported the 20% homestead exemption, which they say will provide tangible benefits to their constituents. It is also more palatable thanks to a new state policy, which means an increased homestead exemption would no longer affect the city's total property tax revenue.
Just now: #ATXCouncil unanimously approved increasing Austin's homestead exemption to 20%! We will also be approving millions of dollars in rental assistance, and a huge investment in housing for the currently homeless. We are using all the tools we have to keep Austinites here.
— Paige Ellis, City Council District 8 (@PaigeForAustin) June 10, 2021
District 3 Council Member Sabino "Pio" Renteria said last Thursday that his East Austin constituents would welcome such tax relief given that home prices have risen sharply in recent years. He purchased his own home 42 years ago for $21,000; it is now valued for $668,000.
District 10 Council Member Alison Alter, whose district has the highest median appraised home value, said the measure was a corollary to recent rental assistance, eviction moratoriums and other tenant relief programs. "We have provided something around $50 million in relief for renters through the pandemic but have been unable to find ways to do the same for our homeowners," she said during a June 1 work session.
District 4 Council Member Greg Casar raised concerns that a 20% homestead exemption would only deepen inequity by offering the greatest benefit to the highest-value homeowners at the expense of commercial property taxpayers, who will be required to make up the difference. But he ultimately supported the measure. "Unfortunately too small a benefit to working class homeowners is still a benefit," he said last week.
Mayor Pro Tem Natasha Harper-Madison a worried that it would provide too little relief to the typical homeowner. "I think to say that this strikes me as the opposite of equitable might be an understatement," she said at the same meeting. "I don't know that $12 a month is worth it."
Community activist Julio Gonzalez Altamirano criticized the 20% homestead exemption as a "capitulation to wealth and innumeracy" in a tweet last week.
City Council is prohibited by state law from implementing a flat rate homestead exemption, even though some council members and residents would prefer it.
"This is not perfect," Adler said during the June 1 work session. "There are some people who are not getting the benefit we would want them to get or are going to get burdens we don't want them to get. But, on balance, I think this is providing really important relief to people that need that relief."
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American Airlines announces 14 new nonstop flights from Austin, including to Puerto Rico and Costa Rica
American Airlines announced 14 new routes departing from Austin on Thursday. The routes will begin this fall and include 10 domestic destinations and four international ones.
Starting Sept. 8, American will offer flights from Austin to:
- El Paso, Texas
- Cincinnati, Ohio
- Indianapolis, Indiana
- Kansas City, Missouri
- St. Louis, Missouri
- Jacksonville, Florida
- Oklahoma City, Oklahoma
- Reno, Nevada
- San Juan, Puerto Rico
- Tulsa, Oklahoma
Starting Oct. 7, the airline will offer flights to:
- Cancun, Mexico
- Liberia, Costa Rica
- Puerto Vallarta, Mexico
- Punta Cana, Dominican Republic
The airline previously announced 10 new routes in March. "Earlier this year, we added more flights from Austin, and customers have spoken: they want more," Vice President of Network Planning Brian Znotins said in a press release.
Heading into the summer travel season, Austin-Bergstrom International Airport is reporting long wait times and recommends travelers leaving during peak departure times—5-8 a.m., 11 a.m.-1 p.m. and 3:30-5 p.m.—arrive at least 2.5 hours in advance.
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