Jeff Bezos Tax Proposal: Should Americans Making Below $75k Pay Federal Income Tax?

Jeff Bezos wants to eliminate income taxes for millions of Americans.

He said that people making under $75,000 a year shouldn’t pay any federal income taxes. And I’ll be honest, my first reaction was, that’s actually kind of interesting. I wanted to understand what Bezos was actually saying, and more importantly, does it make sense?

He was specifically referring to a nurse in Queens, New York, making $75,000 a year. His point was pretty straightforward. Why is somebody like that paying federal income taxes in the first place? Why should a working person who’s trying to pay rent, buy groceries, raise a family, and maybe put something away for retirement be sending thousands of dollars to the IRS every single year?

I think it’s a fair question, but it begs the question: if that nurse and others like her stop paying federal income taxes, then who does?

Whenever somebody starts talking about collecting less tax revenue, the accountant in me starts asking questions like, where will the lost tax dollars come from?

The federal government is already running large deficits. As you already know, the national debt keeps growing, and interest on that debt is becoming a bigger and bigger expense every single year.

So if millions of Americans stop paying federal income taxes, how do you replace that revenue? And do you even need to?

Because if the government can already create trillions of dollars whenever it wants to, why do they even need our tax dollars at all?

I think it’s a fair question.

Think about it. If Washington can create money out of thin air, why not just print money for whatever revenue is lost?

Now, maybe it’s not that simple. Taxes aren’t just about raising money. They’re also a mechanism of control. But that’s a much bigger conversation.

For today, let’s stick with the question right in front of us. If people making under $75,000 stop paying federal income taxes, how would that work?

What Jeff Bezos Is Actually Proposing

I think it’s important to understand what Jeff Bezos is actually proposing.

His focus is about workers, and his example was a nurse making $75,000 a year. His view, and I would agree, is that somebody like that is already carrying enough of a financial burden.

Housing costs are up, food costs are up, insurance costs are up. Life has just gotten a lot more expensive. And if you’re trying to save for retirement at the same time, good luck.

His point is that if somebody is working, contributing, paying their bills, and trying to build a life, why is the government taking thousands of dollars in taxes from them every year?

And honestly, I think most Americans can relate.

So when Jeff Bezos says people should be able to keep more of their own money, it’s not hard to see why that idea gets attention.

A Different Perspective on the Debate

One of the more interesting counterarguments I heard came from a YouTube economist whom I follow, Gary from Gary’s Economics. He’s really good, and I recommend checking out his channel.

His point wasn’t necessarily that Bezos was wrong. His point was that Bezos may have been dodging a different question entirely.

The discussion that was taking place before Bezos spoke was largely about whether wealthy Americans should pay more in taxes. Whether that’s right or wrong isn’t the point, but that was the question being discussed.

Bezos responded by changing the subject and talking about everyday workers paying less in taxes.

Now, those two are very different conversations. One asks, “Should wealthy Americans pay more?” The other asks, “Should working Americans pay less?”

Maybe the answer is both.

Is the Real Problem Taxes or Wealth Inequality?

The more I listen to this debate, the more I realize something.

People weren’t actually arguing over taxes. I mean, they don’t like taxes for sure, but they were arguing about what they think is wrong with the economy.

If you believe the biggest problem facing working Americans is that they’re being taxed too heavily, then Bezos’s proposal makes a lot of sense. Let people keep more of what they earn. It’s pretty straightforward.

But there’s another way to look at it.

Gary from Gary’s Economics argues that taxes aren’t really the problem at all. He argues the bigger issue is wealth inequality.

In other words, too much money and too many assets are ending up in the hands of a relatively small number of wealthy people. And over time, that makes it difficult for everyone else.

Housing has gotten more expensive. All asset classes have gotten more expensive. The gap between people who own things and people who are trying to buy things has gotten wider.

Now, whether you agree with that or not, I think it’s a perspective worth considering.

If the problem is overtaxed workers, then you cut taxes.

If the problem is concentrated wealth, then you start looking at whether wealthy individuals should be paying more in taxes.

Before Bezos made these comments, there was a growing discussion about whether billionaires should pay more taxes. That was the debate.

Then Bezos comes out and says workers should pay less taxes.

Now, maybe both things can be true.

Would Lower Taxes Solve the Bigger Problem?

When I look at Bezos’s proposal, I think he’s right about one thing.

A lot of Americans are struggling. Ordinary people who feel like they’re working harder are getting less. That’s real.

But here’s where I become a little more skeptical.

If somebody making $75,000 paid less tax, would they be better off? Of course.

But would it solve the bigger problem people are dealing with? I’m not so sure.

Because when I talk to people, taxes usually aren’t the first thing they bring up. They talk about housing costs and how everything costs a lot more.

That’s why I don’t think this conversation is as simple as cutting taxes and calling it a day.

When Jeff Bezos says working Americans should have more money in their pockets, I completely agree. But I think it’s fair to ask who benefits.

Workers would benefit, that’s obvious, but so would businesses that depend on consumer spending, including Amazon.

Now, maybe Jeff Bezos genuinely believes that this would help working Americans, but let’s not pretend Amazon wouldn’t benefit if millions of Americans suddenly had more money to spend.

I think that’s worth keeping in the back of our minds as we think about this debate.

Who Benefits and Who Pays?

I’ll leave you with this.

Years ago, I probably would have heard Jeff Bezos make the proposal and immediately loved it. And to be fair, I still think he’s one of the greatest businessmen of our lifetime. You don’t build a company like Amazon by accident.

But as I’ve gotten older, I’ve also gotten more skeptical, not just of Jeff Bezos, but of everybody. Politicians, economists, billionaires, the media, all of them.

Because I’ve learned that whenever somebody proposes a policy, it’s worth asking two simple questions:

Who benefits and who pays?

Now, if people making under $75,000 paid less federal income tax, I think they’d benefit, no question about it.

But they probably wouldn’t be the only ones.

If millions of Americans suddenly had more money to spend, companies that depend on consumer spending would likely benefit too, including Amazon.

If Bezos really wanted to help working Americans, why not support both?

Lower taxes on workers and raise taxes on billionaires.

Tax the rich, I say.

Whenever somebody tells me a policy will make life better for everyone, I start looking for the bill because somebody always pays.

What do you think about Jeff Bezos’s proposal to eliminate federal income taxes for Americans earning under $75,000 a year? Do you think it would help working families, or does it miss a bigger issue?

Let me know what you think in the comment section of my YouTube video.
Thanks for reading, and see you there.