ProPublica reports that it has “obtained a trove of IRS tax return data on thousands of the country’s wealthiest people, covering more than 15 years,” which includes PayPal co-founder and billionaire Peter Thiel who has managed to keep $5 billion tax free with a Roth IRA (individual retirement account), which limits most people to contributing just $6,000 each year.
The Roth IRA was created in 1998 by the Clinton administration to help the middle class save money tax free. At the time, the yearly contribution limit was $2,000 in order to stop wealthy people from using it.
ProPublic journalist Justin Elliot told CNBC that Thiel placed $1,700 worth of PayPal shares — bought at a tenth of a cent — into a Roth IRA in 1999, which broke the rules because a tenth of a cent was below market value. Elliot also noted that if Thiel waits until he turns 60 in 2027 he can withdraw the $5 billion, and not pay any taxes on it.
(Source: ProPublica, CNBC/YouTube, Photo Credit: Hoover Institution/YouTube)