The chairmen of Congress's tax committees on Wednesday released data showing a significant increase in recent years in the number of taxpayers that have individual retirement accounts with very large balances.
Senate Finance Committee Chairman Ron WydenRonald (Ron) Lee WydenBiden pushes back at Democrats on taxes Want a clean energy future? Look to the tax code Democrats brace for toughest stretch yet with Biden agenda MORE (D-Ore.) and House Ways and Means Committee Richard NealRichard Edmund NealBiden pushes back at Democrats on taxes Want a clean energy future? Look to the tax code Democrats brace for toughest stretch yet with Biden agenda MORE (D-Mass.) released a memo from the Joint Committee on Taxation that found that there were nearly 29,000 taxpayers in 2019 with aggregate IRA balances of at least $5 million, and about 500 of these taxpayers had aggregate balances of $25 million or more.
The new figures indicate that the number of taxpayers with so-called mega-IRAs has multiplied in recent years. The Government Accountability Office previously estimated that there were about 9,000 taxpayers in 2011 with IRAs with balances of more than $5 million. About 300 of those taxpayers had aggregate balances of more than $25 million.
Wyden and Neal asked JCT for data about mega-IRAs following a report from ProPublica about how prominent billionaires, such as PayPal co-founder Peter Thiel, have used a type of IRA to avoid taxes.
The lawmakers expressed concerns about the growth in taxpayers with mega-IRAs.
“IRAs were designed to provide retirement security to middle-class families, not allow the super wealthy to avoid paying taxes," Wyden said in a statement. "This is the perfect example of what I’ve long called the tale of two tax codes."
Neal said in a statement that “these data indicate that the exploitation of IRAs is a growing problem.”
“IRAs are intended to help Americans achieve long-term financial security, not to enable those who already have extraordinary wealth to avoid paying their fair share in taxes and deepen existing inequalities in our nation," he added.
Both chairmen said that their committees are looking at ways to prevent wealthy individuals from using IRAs to avoid taxes.