What does it mean for Bill Gates to have an income of $0?

I recently engaged in a friendly Twitter debate about limiting personal income. Someone told me that Bill Gates has an income of $0.

You realize that most of the super-risk [sic] founders have very low income, typically $0. Gates, Musk. Bezos has $180k income.

Is that simply taxably income in a very strict legal sense?

If Bill Gates does have an income of $0, what is a more appropriate word to represent his yearly increase in financial assets?

Wikipedia's opening sentence suggests that any increase in financial wealth is income.

In microeconomics, income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.

It seems that year over year, Bill Gates has increased his ability to consume and save, so for me, income fits as a word. Surely, in one year, he has increased his ability to buy (consume), for instance, a $100 million dollar house. So his income in that case is somewhere around $100M.

But, if not with the word "income", what word is appropriate for that "increased financial wealth over the year?"

What do we call a yearly increase in the amount of money that an individual could choose to spend.

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    – JohnFx
    Commented Nov 30, 2021 at 22:41
  • Mod note : No new comments should be added here, they will be removed with no further notice. Commented Dec 1, 2021 at 22:10

9 Answers 9


Yes, the '180k income' figure reflects reported taxable income for those individuals in the US. For various reasons it is beneficial to have some amount of reported taxable income, but outside of that desire, it is common for ultra-wealthy individuals to avoid / defer the recognition of taxable income, to delay / reduce their overall tax paid each year. [How do they get cash to buy yachts and various other of life's bear necessities? They can borrow debt, secured against their unsold assets, or maybe they have enough cash on hand already, or various other methods - anything but creating a tax burden if possible!!]

But... it seems quite silly to say that Bezos has 180k in income each year, right? That's because the concept of income, in particular as it is defined in various country tax codes, is somewhat arbitrary.

The core ideas behind not showing asset value fluctuation as 'income' are roughly:

(a) if you have assets that fluctuate in value, it can be difficult to determine their exact amount [barring stock assets in publicly traded companies];

(b) the change in value of those assets does not create the cashflow needed to pay resulting tax bills [I play an incomprehensibly small violin for Elon Musk at the thought he might need to sell some more Tesla shares];

(c) by accelerating the liquidation of 'working capital' [funds invested in operating businesses], you reduce the ability of that business to further drive economic improvements;

(d) it opens the question of whether unrealized losses can create immediate tax benefits as well.

Fundamentally, the accuracy of the above justifications is up for debate, and that debate is one that the ultra-wealthy are very keen to argue sharply. The fact is that we now have far more of an ability to calculate (a) above, the abuse of (b) leads to massive loss of tax revenue, (c) has only a tenuous grasp of reality given the speed with which funds track through an economy through either social spending vs tight-fisted individual investment ['trickle-down economics' is not as well-regarded as it once may have been]; and (d) is a non-issue if wealth itself is taxed directly [I haven't seen many serious proposals of actually taxing the 'gain' portion of unrealized gains, but rather full holdings above some threshold]. Solutions to this may involve wealth taxes or the like, but cracks in various tax codes are growing daily, and personally I believe that change is necessary.

Tax rant aside, what you call such a thing becomes very charged due to the way the financial world intermingles with the political. In some senses you could call share value increases income, in some senses you might just call it capital appreciation, but as in all subjective things, the answer really 'depends'.

  • Comments are not for extended discussion; this conversation has been moved to chat. Commented Dec 1, 2021 at 12:51
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    How did a question with a single phrase answer result in a political soap box of an answer? I thought we were supposed to be objective here. -1
    – TCooper
    Commented Dec 1, 2021 at 16:02
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    @TCooper The underlying nature of the OP's question is that it doesn't appear logical that the richest in the world have middle-class 'income'. The reason for that confusion is heavy application of the shrewdest interpretation of what 'income' is, guided by political pressure to avoid taxation of wealth. This is the context that leads to the last paragraph of my answer. Commented Dec 1, 2021 at 16:38
  • Let us continue this discussion in chat. Commented Dec 1, 2021 at 17:48
  • Mod note : No new comments should be added here, they will be removed with no further notice. Commented Dec 2, 2021 at 11:05

We call it "wealth". Wealth includes measuring the total amount of assets you have now, as opposed to the total amount of realized profits you've made (income).

Some countries have wealth taxes, in various forms. The US has property taxes, which typically tax real property and sometimes tangible items like cars or boats (depending on the location), but not at the federal level. There is not currently a wealth tax in the United States, for a variety of reasons, which reasonable people might agree or disagree with.

The main reason not to tax stock market increases, and instead to only tax them when they are realized gains, is that it makes it a lot more complicated for everyone - and that complication matters a lot more to me, than it does to Jeff Bezos, who pays a team of accountants to handle things for him. If my stock goes up Dec. 31, then I owe a bunch of tax, but it falls on Jan. 1 - sucks to be me, doesn't it... and a LOT of people have had very similar issues with Cryptocurrency "investments" recently, because they transacted at the wrong times and realized their gains but then suffered losses.

  • 6
    What’s wrong with ‘change in wealth’?
    – Joe
    Commented Nov 29, 2021 at 22:54
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    The phrase "change in wealth" is fine. I feel surprised that English does not have a single word for that. I appreciate though that English simply doesn't have a word for all things. It might be worth my also asking on the English StackExchange site. Commented Nov 29, 2021 at 23:13
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    To whit: english.stackexchange.com/questions/579371/… Commented Nov 29, 2021 at 23:19
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    "Change in wealth" sounds very artificial, a journalist wouldn't use it in a normal article. Income is the natural word to use no, "change in wealth" are the words to use. If I buy a random vase in China for $10 and after 5 years of it lying in my closet it turns out that it is a genuine Ming Dynasty Vase, worth thousands if not millions, then my wealth has changed, but I had no income. I might or might not have income if and when I sell it, but not until then. Treat Amazon.com, Inc. as a Ming Vase and it's just about the same.
    – AnoE
    Commented Nov 30, 2021 at 16:26
  • 8
    @LassiKinnunen income is not the same as increase in wealth, clearly. Income means gaining *things that were not theirs before. That isn't the case when someone's stock appreciates - do you have income` when your house goes up in value? Definitely not in the common use of the word at least.
    – Joe
    Commented Nov 30, 2021 at 19:18

Other than "change of wealth," there is no word or phrase directly relating to this. English has a paucity of words to handle some of these concepts.

The English language has been heavily influenced by the ideas of technical accountancy because it has been so important in the last two hundred and fifty years. Just as many scientific terms have flooded the language, so have many business terms.

Jeff Bezos' official compensation from Amazon is $180,000. That may not be his entire personal income.

With some notable exceptions, such as may happen with options contracts under the tax code, something is only income in two circumstances.

The first, under cash accounting rules, is directly associated with a cash flow. Cash needs to change hands for income to happen. As a rule of thumb, that is the income method you usually run into with most taxpayers. The second, under accrual accounting rules, is associated with modeled income. There have to be cash flows but they do not need to happen at this moment.

Changes in wealth are not accrued income, however, they are generally changes in the valuation of others seeking assets to purchase.

Jeff Bezos has reduced assets due to gifting and his divorce. His assets are considered more valuable than before, so his wealth can rise even as he owns less. Some of his wealth is the result of indirectly accrued income.

Mr. Bezos owns between ten and eleven percent of Amazon. Amazon does not pay a dividend. He owns an undivided claim to all net assets in Amazon. If Amazon adds $1 in new income, his indirect income due to accruals is roughly eleven cents. He may not take or use that money. It is not his unless the firm is liquidated or declares bankruptcy. That eleven cents is something he owns but may never in his entire life be permitted to touch.

Last year, Amazon added about twenty-six billion dollars to its owner's equity. About ten percent of that belongs to Bezos. He is not permitted to use it, touch it, or even borrow it.

He could sell shares, but that is problematic. If you own and sell shares, nobody cares. When founders sell any appreciable amount of shares, that is often interpreted as due to insider information that the firm is about to self destruct. Mr. Bezos could see the value of the entire company fall simply because he liquidates a large position.

Additionally, the market does not have the depth to absorb that many shares at once. He would pretty substantially shift the short-run supply curve. His wealth would fall if he tried to liquidate his position. He can dispose of relatively small amounts with ease, but it would be a bit challenging to exit.

That is the rub. He has wealth and it changes based on the moods in the market. If we had a 1933 style collapse this year, his official wealth would be reduced by at least 90%. But is that a good characterization?

After all, his official income would likely not change. Likewise, assuming he stopped gifting shares, he would still own the same number of shares. The difference would be that nobody else would want to own them except at rock-bottom prices. His accrual would be the same, assuming Amazon's income didn't change.

If he has the same income, the same indirect accruals, and the same property claims, did his wealth change?

That is why accounting concepts are so important. That is also why so many Democratic and populist tax proposals are either unconstitutional or impossible to make functional.

There are close concepts to this state of affairs. In naval strategy, there is a concept called a fleet in being. It is a denial of sea control strategy.

A fleet in being never leaves its anchorage. If it did, it would be sunk. However, the opposing fleet cannot leave the area outside the harbor or the opposing fleet could be given a free hand. The dominant fleet cannot approach the harbor because land forces augment the naval forces and would also destroy the dominant fleet. The smaller nation cannot be attacked from sea, but only if the fleet in being does nothing.

Bezos's wealth and power are the greatest if he does nothing.

If he tries to exit his position, he is likely to take losses at exponentially discounted rates when compared to the market cap at the time of the decision. As long as he continues to hold his position, he holds considerable social, political and business influence. If he exits, he doesn't become unimportant, but there is no direct reason to take his calls unless he is donating money to you. Right now, if Mr. Bezos calls a head of state, that call will likely be taken.

The idea of wealth doesn't work well for the ultra-rich because they possess a restricted strategy set that also meets concepts of optimality.

A person with ten million dollars is wealthy. A person valued at one hundred and seventy billion dollars is also wealthy but can never access or even attempt to use all of that value. They are certainly wealthier than the person with ten million dollars. We lack ways to talk about it. A boulder is heavy. The moon is heavier. It is meaningless to discuss lifting the moon but you can lift a rock.

What we lack is a concept of accessible wealth.

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    “What we lack is a concept of accessible wealth.” Liquid assets?
    – Davislor
    Commented Nov 30, 2021 at 15:37
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    This answer seems beneficial for the general understanding of the plight of folks like Bezos, but I think it downplays his ability to exchange his Amazon Inc shares for cash. "He may not take or use that money" - he surely can convert some amount of his shares to gain a sizable amount of cash before the market notices. Parts of your answer make it sound like his share in Amazon Inc. is just dormant and he basically has only his $180k allowance to spend - I guess that's not what you intended?
    – AnoE
    Commented Nov 30, 2021 at 16:57
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    @AnoE so it wasn't so much to downplay as to discuss the problem of English. Your phrase sizable is an example of that. What is sizable to me may not be to you. I did not intend for it to imply that he lives off his allowance. Bezos has sold roughly 1.5 billion dollars in shares for cash. While that is far less than one percent, it is beyond what he could possibly use in a lifetime. That money was mostly used to found new ventures. Actually, even that activity is problematic. If you walked into your credit union with a check for $1.5 billion, they couldn't accept it legally. Commented Dec 1, 2021 at 3:06
  • 1
    unrealized capital gain - while not a shorter phrase, is another option in english, and is what's used in accounting/legally.
    – TCooper
    Commented Dec 1, 2021 at 16:16
  • 2
    @Dave Harris: Re $1.5 billion being beyond what he could use in a lifetime, ever try to fund your own space program?
    – jamesqf
    Commented Dec 1, 2021 at 18:07

The statement was false as it implies they pay no tax every year. No, only certain years.

Borrowing money does not create more wealth.

They are living on money they are borrowing.

Loans (Borrowing money) are not taxable income, because you will need to pay it back later with taxed income.

Can you imagine? You finally buy your dream home for $400,000 with 95% borrowed money, and blammo! The IRS wants you to pay over $100,000 taxes on the $380,000 you borrowed, because that puts you in a terrible tax bracket. That wouldn't be fair.

It would also be double taxation - you'd pay tax on the borrowed amount and then pay tax again on the money you use to pay it back. The only way to make "taxing loans" to be fair would be if principal repayments were tax deductible (but not interest) - and that would just make paperwork ridiculous.

This applies to you, too — if you are borrowing money to stay afloat during a time of unemployment, that money is not taxed.

These millionaires are taking loans, using the value of their considerable stock holdings as collateral. Those loans are not income.

Repayment of loans isn't income either.

Suppose you earn $13,000, pay $3000 tax and you now have $10,000 of money that you already paid taxes on. You loan it to me.

Later, I pay it back to you. Is that income to you? Do you need to report that as income? No. It's the same money you already paid taxes on. You don't need to pay tax twice.

I bet you Tesla took billions of dollars of startup capital before it got profitable. Quite likely, a lot of that came from Elon Musk's money that the taxes were already paid on. And I bet Musk loaned it to Tesla.

Well, now Tesla is paying back the principal of those loans. Since Musk already paid the tax on the principal before loaning it, it is not income either.

Wealth is taxed when an asset is sold.

Until the asset is sold, the "wealth created" is purely hypothetical. For instance, my warehouse full of unsold T-shirts about the "cash you ousside" meme. But it isn't wealth until it sells. Back in 200whenever, such trendy shirts would've seemed like a huge pile of wealth. But now it looks like a pile of rubbish. See? Trying to call it "wealth" before it sells is very unworkable, and would make for messy taxes if you tried to tax it before it actually turned into a sale.

The wealth created is considered the value you sold it for minus the value you paid for it. So for instance if Elon Musk were to sell some Tesla stock, that would indeed create a taxable event and be taxed at the usual rates.

Musk tweeted a proposal to do exactly that, to allow the tax man to take some harvest.

What's the difference between selling and borrowing? If you sell shares to the bank, they vote those shares. If you borrow against your shares, you vote those shares. It's about control, at the expense of paying a bunch of interest (which is income to the bank, and the bank pays tax on that income).

If Elon Musk had not existed, the IRS would collect the same amount of money they do now from Musk, but a whole lot less money from the bank (that interest) and everyone else who does business with and makes money from Tesla. Including Tesla itself.

Never sell

People with very successful businesses can take a strategy of "never sell". They just perpetually borrow from their ever increasing paper value of their stock. When they die, their estate sells. And the estate pays all the catch-up tax. The government gets it in the end after all.

How do we account for the difference between "taxable income" and "cash on hand"?

Just like that. In accounting, taking a loan is a double entry - it increases cash in your bank account, but increases debt in your liabilities accounts. The two are equal and opposite.

  • It has zero net effect on your balance sheet (list of assets and liabilities)
  • it has zero effect on your income statement (since money in was offset by liabilities increased)
  • it has a big effect on your cash flow statement, which states cash inflows and outflows.
  • 1
    It's a shame this one will probably get buried. I couldn't write this much on it and stay objective. +1
    – TCooper
    Commented Dec 1, 2021 at 16:37
  • It has zero net effect on your balance sheet (list of assets and liabilities): I'd say (each side of) the balance sheet just increased.
    – green diod
    Commented Dec 1, 2021 at 22:09
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    the magic word being "net". Commented Dec 1, 2021 at 22:16
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    When they die, the estate only sells enough to pay off any debts. The rest of their appreciated assets pass income-tax-free with a step-up basis. There may be a separate estate and gift tax. Commented Dec 2, 2021 at 15:54

You've asked two separate questions - the first in the title and the first line of the post ("What does it mean for Bill Gates to have an income of $0?") and the second at the end of the post ("But, if not with the word 'income', what word is appropriate for that 'increased financial wealth over the year?' What do we call a yearly increase in the amount of money that an individual could choose to spend.")

The current answers all focus on the second so I will add one aimed at the first: when people say "Bill Gates has an income of $0" or "Jeff Bezos has an income of $180,000" they are talking about "earned income", "salary income", or "income from employment". This is of course a subset of all income.

On a UK tax return you have to distinguish between income from employment, income from rent on properties you own, income from interest on bank accounts, income from dividends on shares etc., so I don't think it's as simple as saying that the $0 or £180k represents "taxable income" as the answer from Grade 'Eh' Bacon suggests (I realise neither of them are in the UK so I'm just using this as an example).


The phrase you are looking for is “earned and unearned income, and capital gains (whether realised or not)”. There’s no single word or concise phrase to express it. But be aware that even on that basis Gates’ change in wealth may well be very negative, because of his very large donations to the Gates Foundation.

  • 2
    Wouldn't "equity" be a term? You make two heaps: One with everything you own, and another with everything you owe; the difference (which may be negative) is your equity, I thought. The change in equity over a (fiscal) year is what the OP is asking for. Commented Nov 30, 2021 at 10:32
  • @Peter-ReinstateMonica - that sounds like it should be its own answer.
    – Dragonel
    Commented Nov 30, 2021 at 18:24

The increase in net worth is an Unrealized Capital Gain.


Total Gross Income (Adjusted Gross Income also correct)

According to the IRS: "Adjusted Gross Income (AGI) is defined as gross income minus adjustments to income. Gross income includes your wages, dividends, capital gains, business income, retirement distributions as well as other income. Adjustments to Income include such items as Educator expenses, Student loan interest, Alimony payments or contributions to a retirement account."


In many countries, capital gains are taxed in a separate category from earned income/wages/tips, but they are still considered part of total gross income. It is not technically accurate to say Bezos' income is only 180k/year. The more accurate statement is his EARNED income is only 180k/year.

  • 1
    Capital gains taxes do not tax increases in the value of things you're holding. They only tax the income you get when you sell the thing. So if you buy an antique car for $10k and sell it for $20k, you will have to pay capital gains taxes on the $10k. You will not have to pay taxes on the $10k if you do not actually sell the car - that would be ridiculous. If, as a large shareholder, you sold shares to support your lifestyle (people don't tend to do that), you would pay the capital gains tax.
    – Luaan
    Commented Dec 1, 2021 at 21:53

Bill Gates salary is probably a lot less than what people may think. He may earn some money from the advisory roles he plays in Wal-Mart and some of the other companies he has sizeable amount of shares in. He may act as a board member to some of these companies or he can just simply be just another share holder. Probably only he knows what involvement he exactly has with various businesses he owns.

What he does have is sizeable equity in a number of successful companies. This does not really equate to money in his bank account though. Yes his shares in Wal-Mart at current share prices is probably worth billions but for him to sell those shares in a way that he gets any where near current market price would be a tricky task. I think that a lot of Wal-Mart's investor confidence is built on having such a well known business man steering the ship. I can only imagine what process it will be to liquidate all his assets one day when he passes. Probably going to be an incredibly complicated estate.

  • Do you mean Walmart (WMT)? Bill Gates owns <0.5% of Walmart, that's a significant investment for a company that size (382B market cap) but hardly qualifies him as a "well known business man steering the ship". Or do you mean Doug McMillon, the president and CEO?
    – Spike0xff
    Commented Dec 1, 2021 at 22:06
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    Ok it is his foundation that owns 11,6 million shares in Wal-Mart not him. He owns the foundation though.
    – Neil Meyer
    Commented Dec 2, 2021 at 16:31

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