Yahoo Finance Economists: Richest 400 Americans Now Pay Lowest Overall Percentage Of Income In Taxes
America’s tax system has gradually gone from super-progressive to flat to regressive over the last half century or so, and for the first time on record the richest 400 people in the country now pay a lower tax rate than everyone else, according to data in a new book by two award-winning university economists.
“The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay” by University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman, published by W.W. Norton, is out next week.
The conclusion from the book’s new comprehensive look at data on taxes paid by all Americans over time: “For the first time in more than a century, billionaires now pay lower tax rates than their secretaries.”
The economists’ analysis of decades of data on income and on taxes paid found that the wealthiest 400 households in the United States last year paid 23% of their income in combined taxes at all levels, from federal to the local special district. That’s down from a rate of 70% for the richest 400 in 1950, and just under 50% in 1980.
The US used to have the most progressive tax system in the world.
Now the ultra-rich pay less than everyone else.
Our book, "The Triumph of Injustice", tells the story of how this happened — and how global tax justice could prevail in the 21st century pic.twitter.com/i0IbUt0MuP— Gabriel Zucman (@gabriel_zucman) October 7, 2019
An overall tax rate in the mid-20s range is about the same as that paid by those right in the middle of the income spectrum in the United States, and slightly lower than those at the very bottom of the income scale.
The change is attributed in part to policy: cuts in taxes like the estate tax and corporate tax have bestowed outsized benefits on the super wealthy, and few benefits on low or average earners.
Overall, federal taxes, with the exception of payroll taxes, have declined generally for almost everyone; they’ve just declined more for the super wealthy.
But a major reason for the lower tax rate for the wealthy, according to Saez and Zucman, is the growth of the “tax avoidance industry.”
The book, according to the publisher’s summary, will “explain how America turned away from the most progressive tax system in history to embrace policies that only serve to compound the wealth of a few.”
It also seeks to offer some solutions.
“Saez and Zucman propose a visionary, democratic, and practical reinvention of taxes, outlining reforms that can allow tax justice to triumph in today’s globalized world and democracy to prevail over concentrated wealth,” according to W.W. Norton.
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