American billionaires paid less taxes in 2018 than the working class – Business Insider

0
35
American billionaires paid less taxes in 2018 than the working class – Business Insider
  • In 2018, billionaires paid 23% of their income in federal, state, and local taxes, while the average American paid 28%.
  • That’s according to an analysis of tax data by The University of California at Berkeley’s Emmanuel Saez and Gabriel Zucman for their upcoming book “The Triumph of Injustice.”
  • Between 1950 and 1980, billionaires paid more than 50% of their income in taxes each year, according to Saez and Zucman.
  • Saez and Zucman, who also serve as advisors to Sen. Elizabeth Warren‘s presidential campaign, have proposed a moderate wealth tax as a solution to the United States’ growing wealth gap.
  • Visit Business Insider’s homepage for more stories.

In 2018, billionaires paid a smaller portion of their income in taxes than average Americans. That’s the first time that has happened in history.

Billionaires paid 23% of their income in federal, state, and local taxes in 2018, an analysis of tax data by The University of California at Berkeley’s Emmanuel Saez and Gabriel Zucman found in their upcoming book “The Triumph of Injustice.” The average American, meanwhile, paid 28%.

“The US tax system is a giant flat tax — except at the top, where it’s regressive,” Saez and Zucman wrote in “The Triumph of Injustice.” “As a group, and although their individual situations are not all the same, the Trumps, the Zuckerbergs, and the Buffetts of this world pay lower taxes than the teachers and secretaries.”

Payroll taxes and regressive sales tax increase poorer Americans’ overall tax burden, according to Saez and Zucman, while capital taxes that target investments typically held by the ultra-wealthy have been scaled back since 1980. Between 1950 and 1980, billionaires paid more than 50% in taxes, Saez and Zucman found.

Read more: The racial wealth gap in the US keeps getting bigger — and it could cost the economy as much as $1.5 trillion by 2028

Billionaire investor Warren Buffett wrote in The New York Times in 2011 that the percentage of his income that he pays in taxes has plummeted in recent decades, saying that he pays a lower tax rate than his secretary.

“Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744,” Buffet wrote in The Times. “That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

The wealth gap in America is widening, and even billionaires agree that the system that created their wealth is unsustainable

The top 1% of Americans own 40% of the country’s wealth, Zucman wrote in a paper published by the National Bureau of Economic Research in February.

Several billionaires including JPMorgan Chase CEO Jamie Dimon and Bridgewater Associates founder Ray Dalio have said that current levels of inequality are unsustainable, Business Insider previously reported.

Income inequality is currently at the highest level ever recorded, the US Census Bureau said in September. Real median household income grew 0.8%, to $61,937, in 2018, the smallest increase in three years, according to the Census Bureau. The majority of the US economy’s growth over the past decade has gone to the wealthy and the owners of financial instruments, Timothy Smeeding, a professor at the University of Wisconsin at Madison who studies poverty and economic mobility, previously told Business Insider.

Saez and Zucman have proposed a moderate wealth tax as a solution to the United States’ growing wealth gap

Saez and Zucman also serve as advisors to Sen. Elizabeth Warren’s presidential campaign. One of the most frequently cited wealth tax proposals, Warren‘s “Ultra-Millionaire Tax,” calls for a 2% annual tax on households with a net worth between $50 million and $1 billion and a 3% annual tax on households with a net worth over $1 billion.

The idea has support from ultra-wealthy and ordinary Americans alike: An Insider poll shows that more than half of Americans support Warren’s wealth tax proposal. Saez and Zucman found in a study published by the Brookings Papers on Economic Activity that if a moderate wealth tax had been introduced in 1982, Jeff Bezos‘ fortune would be half what it was in 2018. Bill Gates, meanwhile, would be $61 billion less rich.

Fellow presidential hopeful Bernie Sanders unveiled a wealth tax that’s even more aggressive than Warren’s, telling The New York Times in September that “I don’t think that billionaires should exist.”

Read more: Bernie Sanders and Elizabeth Warren both rolled out tax proposals in hopes of closing the wealth gap. Here’s a side-by-side comparison that shows exactly how they stack up.

Such proposals have been hampered by questions over the effectiveness and the constitutionality of such a tax, Business Insider previously reported.  

Read More

LEAVE A REPLY

Please enter your comment!
Please enter your name here