US Billionaires Pay 24% Effective Tax Rate, Below Average Americans' 30%
Updated
Updated · Mother Jones · May 26
US Billionaires Pay 24% Effective Tax Rate, Below Average Americans' 30%
1 articles · Updated · Mother Jones · May 26
New estimates show US billionaires paid an average effective tax rate of 24% in 2018-20, below the roughly 30% paid by the average American when all taxes are counted.
The research argues claims that the top 1% shoulder most taxes are misleading because they focus on federal income tax and exclude payroll, state, sales and excise taxes that weigh heavily on workers.
Jeff Bezos's own case illustrates the gap: his total effective tax rate was estimated at 15% in 2018, even including taxes paid indirectly through Amazon and excluding unrealized capital gains.
The study says billionaire tax rates fell further after the 2018 Tax Cuts and Jobs Act, even as extreme wealth concentration deepened, with the richest 19 US households holding wealth equal to 14% of national income.
Beyond taxes, what new rules can prevent extreme wealth from undermining democratic processes?
How can extreme wealth be taxed when it can buy political influence or cross borders?
Is today's 'check-writer' philanthropy a solution, or a failure compared to the first Gilded Age?
Billionaires vs. Average Americans: The Widening Tax Rate Divide and Its Consequences (2018–2020)
Overview
Between 2018 and 2020, the report highlights a striking gap in effective tax rates between America’s wealthiest individuals and average workers. While the wealth of top billionaires soared by hundreds of billions, their effective federal income tax rates remained far lower than those paid by most Americans. This is because income from wealth, such as asset appreciation, is taxed at much lower rates than wages. Some billionaires even paid no federal income taxes in certain years. These findings reveal how the current tax system allows the ultra-rich to contribute a much smaller share of their growing wealth compared to ordinary earners.