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Do billionaires pay an 8% federal income tax rate?

By Tom Kertscher
NO

Billionaires pay a federal income tax rate much higher than 8%, according to the latest data.

The smallest income group the IRS reports on is the top 0.001% of income earners. The taxpayers who filed those 1,575 returns in the 2020 tax year paid an average rate of 23.73%, according to a January 2023 analysis of IRS data by the nonpartisan Tax Foundation.

Speaking Aug. 15, 2023, in Milwaukee, President Joe Biden alluded to a report from his administration estimating the wealthiest 400 families paid an average of 8.2% of their income in federal income taxes.

But the estimate was theoretical. It included earnings on unsold stock as income. Stock gains are not taxed until stocks are sold, though at a lower rate than wages.

University of California, Berkeley, economists estimated that in 2018 the 400 richest families paid a rate of 23% in federal, state and local taxes.

This fact brief is responsive to conversations such as this one.
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Wisconsin Watch, the news arm of the nonpartisan, nonprofit Wisconsin Center for Investigative Journalism, increases the quality and quantity of investigative reporting in Wisconsin, while training current and future investigative journalists. Its work fosters an informed citizenry and strengthens democracy.
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