FACT BRIEF

Are billionaires effectively taxed at a lower rate than most other Americans?

Thursday, January 27, 2022

By Jacob Alabab-Moser

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YES

The wealthiest billionaires effectively pay income taxes at a lower rate than other U.S. taxpayers. Estimates of just how much depend on what taxes and what income ranges are used for comparison.

Two Berkeley economists found that in 2018, the wealthiest 400 adults paid the lowest overall tax rate of any income segment examined, at 23%. The lower 50% of adults paid an average rate of 24.2%.

ProPublica, in a 2018 report focusing on the 25 richest taxpayers, found that their relatively low rates arose in part from favorable treatment of investment income and deductions for gifts to nonprofits.

Last year, White House economists, citing various sources, estimated that the 400 richest U.S. families paid an average 8.2% rate on income between 2010 and 2018.

This fact brief is responsive to conversations such as this one.

Sources

CBS News America's richest 400 families now pay a lower tax rate than the middle class

Journal of Economic Perspectives How progressive is the US federal tax system?: A historical and international perspective

Emmanuel Saez and Gabriel Zucman Taxing our way back to justice

ProPublica You May Be Paying a Higher Tax Rate Than a Billionaire

White House What Is the Average Federal Individual Income Tax Rate on the Wealthiest Americans?

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