Billionaires Paid Less In Taxes Than Working Class For The First Time In U.S. History
For the first time in United States history, billionaires paid less money in taxes than the working class. In a new study called “The Triumph of Injustice,” Emmanuel Saez and Gabriel Zucman report that the richest families in the country had a lower tax rate than the poorest half of American households.
As The Washington Post reports, the University of California at Berkeley economists analyzed tax rates since the 1960s and found that the richest 400 families paid a 23 percent tax rate, while the bottom half of Americans paid 24.2 percent in 2018.
In 1960, the richest 400 families paid a 56 percent tax rate and a 47 percent tax rate in 1980. The working-class tax rate, on the other hand, has stayed about the same over that time. The top 400 families also hold more wealth than the bottom 60 percent of the country, illustrating the wealth disparity in the country.
The study looked at federal income taxes, corporate taxes, and state and local taxes, along with indirect taxes like the fees for motor vehicle registration and business licenses.
However, not everyone thinks that the study is an accurate representation of taxes in the U.S. Jason Furman, an economics professor at Harvard, said that the study doesn’t take into account refundable tax credits, which is a credit aimed at helping low-income families.
“The best estimates indicate that the tax system is progressive — with the rich paying a higher tax rate than everyone else,” Furman said.
But the study’s authors argue that they took into consideration this type of credit.
“If you start counting some transfers as negative taxes, it is not clear where to stop,” Zucman said. “Do you treat the EITC as a negative tax? veterans’ benefits? medicaid? defense spending? … There’s no clear line and the results become arbitrary.”
Furman concedes, however, that the wealthy are paying less than they have in the past and less than they should be paying.
“The rich definitely pay less in taxes than they did in the past and less than they should,” Furman said.
The tax rate has dropped for wealthy Americans in recent decades thanks to legislation like 2017’s Tax Cuts and Jobs Act, which was pushed by President Donald Trump and then-House leader Paul Ryan. The tax change has been criticized as a handout to the rich at the expense of the middle class, and the study shows that the wealthy enjoyed a drop of 2.5 percent after the bill’s passage.
Income inequality is now at its highest level in five decades and the pundits say we can’t pay for Medicare for All, College for All, climate action and expanding high-speed broadband.
Meanwhile: pic.twitter.com/LsSj7yUPCD
— Ro Khanna (@RoKhanna) October 8, 2019
As a result, several of the Democratic candidates have attempted to address income inequality, as Andrew Yang recently did.
