{"id":273,"date":"2026-05-27T04:15:23","date_gmt":"2026-05-27T04:15:23","guid":{"rendered":"https:\/\/movingandmortgagehub.com\/?p=273"},"modified":"2026-05-27T04:15:23","modified_gmt":"2026-05-27T04:15:23","slug":"why-billionaires-pay-much-less-tax-than-the-average-american","status":"publish","type":"post","link":"https:\/\/movingandmortgagehub.com\/?p=273","title":{"rendered":"Why Billionaires Pay Much Less Tax Than the Average American"},"content":{"rendered":"
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This story was originally published\u00a0on Gabriel Zucman\u2019s substack, to which you can subscribe here (for English) or here (for French).<\/em><\/p>

Read more DHS Is Getting Sued For the Truth About Its \u201cDomestic Terrorism Watchlist\u201d<\/a><\/p>\n

Last week, <\/span>Jeff Bezos made an unexpected\u00a0contribution\u00a0to the debate about taxation in the United States, claiming that billionaires like himself pay a lot of tax and that it would be pointless to ask them to pay more.<\/p>\n

Coming from someone who, famously, paid zero income tax in 2011 and even received a\u00a0tax credit\u00a0for his children, this predictably did not go very well.<\/p>\n

But it\u2019s not just billionaires like Bezos, with a clear interest in maintaining the status quo, who express this sentiment. There is a common view that the US tax system is progressive, that the super-rich must pay a lot of tax and the working class does not contribute to funding the government.<\/p>\n

So it\u2019s worth looking at what the research says on this issue. My colleagues and I have spent several years trying to assemble the most comprehensive estimates of who pays the taxes in the United States.<\/p>\n

To begin with, it\u2019s worth dispelling a common myth.\u00a0Contrary to what we often hear, the working class pays a lot of tax in America. Bezos, echoing conservative commenters,\u00a0claimed\u00a0last week that the top 1 percent pays 40 percent of taxes and the bottom 50 percent only 3 percent.<\/p>\n

But this claim is misleading. It captures just one tax \u2014the federal income tax\u2014and ignores all the rest: payroll taxes, state income taxes, sales taxes, excise duties, etc., many of which are regressive.<\/p>\n

If one takes a comprehensive view of taxation in the United States, here\u2019s the picture that emerges: All social groups pay broadly the same effective tax rate today\u2014around 25 percent to 30 percent of income, including all taxes\u2014with billionaires having the lowest tax rate: 24 percent on average in 2018\u201320.<\/p>\n

Working class people<\/span> significantly contribute to funding American society today.\u00a0Payroll taxes and consumption taxes absorb a high fraction of their income. For the middle class, the income tax starts kicking in on top of these. And for the rich, the corporate tax becomes significant.<\/p>\n

Of course, low-income Americans also receive government transfers. If one views these transfers as a \u201cnegative tax\u201d (which is problematic for the reasons explained in\u00a0), then the tax rate of the working class falls.<\/p>

Read more The ACA Affordability Crisis Congress Won\u2019t Fix<\/a><\/p>\n

But the tax rate of the middle-class barely changes. No matter how one looks at it, billionaires pay much less tax than the average American.<\/p>\n

The second myth worth dispelling is the notion that the superrich pay a significant amount of tax. The case of Bezos himself is a good illustration of why that is not the case.<\/p>\n

Based on public data, it is possible to estimate Bezos\u2019s total effective tax rate: the total amount of tax he pays personally plus indirectly through Amazon, relative to his income (not<\/em>\u00a0including unrealized capital gains).<\/p>\n

Bezos\u2019s total effective tax rate was just 15 percent in 2018. Meanwhile, the average person in the US pays around 30 percent of their income in taxes.<\/p>\n

More broadly, if one looks at the 400 wealthiest Americans,\u00a0\u00a0shows that billionaires tend to have low individual income tax rates.<\/p>\n

Simply put, the ultrawealthy can easily structure their wealth so that this wealth will generate little\u2014sometimes even no\u2014taxable income. Hence no income tax owed. And things are getting worse: The effective tax rate of billionaires has fallen sharply after the Tax Cuts and Jobs Act of 2018.<\/p>\n

In a context where billionaire wealth is booming, this deprives governments of very significant revenue. And even more importantly, it fuels the rise of inequality\u2014or rather, the rise of plutocracy, which now far exceeds its Gilded Age peak.<\/p>\n

In 1910, the top 0.00001 percent wealthiest Americans\u2014who became known as the Robber Barons, extracting immense wealth from their monopolies, free of tax\u2014owned wealth equivalent to 4 percent of US national income.Today that same fraction of the population \u2014which now includes 19 households \u2013 own the equivalent of 14 percent of US national income in wealth.<\/p>\n

It is high time we fix this anomaly.<\/p>\n

Gabriel Zucman is an economist and professor at the University of California, Berkeley, and at France\u2019s \u00c9cole Normale Sup\u00e9rieur whose research focuses on the accumulation, distribution, and taxation of wealth from a historical and global perspective.<\/em><\/p>

Read more Republican-Appointed Judges Just Gave the Roberts Court a Stunning Rebuke<\/a><\/p>\n<\/article>","protected":false},"excerpt":{"rendered":"

As wealth concentrates at the top, upper-crust tax rates have declined. 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