Billionaires Pay Lower on Effective Tax

Photo: Ali Bi

A new study by the National Bureau of Economic Research (NBER) reveals that America’s wealthiest billionaires pay a lower share of their income in taxes than most workers and even less than the national average.

The analysis, conducted by economists Akcan S. Balkir, Emmanuel Saez, Danny Yagan, and Gabriel Zucman, used administrative data from 2010 through 2020, matching Forbes’ list of the 400 richest Americans with individual, business, estate, and gift tax returns.

It found that the top 0.0002 percent of households—roughly the “Forbes 400”—paid an average total effective tax rate of 24 percent from 2018 to 2020. That compares with 30 percent for the overall U.S. population and 45 percent for top labor income earners.

The authors define the effective rate as all taxes paid relative to “economic income,” which includes labor income, business profits, and capital gains. The report concludes that billionaires “appear less taxed than the average American” when all sources of wealth are considered.

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