Study: U.S. Billionaires Paid a Lower Tax Rate than the Working Class

Triumph of InjusticeIn 2018, American billionaires paid a lower tax rate than than the working class.  This is the first time in this has ever happened.

Here is Chris Ingraham’s piece at The Washington Post:

A new book-length study on the tax burden of the ultrarich begins with a startling finding: In 2018, for the first time in history, America’s richest billionaires paid a lower effective tax rate than the working class.

The Triumph of Injustice,” by economists Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley, presents a first-of-its kind analysis of Americans’ effective tax rates since the 1960s. It finds that in 2018 the average effective tax rate paid by the richest 400 families in the country was 23 percent, a full percentage point lower than the 24.2 percent rate paid by the bottom half of American households.

In 1980, by contrast, the 400 richest had an effective tax rate of 47 percent. In 1960, their tax rate was as high as 56 percent. The effective tax rate paid by the bottom 50 percent, by contrast, has changed little over time.

The analysis differs from many other published estimates of tax burdens by encompassing the totality of taxes Americans pay: not just federal income taxes but also corporate taxes, as well as taxes paid at the state and local levels. It also includes the burden of about $250 billion of what Saez and Zucman call “indirect taxes,” such as licenses for motor vehicles and businesses.

Read the rest here.

The Republican Party and the Income Tax

Ah, the irony of it all.

Heather Cox Richardson reminds us that the Republican Party once championed the federal income tax.  Here is a taste of her post at Bloomsberg:

The government has the right to “demand” 99 percent of a man’s property when the nation needs it.

That was the argument made by a Republican congressman in 1862 to introduce a novel idea: the federal income tax.

The Civil War was then costing the Treasury $2 million a day. To pay for uniforms, guns, food, mules, wagons, bounties and burials, Congress had issued hundreds of millions of dollars of bonds and paper money. But Republicans had a horror of debt and the runaway inflation that paper currency usually caused.

Taxes were the obvious answer. A conservative Republican newspaper declared: “There is not the slightest objection raised in any loyal quarter to as much taxation as may be necessary.”

Until then, taxes in the U.S. had always been apportioned by state according to population, and were generally levied on land holdings. But when it came to the huge sums necessary to fight the Civil War, such direct taxes would ruin farmers.

Instead, Republicans turned to what they called “indirect taxes,” which were essentially sales taxes of 3 percent on all manufactured goods. These, however, wouldn’t be sufficient to raise the needed revenue without making basic necessities prohibitively expensive for most Americans. 

Read the rest here.