Billionaires pay a lower tax rate than the rest of America's taxpayers, new study finds

[ZiprHead]

Billionaires pay a lower tax rate than the rest of America's taxpayers, new study finds

The wealthiest 400 people in the U.S. pay a tax rate of 24%, lower than the average rate for all other taxpayers, economists find.

www.cbsnews.com

MONEYWATCH

Billionaires pay a lower tax rate than the rest of America's taxpayers, new study finds​

By
Aimee Picchi
Edited By
Alain Sherter
August 27, 2025 / 7:58 AM EDT / CBS News




The rich are different from other people — and that also applies to the share of their income they pay in taxes, according to a new study from University of California, Berkeley, economists.

The individuals who make up the Forbes 400 list, topped by Tesla CEO Elon Musk with a fortune of $244 billion, paid an average effective tax rate of 24% from 2018 to 2020, compared with a 30% rate for all other U.S. taxpayers, the researchers said in a new paper published in the National Bureau of Economic Research.

The research comes as President Trump's "big, beautiful bill," signed into law on July 4, delivers its largest benefits to the highest-earning Americans through a mix of new and extended tax breaks. Those include raising the estate-tax exemption to $15 million per person, up from about $14 million.

The changes build on an earlier tax cut — the Tax Cuts and Jobs Act, Mr. Trump's signature first-term legislation. That 2017 law reduced the effective tax rate for the richest Americans from 30% to 24%, the researchers found.

The new findings — from Berkeley economists and noted inequality experts Emmanuel Saez and Gabriel Zucman — calculates the tax rate by tallying all income taxes, as well as corporate taxes that are paid by the companies owned by the richest Americans. In other words, it assigns a share of Amazon's corporate taxes to that of Amazon founder Jeff Bezos when calculating his total tax burden.

 

[Shadowy Man]

Trump should fire whoever wrote that now that he effectively owns CBS.

 

[barbos]

In other words, it assigns a share of Amazon's corporate taxes to that of Amazon founder Jeff Bezos when calculating his total tax burden.

What a waste of research money, these two idiot economists.

 

[Bomb#20]

Here's the actual paper: https://www.nber.org/system/files/w...EON_STRIPPED&utm_source=PANTHEON_STRIPPED

"Table 2 presents our results on effective tax rates in 2018-20. For the top 400, the total effective tax rate is 23.8%. It increases as one moves down the distribution: from 22.0% for the top 100 to 26.6% for the next 300. We can compare these rates to the effective tax rate of top labor income earners, which is around 45%.11 We can also compare them to the total effective tax rate of the US population as a whole (i.e., adding all taxes paid by US residents divided by their total economic income), which is 30.2% in 2018-20.12 When taking a comprehensive view of taxation and income, ultra-high-net-worth individuals appear less taxed than the average American."​

The paper spends pages and pages explaining how the 24% on the top 400 was calculated; as for how the 30% rate for all other U.S. taxpayers was calculated, you're looking at it. So when the authors say "the average American", they mean averaged by dollar, not averaged by head. According to US Treasury data here, https://home.treasury.gov/system/files/131/Graph-Distributional-Analysis-2024-11162023.pdf, the households paying over 24% are the top 5%. So the paper is actually a comparison of the hyper rich with the merely rich, not with those whom any normal person would call "the average American". Labeling the results "Billionaires pay a lower tax rate than the rest of America's taxpayers, new study finds" is highly deceptive.

 

[laughing dog]

I haven’t read the paper, but the phrase “taxes paid by” in professional economic tax incidence analysis does necessarily mean “remitted by”. For example, it may include the amount of property, social insurance, business and corporate taxes estimated to be shifted on to individuals through higher product prices or lower earnings.

 

[Loren Pechtel]

Well, duh, higher on the ladder generally means a higher percentage of their income is from capital gains.

This still comes down to the basic issue that you are paying tax on "gains" that are just keeping up with inflation.

 

[ZiprHead]

Crowd chants "tax the rich" during Ohio GOP town hall, watch video

More than 500 people attended Rep. Warren Davidson’s town hall in Trenton, where some in the crowd shouted objections to his answers.

 

[ZiprHead]

Reply

Well, duh, higher on the ladder generally means a higher percentage of their income is from capital gains.

This still comes down to the basic issue that you are paying tax on "gains" that are just keeping up with inflation.

What about all the people who's gains don't equal inflation? They are still taxed on those gains.

 

[zorq]

Well, duh, higher on the ladder generally means a higher percentage of their income is from capital gains.

This still comes down to the basic issue that you are paying tax on "gains" that are just keeping up with inflation.

Gains are gains. I don't see why gains you don't put in any actual effort to realize should have lower taxes than the alternative. I think it should be the reverse.

 

[TV and credit cards]

How about a global asset based wealth tax like Norway's? This way those without traditional sources of income still contribute to society.

Previously covered?

 

[Tigers!]

Many countries appear to suffer from this problem.

 

[Bomb#20]

Well, duh, higher on the ladder generally means a higher percentage of their income is from capital gains.

This still comes down to the basic issue that you are paying tax on "gains" that are just keeping up with inflation.

Gains are gains. I don't see why gains you don't put in any actual effort to realize should have lower taxes than the alternative. I think it should be the reverse.

With the proliferation of electric cars, paying for roads with the gas tax is stupid -- we need to check people's odometers and tax them based on the difference in the reading after a year. And speaking of stupid, another thing my country does that's really stupid is measure distances in miles. It's long past time we joined the rest of the world and switched to kilometers, don't you think? So this year Loren's odometer says 100,000 miles. Next year it will say 170,000 km. So we should bill him for the increase, 170,000 - 100,000 = 70,000. That's fair, isn't it? Distance is distance.

 

[zorq]

Well, duh, higher on the ladder generally means a higher percentage of their income is from capital gains.

This still comes down to the basic issue that you are paying tax on "gains" that are just keeping up with inflation.

Gains are gains. I don't see why gains you don't put in any actual effort to realize should have lower taxes than the alternative. I think it should be the reverse.

With the proliferation of electric cars, paying for roads with the gas tax is stupid -- we need to check people's odometers and tax them based on the difference in the reading after a year. And speaking of stupid, another thing my country does that's really stupid is measure distances in miles. It's long past time we joined the rest of the world and switched to kilometers, don't you think? So this year Loren's odometer says 100,000 miles. Next year it will say 170,000 km. So we should bill him for the increase, 170,000 - 100,000 = 70,000. That's fair, isn't it? Distance is distance.

Why did you complicate an idea that has merit with stupidity?

Why do think you deserve a safe place to park your money?

If you don't want to pay tax on gains, nobody is forcing you to invest.

 

[Bomb#20]

Well, duh, higher on the ladder generally means a higher percentage of their income is from capital gains.

This still comes down to the basic issue that you are paying tax on "gains" that are just keeping up with inflation.

Gains are gains. I don't see why gains you don't put in any actual effort to realize should have lower taxes than the alternative. I think it should be the reverse.

With the proliferation of electric cars, paying for roads with the gas tax is stupid -- we need to check people's odometers and tax them based on the difference in the reading after a year. And speaking of stupid, another thing my country does that's really stupid is measure distances in miles. It's long past time we joined the rest of the world and switched to kilometers, don't you think? So this year Loren's odometer says 100,000 miles. Next year it will say 170,000 km. So we should bill him for the increase, 170,000 - 100,000 = 70,000. That's fair, isn't it? Distance is distance.

Why did you complicate an idea that has merit with stupidity?

To explain by analogy why the idea lacks merit. If you bought a condo in 2006 for $100,000, and sold it in 2025 for $170,000, the government calls that a capital gain of $70,000, because the government measures your purchase price in 2006 dollars and measures your sales price in 2025 dollars. But between 2006 and 2025 the government inflated the currency -- it created so many new dollars that a 2006 dollar was 60% bigger than a 2025 dollar, just as a mile is 60% bigger than a kilometer. Your purchase price was $160,000 in 2025 dollars, so your actual profit is $10,000. I've got no problem with taxing that $10,000 profit at the same rate as ordinary income -- I see no justification for the government discriminating against people by source of income -- but why do you think measuring purchase price in bigger units than sales price it's an iota more reasonable than measuring starting distance in bigger units than ending distance? If the government said Loren drove 70,000 km rather than 10,000 km, the government would be using an accounting gimmick to tell a lie. Claiming you made a $70,000 profit on your condo is the same accounting gimmick and it's the same lie.

Why do think you deserve a safe place to park your money?

It's not about having a safe place to park money; it's about honest accounting. If the government taxed your pay when your boss deposited it to your bank and then taxed it again when you withdrew it, claiming you received it twice so your pay is double what it actually is, would you justify that with "Why do think I deserve a safe place to park my money?"? Would you be okay with being taxed based on a lie?

And as for who deserves what, why do you think the government deserves to be rewarded for inflating the currency?

If you don't want to pay tax on gains, nobody is forcing you to invest.

Nobody objected to paying tax on gains, only to paying tax on fictional gains. If you don't want to pay tax on fictional wages, nobody is forcing you to work.

 

[Derec]

With the proliferation of electric cars, paying for roads with the gas tax is stupid -- we need to check people's odometers and tax them based on the difference in the reading after a year.

Electric cars are still a small fraction of all cars on the road. And we should encourage their proliferation, and not hamstring them by piling new taxes. That is is counterproductive to their widespread adoption, and to reducing carbon emissions. Unfortunately, that is exactly what Democrat-run Oregon is doing.
Oregon could join Hawaii in mandating pay-per-mile fees for EV owners as gas tax projections fall

Now, eventually, when EVs are the majority of cars on the roads, a road use tax will become necessary. But it should not be a flat fee like the Oregon plan, but should scale with the size of vehicle. That system effectively subsidizes behemoths like Ford F250 which tear up the roads and use up far more space than regular cars. Extra-large vehicles should not be advantaged by the tax code, but rather disadvantaged.
.

 

[Derec]

In other words, it assigns a share of Amazon's corporate taxes to that of Amazon founder Jeff Bezos when calculating his total tax burden.

What a waste of research money, these two idiot economists.

I wonder if they then also assign Amazon's corporate income to Bezos, not just his actual income.

From the OP article:

The new findings — from Berkeley economists and noted inequality experts Emmanuel Saez and Gabriel Zucman

"Inequality experts" is already sus when it comes to bias.

Ah, I was right!

"The economic income of the wealthiest are essentially the profits of the businesses they own," Saez told CBS MoneyWatch in an email. "Jeff Bezos owns about 10% of Amazon, and hence his true economic income is 10% of Amazon's profits."

At the same time, according to his wiki page, Saez does not count any government benefits as income for those who receive things like social security, EITC, child tax credits, SNAP etc.

Saez and Zucman are leading proponents of instituting a U.S. wealth tax to help address widening inequality between the haves and have-nots. That idea has been embraced by some lawmakers, such as Senators Elizabeth Warren, a Democrat from Massachusetts, and Bernie Sanders, an independent from Vermont.
[...]
The findings about the richest 400 Americans suggest that a wealth tax is still needed to curb inequality in the U.S., Saez said.
"The wealth tax is the most direct and powerful way to specifically target the ultra-rich and increase tax progressivity at the very top," he said. "The wealth tax on the ultra-rich is also popular but will obviously be fought by billionaires, and they have disproportionate influence."

The whole study seems to be a vehicle for advocacy for wealth taxes.

 

[laughing dog]

In other words, it assigns a share of Amazon's corporate taxes to that of Amazon founder Jeff Bezos when calculating his total tax burden.

What a waste of research money, these two idiot economists.

I wonder if they then also assign Amazon's corporate income to Bezos, not just his actual income.

From the OP article:

The new findings — from Berkeley economists and noted inequality experts Emmanuel Saez and Gabriel Zucman

"Inequality experts" is already sus when it comes to bias.

Ah, I was right!

"The economic income of the wealthiest are essentially the profits of the businesses they own," Saez told CBS MoneyWatch in an email. "Jeff Bezos owns about 10% of Amazon, and hence his true economic income is 10% of Amazon's profits."

At the same time, according to his wiki page, Saez does not count any government benefits as income for those who receive things like social security, EITC, child tax credits, SNAP etc.

Saez and Zucman are leading proponents of instituting a U.S. wealth tax to help address widening inequality between the haves and have-nots. That idea has been embraced by some lawmakers, such as Senators Elizabeth Warren, a Democrat from Massachusetts, and Bernie Sanders, an independent from Vermont.
[...]
The findings about the richest 400 Americans suggest that a wealth tax is still needed to curb inequality in the U.S., Saez said.
"The wealth tax is the most direct and powerful way to specifically target the ultra-rich and increase tax progressivity at the very top," he said. "The wealth tax on the ultra-rich is also popular but will obviously be fought by billionaires, and they have disproportionate influence."

The whole study seems to be a vehicle for advocacy for wealth taxes.

Perhaps, but did you read the study to actually see how income is measured and shat taxes paid means?

 

[Derec]

Perhaps, but did you read the study to actually see how income is measured and shat taxes paid means?

Did you? And if so, did you find anything that contradicts what I got from the CBS article and Saez' wiki page?

 

[zorq]

I understood your analogy. I just recognize it as crap. Loren didn't drive his car. Your capital gains helped you keep up with inflation. The gains weren't fictional. Those were real dollars that you have in your pocket that you otherwise wouldn't.

Inflation is just another form of tax. The government "deserves" to benefit from inflation for the same reason it deserves to benefit from any other tax. Because the tax will be used to provide services to the people. And yes, sometimes assets are exposed to more than one single tax. This isn't a novel concept.

What the hell are "fictional wages"? Your analogy is crap.

inflation is reality. It's here. It's not going away. Get used to it. An apple you buy today is not going to be worth the same in a year. It will decay or cost you energy to preserve. Entropy is coming for us all. You want your money to have the same value as time progresses. Tough. Inflation is part of reality and it can and does affect wages too.

 

[laughing dog]

Perhaps, but did you read the study to actually see how income is measured and shat taxes paid means?

Did you? And if so, did you find anything that contradicts what I got from the CBS article and Saez' wiki page?

You are making a claim about a study, not me. From your response, I conclude you have not read the study. Methodologies may change from study to study depending on data availability and restrictions.