Almost a decade ago, Warren Buffett was dismissed by media and public when he said his secretary paid a larger share of her income in taxes than he did.
Now, here’s a 2019 update:
“In 2018, for the first time in history, America’s richest paid a lower effective tax rate than the working class.”
“The ultra-rich have had their taxes collapse to levels last seen in the 1920s.”
Those are some of the teasers from a new, book-length study called "The Triumph of Injustice- How the Rich Dodge Taxes and How to Make Them Pay" by economists Emmanuel Saez and Gabriel Zucman.
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Two economists, from the University of California at Berkeley, found that the average tax rate paid by the richest 400 families in the country was lower than the rate paid by the bottom half of American households last year.
However, the findings are not a major surprise as the tax rate for the richest has been declining for the past six decades. What just happened was bound to happen at some point.
The wealthy's taxes have declined over time from various actions by lawmakers, but the 2017 Tax Cuts and Jobs Act significantly lowered taxes for this group.
Saez and Zucman analyzed Americans' effective tax rates since the 1960s. They decided to examine the top 400 families because they have more money than the bottom 60 percent of households combined. They also own 3.5 percent of the country’s assets. Related: Space Crime And Scandal Overshadow SpaceX Failure
In the late 1950’s, the total tax rate for those families stood at 70 percent. They had a 56 percent tax rate in 1960 and 47 percent tax rate in 1980, while the working class' tax rate has remained relatively stable.
After Trump’s tax cuts for the wealthy took effect, the tax rate on U.S. billionaires had fallen to just 23 percent. The administration’s tax law was a $1.5-trillion, 10-year deal for tax cuts that was designed to spur economic growth last year to 3 percent.
As a solution, the authors of the study propose a minimum global corporate tax of at least 25 percent, with companies to pay taxes on profits in the United States even if it sets up headquarters elsewhere.
Still, some economists have criticized the study as misleading since it does not include refundable tax credits and overestimates the wealth disparity in the country.
If the public is willing to join the debate, “The Triumph of Injustice” is available to be purchased from few online bookstores, including Amazon.
Speaking of Amazon, incidentally, the retail giant paid zero Federal income taxes in 2018, but it wasn’t alone. Back in April, a report from the Institute on Taxation and Economic Policy (ITEP) in Washington, D.C. detailed how 60 of the biggest companies in the country managed to pay zero in taxes. Some even reported negative tax.
Overall, the report claimed to have found that “60 of America’s biggest corporations zeroed out their federal income taxes on $79 billion in U.S. pretax income. Instead of paying $16.4 billion in taxes at the 21-percent statutory corporate tax rate, these companies enjoyed a net corporate tax rebate of $4.3 billion”.
By Fred Dunkley for Safehaven.com