A study, appropriately named “The Triumph of Injustice,” by economists Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley, has found that, for the first time in history, the wealthiest Americans paid a lower tax rate than the bottom 50% of Americans.
In 2018, the average effective tax rate paid by the richest 400 families in the U.S. was 23% — a full percentage point lower than the 24.2% rate paid by the bottom 50% of American households, according to the Washington Post.
It is a huge change from 1980, when the 400 richest families had an effective tax rate of 47%, or in 1960, when that rate was as high as 56%. But the effective tax rate paid by the bottom 50% of Americans, the working class, has changed very little over time.
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Saez and Zucman wrote that the focus on the ultrarich is necessary because they control most of the nation’s wealth. The richest 400 families in the country have more wealth than the bottom 60% of American households.
It has been a steady move toward this point, where U.S. billionaires are paying very little taxes. Saez and Zucman wrote that it’s been a combination of deliberate decisions and not taking actions at crucial points.
Congress has slashed top income tax rates and cut taxes on capital gains and estates. There is inadequate funding for IRS enforcement as well, and major multinational corporations have been able to hide their profits in off-shore accounts, the Post reported.
But the major push toward letting America’s richest families pay little taxes was President Donald Trump in 2017 with the passage of the Tax Cuts and Jobs Act, which the president said would help the working class by the “trickle-down” effect.
It lowered the top income tax bracket and slashed the corporate tax rate, while higher rates of growth and business investment have not happened for ordinary Americans.