DawgTalkers.net Forums DawgTalk Palus Politicus America's richest 400 families now pay a lower tax rate than the middle class

* The 400 richest U.S. families now pay a lower overall tax rate than the middle-class, the first time that's happened in 100 years, according to economists Emmanuel Saez and Gabriel Zucman.

* Factoring in federal, state and local taxes, those ultra-wealthy households pay a total rate of about 23% — that compares with just over 24% for the bottom half of households.

* The U.S. now "looks like the tax system of a plutocracy," Saez and Zucman say.

The U.S. tax system is supposed to be progressive, meaning that wealthier households pay a larger share of their income to the taxman than the middle class and the poor. Yet after the Tax Cuts and Jobs Act of 2017, that's no longer the case: For the first time in a century, America's 400 richest families now pay lower taxes than people in the middle class.

That's according to an analysis of tax data by two prominent economists, Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley, that is a centerpiece of their new book, "The Triumph of Injustice," to be published on October 15. Saez and Zucman, who have worked with the noted French economist Thomas Piketty to produce seminal research on inequality, also advised Senator Elizabeth Warren on the Democratic presidential candidate's plan to impose a wealth tax on ultra-rich families.

The tipping point came last year when the Tax Cuts and Jobs Act, which was signed into law by President Donald Trump at the end of 2017, took effect. While Mr. Trump vowed that middle-class families would be helped by the tax overhaul, experts say most working-class families saw only a minimal benefit, while the wealthiest citizens got the lion's share of breaks. In fact, Saez and Zucman argue, the Tax Cuts and Jobs Act turned the tax system on its head.

"In 2018, for the first time in the last hundred years, the top 400 richest Americans have paid lower tax rates than the working class," they write. "This looks like the tax system of a plutocracy."

Factoring in all federal, state and local taxes, those ultra-wealthy households pay a total rate of about 23% — that compares with 24.2% for the bottom half of households, which includes many in the middle class. The richest families also pay a lower rate than those in the upper middle class and even those in the top 1%, who pay closer to 30% of their income in taxes.
Why do the super-rich pay lower taxes?

Zucman and Saez, who base their analysis on income tax returns, tax audits and other data, argue that in recent decades the tax system has tilted in favor of the highest earners, with the most recent push coming from the Tax Cuts and Jobs Act.

"In 1970, the richest Americans paid, all taxes included, more than 50% of their income in taxes, twice as much as working-class individuals," the book notes. "In 2018, following the Trump tax reform, and for the first time in the last hundred years, billionaires have paid less than steel workers, schoolteachers and retirees."

Today, the tax rates enjoyed by the richest Americans are at levels last seen in the early part of the 20th century, when the U.S. government was a fraction of its current size. In 1910, many popular programs credited with keeping millions of Americans out of poverty didn't exist, including Social Security and Medicare.

The rich pay lower tax rates than the middle class because most of their income doesn't come from wages, unlike most workers. Instead, the bulk of billionaires' income stems from capital, such as investments like stocks and bonds, which enjoy a lower tax rate than income. It's the same reason why Warren Buffett famously said his tax rate was lower than his secretary's.

The 2017 tax law amplified that trend, according to the new analysis. The tax rate for corporations was slashed to 21% from from 37%. And business income for many taxpayers now enjoys a 20% deduction, thanks to the new tax code, which places more income out of the IRS' reach.

"The only category of income that does not benefit from any exemption, deduction, reduced rate or any other favor is wages," Zucman and Saez write. "At any income level, wage earners are thus more heavily taxed than people who derive income from property."

In effect, they add, capital income "is becoming tax-free."
Why it matters

Although advocates of low taxes argue that slashing rates on the rich and corporations boosts economic growth, there's little evidence for that. Instead, the U.S. is facing a number of risks by shifting to a more regressive tax system, the authors say.

For one, the federal government is losing out on a massive amount of tax revenue by slashing levies on the rich. Secondly, that lost revenue must be found elsewhere, which means the middle class and poor are likely to be stuck footing the bill.

But the most important reason, according to Zucman and Saez, is that the U.S. tax system is creating what they call an "inequality spiral." In other words, the rich are getting richer — that allows them to shape public policies to extract further tax breaks and other benefits, boosting their wealth and political clout.

Of course, tax codes can change, which means the U.S. isn't doomed to sink more deeply into the quagmire of inequality, Zucman and Saez write. For instance, the economists propose a new national income tax that would tax all income — whether from labor, capital or other sources — as a supplement to the existing income tax. The also favor a wealth tax.

The latter, similar to proposals from both Warren and Senator Bernie Sanders, would tax annual wealth at 2% for those above $50 million and 3.5% above $1 billion.

"A wealth tax will never replace the income tax," they note. "Its goal is more limited: to ensure that the ultra-wealthy do not pay less than the rest of the population."

https://www.cbsnews.com/news/americas-ri...e-middle-class/

Good thing trump voters get temporary their $200 dollar tax cut that will be eaten up by tariffs so they wont complain.

Sticking to the article, I will say a few things.

It's correct. Hopefully. (I do wonder though. I see several taxes missing - like property, death tax - but, that's not what the article is discussing, so I won't either)

It's talking about the richest 400 families.

Who writes the tax code? Why can't it get changed? Oh...congress writes the code. Who dumps huge amounts of money into congress people? The rich.

The tax code is the problem. (aside from gov't. spending, that is)

While you are technically correct.. a republican congress wrote the current revisions to the tax code that made this possible and a republican president signed it, touting it as the greatest thing since Betty White.. it was frequently touted as a huge benefit for the middle and working class and not a big tax cut for the wealthy... the wealthy were supposed to get some benefit because "everybody benefits from lower taxes"..

But it turns out that it disproportionately helped the wealthy while providing only minimal help to everybody else.. and it has caused the deficit to skyrocket...

We cannot exist with a regressive tax structure.

Are you insinuating trump lied to us?

Thank you.

Hasn't it sorta been that way for a long, long time though?

I'm pretty sure the time of the tax cut many on here pointed out that the tax cut was overwhelmingly in favor of the wealthy, and then they were a few Trump supporters who said no no no no no it benefited everybody. Now we can see that it clearly benefited the richest of the rich. there were others on here like myself, who even asked the question why we were having a tax cut at a time when the economy was so strong. Highlighting that it achieved absolutely nothing other than give money back to the wealthiest.

Do any of the Trump supporters want to come on at admit what a scam the tax cut was?

Found an article from 2018 that there are 205 families in the United States who make over $50 million/year... this is the group being discussed that got a bigger tax cut than middle America...


$50 million/year...

why you mad, bro? that yacht aint gonna finance itself.

i want that one with the helipad, too.

Bigger tax cut in dollars? Or in percent?

Oops. Edited to add: If it's dollars, that makes sense.

If the tax cut was in percentage, no, it doesn't make sense, which goes back to my post about who pays to get the congress people elected.

check me out:



my chopper has the matching paint job to the yacht. probably got some .50 cals stored in the back.

Both. Bigger % = Bigger $

The real question is, why did they need a tax cut at all?

Yeah, someone has a 'boatload' of money. (see what I did there?)

I think perhaps you see envy, and to an extent, I do also. However, I also see hundreds of people, maybe more, that have a job due to that boatload of money.

That's cute. Another round of tax cuts and maybe you can upgrade to a real yacht.

oh, i'm not hating at all. and i agree with you.

think about how many people got paychecks just for building it, which actually takes quite a bit of time. then to pay the crew itself, plus all the other things.

but those kinds of people who can afford to pay for these sorts of things should also be expected to pay their fair share.

that shouldn't be a problem.

Obviously the dollar amount.........The % amount bothers me - but again, it goes back to what I said: Congress people love their jobs, and all the perks said job provides for them and their families.

How do we fix that?

Screw it - let's tax those filthy rich people at 80%. They don't need that money. The govt. does.

Because they’re job creators!... don’t you know?
Their forth house, that they never really use, needs gardeners, and pool boys, and maids to keep it dusted and clean, and someone to keep the Bentley in the garage polished. and and and.

Just think of all the jobs that one house creates.
Now their yachts!!! Captains, cooks, maids, butlers, the list goes on.

Jobs jobs jobs. More tax breaks please!


#eattherich

I'll go with that. Thanks for not attacking me.

You're welcome.

You obviously replied to the wrong person.

I just know I'm the one you always accuse of it. So I thought I would let you know I received your message.

j/c

Here is a part of the article I find to be critical in abolishing a common perception many people have. Many seem to believe or feel that the rich simply put their gains back into the economy. When actually they invest that money in ways that make their gains far less taxable than the every day worker.

It's how they get away with paying much lower taxes.



So it's not actually used to increase jobs. Jobs are a result of need. If you sell more goods which causes a higher demand, you will add jobs. People don't just "create jobs" for the sake of creating jobs when they have more money. Rather they invest it in ways that decrease their taxes on gains.

I hate that I saw this thread, and have to respond ...... and it is too late to read the article ..... but the rich have always paid a lower effective rate, due to the way the tax system is set up, not rates.

Warren Buffet famously "complained" that he paid a lower effective federal rate than his secretary, while taking steps to ensure that this is exactly what would happen. He "paid" himself in stock options, and collected only a minimal salary.

Also, and again, I did not read the whole article, but it says the "richest families". How do they measure that? A company worth billions, who do not work much, or pay themselves much, would not pay a high income tax. Also, if, like almost every year that I can recall, they had items to write off, that would affect tax.

The entire tax code is a cheat anyway, no matter who is in power. One side raises rates, while opening up loopholes ... while the other lowers rates, and closes loopholes. It's a cheat, no matter who's in power. If they truly want a fair tax code, then tear up the entire tax code, and adopt the one page return that many have brought forward. Lose the deductions, except maybe the personal and child tax credits, and use a single tax rate. Maybe give a $10,000 personal exemption, then $1000 per kid, and tax the difference at 25%. Anything you receive in place of salary for your work is charged as income. No more playing tricks on the tax system. Business returns would need deductions for equipment and purchase/expansion of a business ..... but I would limit those deductions to capital actually spent in the US. Want to build a factory in Canada? Fine, but these is no deduction on your US taxes. Deduct salaries and other real expenses. The list should be narrowed, though, and most of the garbage scrapped.

It could be done, except that neither side has the desire to do it ... and they are both far too bought and paid for to actually do it.

Pfft.. How about we just start taxing them at the same rate the middle class is taxed first.