America's richest billionaires paid a lower average tax rate than the working class for the first time in US history in 2018, according to a new study. The book-length research, The Triumph of Injustice, comes from Emmanuel Saez and Gabriel Zucman, the same economists who inspired Elizabeth Warren's proposed wealth tax. Considering local, state, federal income taxes, corporate taxes, and indirect taxes tied to business and motor vehicle licenses, it compares effective tax rates since the 1950s, finding that the 400 richest families paid 70% in 1950, 56% in 1960, and 47% in 1980, per the Washington Post. In 2018, however, the families who hold more wealth than the bottom 60% of US households had an average effective tax rate of 23%—one percentage point lower than the 24.2% paid by the bottom 50% of US households, whose tax rate has held steady.
Congress has lowered top income tax rates and taxes on capital gains and estates over time. But "a windfall for the wealthy" came with 2017's GOP tax bill, which continued that trend and "slashed the corporate tax rate," reports the Post. According to Saez and Zucman, the average effective tax rate paid by the top 0.1% of households fell by 2.5%. Raising the overall tax rate on the richest 1% to 60% would bring in $750 billion a year, "enough to pay for universal pre-K, an infrastructure program, medical research, clean energy and more," David Leonhardt writes in a New York Times op-ed praising the "maddening" research. One critic, Harvard economist Jason Furman, claims refundable tax credits weren't applied, making tax burdens on the bottom half appear higher than they are. Still, he agrees the rich "pay less in taxes than they did in the past and less than they should." (Read more tax rates stories.)