The effective tax rate for the rich has stayed very flat over time, and it has never been 90%. That is an internet myth that is somehow floated around that most people don't bother to check up on.
Your source doesn't address the amount of tax collected from the ultra wealthy in relative proportion to their wealth. It only addresses the amount as a percentage of the federal budget.
90% superficially sounds unreasonable, because we have a tendency to think that wealth is distributed on a bell curve. But wealth is not distributed that way, it is distributed according to a power law, which means that a significant number of people make in excess of $100M per year while others make less than $1000. If wealth were distributed according to skill and ability, the ratio between the highest and lowest would be much lower and billionaires would be as rare as 100 ft tall people.
The idea that a person could personally contribute the equivalent of $100M of value in a year per their efforts and skills (which ARE distributed on a bell curve) is absurd. It is this mismatch between the distribution of ability and the distribution of wealth that the rich exploit. So for someone making $100M/year, a 90% tax rate is not unreasonable at all.
it's interesting that there's a second tipping point, but it occurs high enough in the income percentiles that I don't think it's particularly relevant to the discussion at hand. these people may contribute an outsized share of tax revenue, but they make up a very small fraction of the democratic base.
in any case, I don't think the voting tendencies of the ultra-rich do very much to invalidate my point. they're in a position where they can dodge the brunt of most taxes they vote for, and even if they weren't, there are basically no tax policies within the current overton window that could meaningfully affect their standard of living. if bill gates lost 98% of his net worth, he might have to dial back his charitable endeavors, but I doubt the material comfort of his family's lifestyle would change at all.
2) The amount of tax the super rich pay is way down on the list of issues to be worried about. The top 0.01% (household income above $7.5 million per year, so not even “super rich”) make just 3.3% of all income. Tax them at 25% or 75%—it doesn’t make much of a difference to the Treasury. Taking all of their money would add maybe 3% to total government spending. That wouldn’t pay for Medicare for All. It won’t pay for the Green New Deal. It might just about pay for universal child care and pre-K.
Beyond just anecdotes of the rich “paying no tax”, do you have a data source to show it’s widespread? All I see are individual examples that are often “off years”.
The latest data I saw from the IRS showed a consistent progressive tax rate right up to the top 0.1% (who pay the highest effective tax rate).
Even the Propublica article showed that Elon paid $500M in taxes when he sold $1.5B in shares.
The thing is, of course, that most of the income of the wealthy is never taxes. How much income tax has Bill Gates ever paid? I'd be surprised if it's anywhere near 10% of his wealth.
Actually, it's very uncommon. Keep in mind, we have IRS data that shows the average rate paid by different groups, we know that most of the 1% is paying MUCH higher tax rates than the 99%. And should be make public policy based on the extremely rare edge cases, or the overwhelmingly common case?
Also, this debate really depends what you mean by "millionaires/billionaires". And "taxes". And "tax rates". And "working folk". Being a billionaire is a measure of wealth; your tax bracket is based on income in a single year. Are we talking about marginal rates or average rates? Federal income taxes? All federal taxes? All taxes? How do we impute the corporate income tax (knowing, as we do, that it is paid by both employees and investors)? How do we impute the corporate half of the payroll tax (ditto)? How should we handle cases where someone is in the "1%" for a single year due to the sale of a single large asset they've been working on for decades (family farm, small business, IPO, or the like)? Does it truly make sense that someone who makes $50k/year for 10 years, then sells his start-up for $100m should be in the same tax bracket in that 11th year as an investment banker who makes $100m/year every single year?
This is not an area with easy answers, and the tax code looks the way it does due to a long series of hard-fought struggles and difficult compromises. It's easy to look at Romney at say "he paid 14%", but it's less clear what rate is "right". Capital gains is fundamentally not normal income, and there's no reason it should be taxed at any given rate, much less whatever rate normal income would be taxed at. Some very socialist and egalitarian places have no capital gains tax at all. :)
Edit: My initial post had some silly errors of fact. Mike Ash was quite polite in pointing them out. :) Thanks.
I agree the title is click baity, but the ultra wealthy do pay a lower effective tax rate than me, and I'm probably in the top 10% of income percentile.
But the observations of the article itself check out. The tax system has gotten radically less progressive over the last 50 years. The argument is over whether or not it should be made more or less progressive given current realities.
People can differ in their opinions on that, but the historical trend is clear as day.
The ultra-rich certainly have tax minimisation schemes in place, but by saying that middle-class bears the brunt of taxation, I suspect you're falling victim to the fallacy that rich people don't think of themselves as rich[1]. In the UK at least, the tax burden is fairly progressive:
The top 1% of earners pay roughly 30% of all income tax. The top 10% pay roughly 50% of all income tax. Meanwhile, the bottom 50% pay roughly 10% of income tax.
That leaves to 50-90th percentile, who you might call "middle class" (although it's debatable whether someone in the 80-90 range is truly middle class) who pay approximately 30% of all income tax. So the whole middle class only pays as much tax in total as the 90-99 range, although their total of pre-tax income is double.
The ultra wealthy, if not breaking the tax law, are paying what the government believes they should pay and are not avoiding anything. Congress wrote, voted on, and passed the tax laws.
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