News

After Trump Tax Plan, Richest 400 U.S. Families Pay Lower Taxes Than Bottom 50%

The need for progressive taxation has been a hot topic of discussion. It has pitted liberals against conservatives. The economists, Emmanuel Saez and Gabriel Zucman, of the University of California at Berkeley, recently published a study, “The Triumph of Injustice.” This will surely add fuel to the fire. The study shows that last year, the 400 wealthiest households paid tax at a lower “effective” rate than the bottom half of the population. This is the first time that this has happened in the U.S. In arriving at “effective” tax rates, they took into account federal income taxes, corporate taxes, state taxes, local taxes and indirect taxes like motor vehicle taxes and license fees for businesses. Citing their work, the Washington Post reported that the study shows that in 2018, whereas the 400 richest families paid an effective tax rate of 23%, the bottom 50% of US households paid an effective tax rate of 24.2%.

For the 400 richest households in the U.S., effective tax rates kept going down. It declined from 56% in 1960 to 47% in 1980. Finally, it went down to 23% in 2018. For the bottom 50% of income, the tax rate remained largely unchanged during this period. While a number of legislative actions led to this situation, the most significant one was the 2017 Tax Cuts and Jobs Act. There are a few economists that have questioned the reliability of the study. Some have claimed that it builds upon the earlier work of Saez and Zucman with the leftist economist Thomas Piketty, who is known to have over-estimated income inequalities. Jason Furman of Harvard University pointed out that by not taking into account refundable tax credits, the effective tax rate overstates the tax burden on those in the bottom half of the income structure.

SLIDESHOW: TOP DEMOCRATS RUNNING FOR PRESIDENT IN 2020

Subscribe to our free weekly newsletter!

A week of political news in your in-box.
We find the news you need to know, so you don't have to.

Rajeet Guha

Recent Posts

After Bad Bunny Posts Harris Endorsement, Top Puerto Rican Celebrities Follow Suit

After Puerto Rican pop star Bad Bunny dropped an eight-minute video on Instagram endorsing Kamala…

12 hours ago

Mayor Apologizes After Halloween Parade Depicts Kamala Harris Shackled To A Cart Driven By Man Dress As Trump During Parade

https://youtu.be/PB6BcCkYtDk A Halloween parade that took place on Oct. 30 in Mt Pleasant, Pennsylvania, sparked…

13 hours ago

Harris Trolls Trump For Failure To Release His Medical Records

Vice President Kamala Harris recently released her medical records and dared former President Donald Trump to do the same.…

2 days ago

VIDEO: Nicky Jam Withdraws Trump Endorsement Following Puerto Rico ‘Garbage’ Comment

https://youtu.be/wEWjxbqwPQs Singer Nicky Jam withdrew his support for former President Donald Trump on Oct. 30,…

2 days ago

Democrats Attack Green Party Nominee Jill Stein In New Ad

A new ad about Green Party candidate Jill Stein has been released by Vice President Kamala Harris'…

3 days ago

Jennifer Lopez Says Trump ‘Offended Every Latino In The Country’ With MSG Joke At Harris Rally

https://youtu.be/inbJpo6D4BQ Jennifer Lopez, campaigning with Kamala Harris on Oct. 31 in Nevada, said Donald Trump’s…

3 days ago