The richest Americans today manage to maintain their wealth largely due to comparatively lower tax rates, with recent reports suggesting that the effective tax rates of the super-rich now lag behind those of the working class for the first time in history.
What Happened: According to economist Gabriel Zucman, the effective tax rate of the 400 richest Americans in 2018 was 23%, slightly lower than the 24% rate for the bottom half of income earners.
Cut back to the 1960s and you had the 400 wealthiest Americans paying over half of their income in taxes, supporting social safety nets like Medicare, Medicaid, and food stamps, Zucman said in a New York Times op-ed last week.
How Do Billionaires Avoid Hefty Tax Burdens? Many big corporations, particularly in the tech sector, opt to reinvest profits rather than distribute them to shareholders. For instance, Jeff Bezos‘ Amazon could face significant tax obligations if it paid dividends to shareholders, prompting companies like Amazon, Tesla, and Berkshire Hathaway to reinvest profits and generate more wealth for shareholders, according to Zucman.
By being ...