9 Stats That Show the Tax Code Favors the Ultra-Rich

Without dramatic tax reform, inequality will continue to skyrocket.

Izii Carter November 18, 2019

Protesters march in New York City on Tax Day demanding that President Donald Trump release his tax returns, April 15, 2017. (Photo via EuropaNewswire/Gado/Getty Images)

Eco­nom­ic inequal­i­ty in the Unit­ed States is the high­est it’s been in the last 50 years. In recent decades, the rich­est 1% of Amer­i­cans have accu­mu­lat­ed near­ly 40% of the country’s wealth. The net worth of just three indi­vid­u­als — Jeff Bezos, Bill Gates and War­ren Buf­fett—dwarfs that of the entire bot­tom 50% of Amer­i­cans. And it only seems to be get­ting worse.

How did we get here? In a new book The Tri­umph of Injus­tice: How the Rich Dodge Tax­es and How to Make Them Pay, authors Emmanuel Saez and Gabriel Zuc­man sug­gest the answer has much to do with changes to the tax code that have reduced the bur­den of tax­a­tion on America’s wealth­i­est groups and made it eas­i­er than ever for cor­po­ra­tions to evade pay­ing their dues. 

Pol­i­cy pro­pos­als from 2020 hope­fuls like Eliz­a­beth War­ren and Bernie Sanders are seek­ing to change that. Warren’s Ultra-Mil­lion­aire Tax” would impose a 2% tax rate on net worth in excess of $50 mil­lion, which becomes a 3% tax rate beyond $1 bil­lion. In oth­er words, any wealth between $50 mil­lion and $1 bil­lion would be taxed at 2%, but the 1,000,000,001st dol­lar (as well as any­thing beyond that) would be taxed at 3%. Sanders’ Tax on Extreme Wealth” plan goes even fur­ther by insti­tut­ing a 1% tax rate on net worth above $32 mil­lion that ris­es steadi­ly to 8% on all wealth over $10 bil­lion. Warren’s cam­paign claims her plan would bring in $2.75 tril­lion in rev­enue. Sanders’ would like­ly raise even more, which he pro­pos­es to use as fund­ing for his afford­able hous­ing plan, uni­ver­sal child­care, and some of Medicare for All. 

Here are nine sta­tis­tics from The Tri­umph of Injus­tice that show how tax injus­tice has con­tributed to inequal­i­ty in Amer­i­ca and the urgent need for reform: 

  • 52% — U.S. cor­po­rate tax rate in 1952
  • 21% — U.S. cor­po­rate tax rate after Trump’s tax law

  • 0% — Cor­po­rate tax rate in Bermuda

  • 60% — Por­tion of prof­its U.S. multi­na­tion­als col­lec­tive­ly book in low-tax coun­tries like Bermu­da and Ireland

  • $25,000 — FDR’s pro­posed max­i­mum income” in 1942 (about $400,000 today), above which income would be taxed 100%

  • $1,500,000 — Aver­age income of the top 1% of Amer­i­can earn­ers today

  • 37% — Cur­rent top mar­gin­al tax rate in Amer­i­ca, 20% below the his­tor­i­cal average

  • 2018 — First year in his­to­ry that America’s top 400 rich­est indi­vid­u­als paid less in tax­es than the bot­tom 50% of earners

  • 25% — Frac­tion of unpaid tax­es owed by the ultra-rich, almost 15% more than for oth­er income levels

Izii Carter is an edi­to­r­i­al intern at In These Times.
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