We used to tax the wealthiest at 70 percent of their income. Now we only tax them 24.2 percent.
As of right now, if you're ludicrously rich and an American citizen then you're probably paying a much lower tax rate than the guy pumping your gas.
Two economists out of University of California at Berkeley named Emmanuel Saez and Gabriel Zucman did an in-depth study of tax rates, which they published in their book The Triumph of Injustice. The authors found that as of 2018 the total tax rate for the 400 wealthiest families in America was 23 percent, while the tax rate for bottom half of American families was at 24.2 percent.
This is the first time in American history the rich have had a lower tax burden than the working class.
Remember, the 400 richest families have as much wealth as the ENTIRE 60% of the bottom percent of households.
This change started from the 1950s, when the top wealthiest families paid 70% of their income in taxes. By the 1980s (the era of Trickle Down Economics) the percentage dropped to 47 percent.
In The Triumph of Injustice, Saez and Zucman argue that the tax rate for the wealthy should be around 60 percent, which would give the government around $750 billion windfall the government to spend on social program that help underprivilged populations.
So what happened? In short, the rich figured out a bunch of ways to avoid paying taxes. Between tax shelters and investing in politicians that support lower taxes for the wealthy, the richest families can also benefit from cuts to capital gains, estate, and corporate taxes in ways that poor people cannot access.
The income inequality has not gone unnoticed. In January, Rep. Alexandria Ocasio-Cortez (D-N.Y.) proposed the institution of a top marginal tax rate of up to 70 percent. Sen. Elizabeth Warren (D-Mass.) has run as part of her campaign platform a proposed to tax a family’s wealth above $50 million at 2 percent per year, adding an additional percentage point on wealth over $1 billion. The plan was based on research by Saez and Zucman.