ProPublica anonymously obtained billionaires’ tax returns. Combining the data with Forbes’ billionaire wealth estimates, ProPublica calculated a “true tax rate” for America’s 25 richest people:
The results are stark. According to Forbes, those 25 people saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%.
It’s a completely different picture for middle-class Americans, for example, wage earners in their early 40s who have amassed a typical amount of wealth for people their age. From 2014 to 2018, such households saw their net worth expand by about $65,000 after taxes on average, mostly due to the rise in value of their homes. But because the vast bulk of their earnings were salaries, their tax bills were almost as much, nearly $62,000, over that five-year period.
As you might guess, a lot of the disparity has to do with wealth held in unrealized capital gains. The other part is how the ultrawealthy still pay for everything when most of their money is in investments and how that factors into deductions.