- An Institute for Policy Studies paper looks at the rate of taxes on the richest Americans.
- From 1953 to 2018, the rate of taxation as a percentage of wealth on the top 0.01% has fallen 83%.
- The authors say that means the concentration of wealth has become “unavoidable.”
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A new study finds that the top 0.01% of Americans have seen their rate of taxation fall dramatically over the past 50 years.
According to the paper from the Institute for Policy Studies, from 1953 to 2018 the rate of taxation on the richest Americans – as a percentage of wealth – fell by 83%. From 1979 to 2018, tax payments from the group, as a percentage of its wealth, decreased by more than 75%. There’s a few reasons for that.
Broadly, the paper says, “Since 1980, American tax policy has increasingly favored wealth over work.” That includes things like the maximum rate of income tax on dividends falling lower than the maximum rate of income tax on wages, an increase in the estate tax exemption limit, and a decrease in the tax rate on corporate income.
The richest have also gotten a lot richer. In the midcentury era, an average member of that elite group held 200 times the wealth of an average American. Now, according to the paper, they hold an average of 1,000 times more wealth than the everyday American.
“America hasn’t stopped taxing its wealthiest citizens entirely,” authors Bob Lord and Chuck Collins write, “But that’s where we’re headed.”
The paper concludes that the rate of taxation on the top 0.01% is such that the concentration of wealth is now “unavoidable.” The authors write that “no other factor is as visibly and as directly connected to the concentration of wealth as tax policy.”
That research comes amidst a time of inequality further fueled by the pandemic. America continues to feel the impacts of a K-shaped recovery, where high-wage workers see their jobs and incomes grow, and low-wage workers experience the opposite.
American billionaires have added $US1.1 ($1) trillion to their net worths during the pandemic, bringing their collective wealth to $US4.1 ($5) trillion. The bottom 50% of Americans currently hold around $US2.36 ($3) trillion in wealth. Globally, billionaires have made $US3.9 ($5) trillion during the pandemic, while workers lost $US3.7 ($5) trillion in earnings. American workers saw the greatest losses, with a 10.3% decline.
The idea of a wealth tax has also gained increased traction throughout the pandemic, with Sen. Elizabeth Warren (D-Mass.) renewing her calls to use it as a tool to address inequality.
“The members of the top 0.01% pay only one-sixth of what they paid a half century ago in taxes. What used to be paid every two months is now paid every twelve,” the authors write. “And there’s no sign this trajectory is changing.”