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In a recent study done by economists from the University of California, Berkley which is published in the National Bureau of Economic Research, it has been discovered that US billionaires, especially the names on the 'Forbes' 400 list', pay lower tax than the rest of the American taxpayers.
Co-authored by Gabriel Zucman and Emmanuel Saez, the study revealed that they paid an average effective tax rate of 24 per cent between the years 2018 to 2020, while the full population paid 30 per cent.
With the 'Top 400' constituting only 0.0002 per cent of the population, the list contains Elon Musk leading the list. Jeff Bezos, Mark Zuckerberg, and other famous figures have also seen their inclusion. Donald Trump is on the list, with a net worth of $4.3 billion. The minimum net worth of the names listed on the 'Top 400' is $3.3 billion.
With Trump's 'big, beautiful bill' taking effect on July 4, it provides benefits to the highest earners in the country. One of the changes introduced was the estate-tax exemption would increase from $13.99 million per person, to $15 million. The estate-tax mainly refers to the amount one can transfer during their life or at death without being subjected to federal taxes.
From 2010 to 2017, prior to the Tax Cuts and Jobs Act, the richest paid around the same tax rate as the rest of the population. The effective tax rate then stood at 30 per cent for the 'Top 400'.
On the other hand, billionaires do not have much to worry about in terms of tax paying, as capital gains and business revenue are taxed at a lower rate compared to the top rate of income the citizens earn through jobs.
Saez and Zucman have been active advocates for pushing forward US wealth tax, that considers the nature of tax inequalities. The study does confirm that billionaires pay less taxes than the middle-class taxpayers. As they identify loopholes to pay less taxes, like the 'Buy, Borrow, Die method', where they can spend as much of their collected fortune, and give the rest of it to their heirs, tax-free.
Stating that such tax rates prove tax disparity in US, Saez spoke to CBS News saying, "The wealth tax is the most direct and powerful way to specifically target the ultra-rich and increase tax progressivity at the very top."