WASHINGTON (Dispatches) - The nonprofit news organization ProPublica has published an analysis of the top 400 income earners in the U.S. The report reveals how much income tax the wealthy elite pay and illustrates how the U.S. tax system is itself structured to benefit the personal wealth of a handful of individual billionaires and multimillionaires.
Based on a trove of leaked IRS data, the ProPublica report shows that it took an average of $110 million in income per year between 2013 and 2018 to enter the top 400 list. The data confirm what many already know—that the tax laws in America are structured to benefit the super-rich and that this set-up is a contributing factor in the overall growth of social inequality in the U.S.
The report shows that the highest earning Americans do not pay the highest income tax. ProPublica notes, “On average, the rate of income tax that people pay does climb as incomes ascend into the top 1 percent, but when you get to the range of $2 million to $5 million, that trend stops. The group earning in this range, composed mostly of business owners and workers with extremely high salaries, paid an average income tax rate of 29 percent from 2013 to 2018. After that, average tax rates actually drop the further up in income you go.”
The analysis begins by pointing out that many billionaires “didn’t even come close” to making the top 400 list because they use write-offs to erase taxable income. “Other billionaires, like Warren Buffett, simply avoid income even as their wealth rises,” the report says.
Buffet’s average personal wealth was $70 billion across the six years of the ProPublica report— from 2013 to 2018–but his average income during that timeframe was just $27 million and he is not on the top income earners list.
The report also explains that billionaires often use the “Buy, Borrow, Die” method in which they “borrow against their wealth to avoid taxes, then their estates are able to skirt taxes after their deaths.”