The efficient tax fee for the wealthiest 0.0002 p.c of Individuals — a gaggle that corresponds roughly to the billionaires on the well-known Forbes 400 listing —fell from 30 p.c to 24 p.c after the 2017 GOP tax cuts, which had been prolonged final month by Congress in Trump’s “big, beautiful bill.”
The efficient tax fee for the U.S. inhabitants as an entire is about 30 p.c, and for individuals with the highest salaries it’s about 45 p.c. However for the 100 wealthiest Individuals, it’s 22 p.c, in accordance with a examine printed Monday by the Nationwide Bureau of Financial Analysis.
These drop-offs are correlated within the examine particularly with the 2017 Trump tax cuts, also referred to as the Tax Cuts and Jobs Act.
“The tax fee of the highest 400 fell considerably on the finish of our pattern, a interval that
consists of numerous financial and coverage adjustments, together with the Tax Cuts and Jobs Act,” the researchers observe.
The examine is by Emmanuel Saez and Gabriel Zucman, economists on the College of California who’re two of the foremost specialists on world wealth inequality, a pattern that has exploded in current many years.
They famous that whereas the wealth of the highest 0.0002 p.c was the equal of two p.c of U.S. gross home product (GDP) in 1982, it has hit 20 p.c of GDP in 2025, with about three-quarters of the rise being attributable to the highest 100 wealthiest people alone.
As a fraction of wealth, versus revenue, taxes paid by the highest 400 dropped from 2.7 p.c previous to the 2017 tax cuts to 1.3 p.c afterwards. The U.S. doesn’t tax individuals primarily based on wealth, solely primarily based on revenue, although the Supreme Court docket has lately proven openness to contemplating a wealth tax.
Surprisingly, the decrease tax charges for the super-rich are due partly to a low quantity of personal enterprise revenue. Cross-through companies that generate taxable losses are cited as decreasing the tax burdens for the wealthiest Individuals, permitting them to offset taxes owed on different revenue owed on different revenue sources like wages and dividends.
The centerpiece of the 2017 Trump tax cuts was the discount of the company tax fee from 35 to 21 p.c, a change that made an enormous distinction for the billionaire class.
“Out of the top 400’s effective tax rate of 23.8 percent, about 9 points comes from the corporate tax,” Zucman and his coauthors discovered.
In a distributional evaluation of the extension of the 2017 cuts that had been signed into legislation in July, the Congressional Finances Workplace discovered that they might shift wealth from America’s poor to the wealthy. On account of cuts to social packages like well being care, the bottom earners would lose assets whereas the rich would achieve them.
These positive aspects elevated within the larger parts of the revenue ladder, with essentially the most positive aspects by far going to the highest tenth of earners, principally within the type of saved tax revenues.
The pattern is a worldwide one. Whereas wealth variations between international locations have moderated during the last quarter-century, the wealth variations inside international locations just like the U.S. have skyrocketed.
“In 2018, the 26 richest people in the world held as much wealth as half of the global population (the 3.8 billion poorest people), down from 43 people the year before,” the United Nations reported.
Financial historians have thought-about a brand new designation for world class constructions primarily based on the rising pattern of inequality.
“We must also be witnessing the emergence of a new class structure, axed around relations of ‘politically engineered upward redistribution,’” financial historian Robert Brenner and sociologist Dylan Riley wrote in a 2022 paper.
