Warren Buffet famously said he’s paying a lower tax rate than his secretary. That may be the case for most regular Americans versus the richest billionaires.
The average American pays a 17.6% federal tax rate on their lifetime earnings, according to a study by the financial technology company Self. That’s five times higher than the 3.4% tax rate a recent ProPublica report estimated that the wealthiest 25 Americans pay in federal taxes.
“It’s long been understood that the tax system is very favorable to the extremely wealthy,” Seth Hanlon, a tax policy expert at the Center for American Progress, told Yahoo Money. “People who work for a living are taxed in a fundamentally different way than people who enjoy great wealth.”
To arrive at its tax rate, ProPublica considered overall wealth as income and calculated how much tax those billionaires would have paid on sources that aren’t typically taxed — such as unrealized capital gains. Stripping that out, though, the richest 25 Americans still get a break, paying a federal income tax rate of 15.8% between 2014 and 2018, according to ProPublica, which is 2.7 percentage points lower than the rate the average American pays.
