Do the rich pay their fair share? (2024)

What billionaires and giant corporations pay in taxes—and what that means for the rest of us.

Paying your fair share of taxes strikes at the heart of fundamental fairness. Does everyone play by the same rules? Does our government have the resources it needs to provide the services we all rely on, from schools to roads to firefighters?

The importance of fair taxation has taken on new urgency. As corporate profits and billionaire wealth surge, families are struggling to pay the bills as our climate sleepwalks to catastrophe.

“We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can’t have both,” famously said former U.S. Supreme Court Justice Louis Brandeis.

At Oxfam, we’ve been tracking the rise in corporate power and billionaire wealth for years. So we’re going to answer the question, step by step: Whether billionaires and giant corporations pay their fair share, and what the rich paying their fair share would mean for something as ambitious as ending poverty and injustice.

Do billionaires pay their fair share?

Billionaires in the U.S. pay a smaller tax rate than most teachers and retail workers. Thanks to a tax code that favors income from wealth over income from work—and a slew of tax-avoidance strategies—the richest among us end up paying a smaller percentage of their income to the federal government than most working families.

Here’s what we know:

  • U.S. billionaires are 46 percent, or $1.6 trillion, richer than they were in 2020.
  • According to a 2021 White House study, the wealthiest 400 billionaire families in the U.S. paid an average federal individual tax rate of just 8.2 percent. For comparison, the average American taxpayer in the same year paid 13 percent.
  • According to leaked tax returns highlighted in a ProPublica investigation, the 25 richest Americans paid $13.6 billion in taxes from 2014-2018—a “true” tax rate of just 3.4 percent on $401 billion of income.

That’s not paying your fair share. Instead of rewarding wealth over work, our tax system should ensure that billionaires play by the same set of rules as the rest of us. It’s good for the planet, and it’s essential to the preservation of our democracy.

So what should they pay?

  • Higher tax rates: The IRS code should raise individual tax rates for billionaires and equalize taxes on capital gains and labor income so work isn’t taxed more than wealth.
  • A fair tax on their wealth: Billionaires should pay a wealth tax, and we should close tax loopholes that permit the rich to stash profits in tax havens.

“In reality, taxation is a sign of legality and justice," said Pope Francis.

Do giant corporations pay their fair share?

While giant companies enjoyed record profits in recent years, many still pay lower tax rates than most working families. That’s in part because many take advantage of generous tax breaks and stash profits in tax havens around the world.

Here’s what we know:

  • According to the Institute on Taxation and Economic Policy, at least 55 of the largest corporations in America paid no federal corporate income taxes in 2020.
  • The US government is estimated to have lost around $135 billion in revenue due to corporate tax avoidance in 2017. In contrast, corporate philanthropy has amounted to less than $20 billion a year.
  • Corporations shiftednearly $1 trillion in global profits to tax havens in 2022—depriving countries all over the world of desperately needed tax revenue.

That’s not paying your fair share. Instead of only maximizing profits for their overwhelmingly rich, white shareholders, corporations should do more to support the employees, consumers, and community members that corporations rely upon to make their money.

So what should they pay and do?

  • To reduce tax haven abuse and the offshoring of corporate profits, corporations should pay the same tax rate on their foreign profits as on their domestic profits, and all large multinational corporations should pay a global minimum tax rate.
  • To end the secrecy that shrouds corporate tax dodging, corporations should publish key financial data like revenue, profits, and taxes paid on a country-by-country basis.

“We want an economy that works for everyone, not just for a small elite,” said former U.S. Labor Secretary Robert Reich.

What would the rich paying their fair share mean for ending poverty and injustice?

Taxing the rich would pay incredible dividends in ending poverty and injustice. Calculations from Oxfam found that a progressive wealth tax on US multi-millionaires and billionaires could generate $664 billion dollars every year to help lift people out of poverty.

That kind of revenue would allow the US to invest in programs that:

  • Protect the climate
    • Building off climate investments in the 2022 Inflation Reduction Act, we could fund tax credits for consumers and companies to cut carbon emissions and support the creation of a 21st century Civilian Conservation Corps—a jobs program to actively combat the climate crisis.
  • Lift children out of poverty
    • Reinstating the child tax credit could lift more children out of poverty. The credit reached more than 60 million children in 2021, cutting child poverty by 30 percent. We could also fund child nutrition waivers used by 90 percent of US schools to fight childhood hunger by providing lunches to children in need.

All of these programs would provide big benefits for workers, caregivers, and communities of color—unlike corporate tax dodging, which just benefits a white, wealthy elite.

“It’s time for our nation’s billionaires and giant corporations to contribute their fair share of taxes to support the very people who have provided the labor that has allowed them to enjoy record profits and excess wealth,” said Gina Cummings, Oxfam America’s Vice-President of Advocacy, Alliances and Policy.

Conclusion

When billionaires and corporations rig the rules to pay a smaller percentage of taxes than the average American tax payer, they’re not paying their fair share. Everyone should play by the same set of rules, and working families shouldn’t bear more than their fair share.

By increasing tax rates on the richest Americans, taxing billionaire wealth, and making corporations pay their fair share, we can ensure that the rich help protect the climate and lift children out of poverty. And it’s key to saving our democracy and solving our toughest global challenges.

Hundreds of thousands of people like you have joined Oxfam to demand the rich pay their fair share in taxes. Your voice in this fight matters, and when we join our voices together, our message becomes impossible to ignore.

Do the rich pay their fair share? (2024)

FAQs

Do the rich pay their fair share? ›

In 2021, the top 1% of income earners in America accounted for “only” 26% of the country's total income, yet they shouldered 46% of the total tax burden. This indicates that the wealthy paid 15% more than what would be considered their equitable share.

Do rich pay their fair share? ›

According to a 2021 White House study, the wealthiest 400 billionaire families in the U.S. paid an average federal individual tax rate of just 8.2 percent. For comparison, the average American taxpayer in the same year paid 13 percent.

Do the 1% pay the most taxes? ›

High-Income Taxpayers Paid the Majority of Federal Income Taxes. In 2021, the bottom half of taxpayers earned 10.4 percent of total AGI and paid 2.3 percent of all federal individual income taxes. The top 1 percent earned 26.3 percent of total AGI and paid 45.8 percent of all federal income taxes.

Why do people say the rich don't pay taxes? ›

Currently, wealthy households can finance extravagant levels of consumption without even paying capital gains taxes on the accruing wealth by following a “buy, borrow, die” strategy, in which they finance current spending with loans and use their wealth as collateral.

What is the meaning of fair share of taxes? ›

For the system to be fair everyone should be paying the same percentage of their income as tax, regardless of your income level. Currently 10% of the population pays 90% of the taxes and a lot of people don't pay any income tax at all (social security and medicare are not income tax).

Do billionaires use credit cards? ›

What Credit Card Do the Super Rich Use? The super rich use a variety of different credit cards, many of which have strict requirements to obtain, such as invitation only or a high minimum net worth. Such cards include the American Express Centurion (Black Card) and the JP Morgan Chase Reserve.

Do the poor pay more taxes than the rich? ›

Who pays the most in federal taxes? The federal tax system is generally progressive (versus regressive)—meaning tax rates are higher for wealthy people than for the poor.

Do the top 1% pay 70% of taxes? ›

Tax Shares in Tax Year 2021

The newly released report covers Tax Year 2021 (for tax forms filed in 2022). The newest data reveals that the top 1 percent of earners, defined as those with incomes over $682,577, paid nearly 46 percent of all income taxes – marking the highest level in the available data.

Who doesn't pay taxes in USA? ›

Generally, you don't have to pay taxes if your income is less than the standard deduction, you have a certain number of dependents, working abroad and are below the required thresholds, or are a qualifying non-profit organization.

How much does the middle class pay in taxes? ›

Middle-Class Income Doesn't Matter as Much as Tax Brackets

The lowest tax bracket is 10%. The highest tax bracket is 37%. If you're in the middle class, you're probably in the 22%, 24% or possibly 32% tax brackets. That may sound as if you're paying 22%, 24% or 32% of your income toward taxes, but you're actually not.

How do billionaires pay no taxes? ›

Billionaires (usually) don't sell valuable stock. So how do they afford the daily expenses of life, whether it's a new pleasure boat or a social media company? They borrow against their stock. This revolving door of credit allows them to buy what they want without incurring a capital gains tax.

How do the super rich avoid taxes? ›

12 Tax Breaks That Allow The Rich To Avoid Paying Taxes
  1. Claim Depreciation. Depreciation is one way the wealthy save on taxes. ...
  2. Deduct Business Expenses. ...
  3. Hire Your Kids. ...
  4. Roll Forward Business Losses. ...
  5. Earn Income From Investments, Not Your Job. ...
  6. Sell Real Estate You Inherit. ...
  7. Buy Whole Life Insurance. ...
  8. Buy a Yacht or Second Home.
Jan 24, 2024

Why do poor people pay more taxes than the rich? ›

Because rich Americans are taxed at lower marginal rates and tend to earn more of their income from sources other than work, they face lower payroll tax rates than poorer Americans.

Who benefits from FairTax? ›

The Fair Tax Act includes a rebate equal to the amount of national sales tax paid up to the poverty level. This is designed to offset national sales taxes, so that a household at poverty level would essentially pay no tax. The rebate would be paid to all households, regardless of income.

What are the cons of a FairTax? ›

Cons Of A Fair Tax System
  • Raises incentives for private businesses to cheat. Businesses who want to undercut the competition may decide to cut out sales tax collection. ...
  • Tax rates may fluctuate over time. ...
  • Middle-income families may see higher taxes. ...
  • Potential dampening effect on overall economic growth.
Sep 20, 2023

What is the fair share percentage? ›

Fair share percentages are calculated by applying a logit transformation algorithm. The algorithm considers the number of responses in each cell and adjusts the proportions to reflect the size of the contribution within a column or row.

Do billionaires keep their money in stocks? ›

High-net-worth individuals are opting to keep most of their assets in cash right now. Stocks are still a popular choice for wealthy investors. You don't have to be rich to come up with a plan for your own money.

Do billionaires pay taxes on stocks? ›

Taxation of gains and losses from assets like stocks

Tradable assets (like stocks that are easily valued on an annual basis) owned by billionaires will be marked to market each year. This means that billionaires will pay tax on gains or take deductions for losses, whether or not they sell the asset.

How do billionaires not pay taxes with stocks? ›

Billionaires (usually) don't sell valuable stock. So how do they afford the daily expenses of life, whether it's a new pleasure boat or a social media company? They borrow against their stock. This revolving door of credit allows them to buy what they want without incurring a capital gains tax.

How much equity is considered rich? ›

$2.2 million

That's how much net worth an American needs to be considered wealthy in 2023, according to the Charles Schwab Modern Wealth Survey.

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