The richest Americans have seen a big drop in how much they pay in taxes, according to a new study from the National Bureau of Economic Research.
As reported by The Hill, the paper, published by economists Emmanuel Saez and Gabriel Zucman, found that the effective tax rate for the wealthiest 0.0002% of Americans fell from 30% to 24% following the 2017 Republican tax cuts.
That group includes billionaires listed on the Forbes 400.
For context, most Americans pay around 30% in taxes. People with high salaries can pay up to 45%.
But the 100 richest people in the country now pay just 22%, according to the study.
The research links the drop directly to the 2017 Tax Cuts and Jobs Act, which was signed into law by then-President Donald Trump and extended by Congress in July as part of what Trump called his “big, beautiful bill.”
“The tax rate of the top 400 fell significantly at the end of our sample, a period that includes various economic and policy changes, including the Tax Cuts and Jobs Act,” the researchers wrote.
Corporate Tax Cuts Drive the Decline
A large part of the tax savings comes from cuts to the corporate tax rate. The 2017 law lowered that rate from 35% to 21%, which made a huge difference for the billionaire class.
Saez and Zucman noted that nearly 9 percentage points of the top 400’s 23.8% effective tax rate came from corporate taxes.
The study also found that the ultrarich pay very little in taxes compared to their total wealth.
Before the tax cuts, the top 400 paid about 2.7% of their wealth in taxes. That figure dropped to just 1.3% after the law took effect.
Wealth, Not Income, Remains Untaxed
The U.S. currently taxes people based on income, not wealth.
But the idea of a wealth tax has gained more attention lately, and the Supreme Court has recently shown some interest in reviewing the concept.
One surprising reason the ultrarich can pay so little: many of them report relatively little income from private businesses.
Instead, they use so-called pass-through businesses that show losses, which helps them reduce how much tax they owe on other income like wages and dividends.
CBO: Poor Lose, Rich Gain
A separate analysis by the Congressional Budget Office of the July extension found that the tax cuts would shift resources away from lower-income Americans and benefit the rich.
The study said that cuts to social programs like health care would hurt the poor, while the rich would benefit most from the extended tax breaks.
Most of the gains from the cuts go to people higher up the income ladder, especially the top 10%, according to the CBO report.
The Growing Wealth Gap
The study also shows how much more concentrated wealth has become in the U.S. In 1982, the wealth of the top 0.0002% equaled about 2% of U.S. gross domestic product. By 2025, it had grown to 20%.
Three-quarters of that increase came from just the top 100 wealthiest Americans.
Globally, inequality between countries has narrowed somewhat in recent decades. But within wealthy countries like the U.S., the gap between the richest and everyone else has grown quickly.
In 2018, the United Nations reported that just 26 people held as much wealth as the poorest 3.8 billion people worldwide.
That was down from 43 people the year before.
Economic historian Robert Brenner and sociologist Dylan Riley wrote in a 2022 paper: “We must also be witnessing the emergence of a new class structure, axed around relations of ‘politically engineered upward redistribution.’”
That upward redistribution, the new study shows, is not just happening. It’s accelerating.