US Billionaires Pay Lower Tax Rate Than Most Americans, Study Finds

Last Updated:August 27, 2025, 19:19 IST

Economists Emmanuel Saez and Gabriel Zucman found Forbes 400 billionaires like Elon Musk pay lower tax rates than average US workers.

A file photo of Elon Musk (AP)

A new research by University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman found that the wealthiest Americans are paying a smaller share of their income in taxes than the average worker. The study found that members of the Forbes 400- led by Tesla chief executive Elon Musk, whose fortune is estimated at $244 billion- paid an average effective tax rate of 24% between 2018 and 2020, compared with 30% for all other US taxpayers.

The findings come as US President Donald Trump’s latest tax legislation- which he called his “big, beautiful bill" when signing it into law on July 4- takes effect, delivering substantial benefits to the highest earners. Among its measures was an increase in the estate-tax  exemption to $15 million per person, up from about $14 million.

How The Rich Pay Less?

Emmanuel Saez and Gabriel Zucman calculated effective tax rates by including not only personal income taxes but also corporate levies, assigning a share of company tax payments to their billionaire owners. Emmanuel Saez said, “The economic income of the wealthiest are essentially the profits of the businesses they own. Jeff Bezos owns about 10% of Amazon and hence his true economic income is 10% of Amazon’s profits."

Because capital gains and corporate income are taxed at lower rates than wages- and wealth is untaxed until assets are sold- billionaires often face a lighter burden. The top tax rate on wages is 37% but long-term capital gains are taxed at 20%, while corporate profits face a 21% rate.

Emmanuel Saez said, “The individual income tax is designed to be progressive… except among the billionaire class. The billionaire class can avoid realizing individual income and hence can escape the individual income tax."

Emmanuel Saez and Gabriel Zucman, long-time advocates of a US wealth tax, argue the new evidence strengthens the case for reform.

“The wealth tax is the most direct and powerful way to specifically target the ultra-rich and increase tax progressivity at the very top," Emmanuel Saez said, adding, “It is also popular but will obviously be fought by billionaires, and they have disproportionate influence."

Location :

Washington D.C., United States of America (USA)

First Published:

August 27, 2025, 19:19 IST

News world US Billionaires Pay Lower Tax Rate Than Most Americans, Study Finds

Read More