Thread by @ParrottCBPP

Check out @CenteronBudget’s new (short!) piece on why the tax system needs to be improved. Incomes for the very wealthy have grown substantially but the share of income they pay in taxes has shrunk.

The Biden admin has modest proposals that would help: cbpp.org/research/feder…

The highest-income 0.01% of tax filers (the top 1 in 10,000) saw their incomes rise on average by 601% in inflation-adjusted terms between 1979 & 2017. Yet from the mid-90’s through 2017, the average share of the income that the top 0.01% paid in federal taxes fell by almost 20%.

Yet from the mid-90’s through 2017, the average share of the income that the top 0.01% paid in federal taxes fell by almost 20%.

Sidenote: And these figures exclude a substantial portion of the income received by those at the top that comes from the rising value of their investments they own, as explained more below.

High-income & high-wealth households benefit from ✌️ major tax advantages 👇

1️⃣: Much of the wealthy filers’ income isn’t taxed annually. It escapes annual taxation because the increase in the value of their stocks, real estate, & other investments isn’t considered “taxable income” unless they sell the asset.

2️⃣: When their income is taxed, it often is subject to low preferential rates, like the low tax rate on capital gains & dividends & the special deductions allowed on pass-through income. These kinds of income are overwhelmingly received by high income households.

And that’s on top of the fact that the #IRS fails to collect as much as $1 trillion of legally owed taxes each year. Because of budget cuts, audit rates for millionaires fell by 71% between 2010 & 2019.

There are plans in the works to ensure that high-income & high-wealth households pay a fairer amount of tax by making more income subject to tax, by having fairer tax rates, & by giving the #IRS the tools it needs — including more information — to collect what’s owed.

Even still, it’s a modest proposal: it would only reduce – not eliminate – the tax advantages that income from wealth enjoys. And in historical terms, it ranks 24th among revenue-raising legislation enacted since World War II.

The increased taxes on high-income households would then be used to make investments in children, education, health care, & infrastructure — investments that broaden opportunity & improve people’s lives.

See more on #taxes, the wealthy, & creating a fairer tax system: cbpp.org/research/feder…