American Billionaires By the Numbers

A new website is using Forbes’ billionaires data to provide insights into growing wealth inequality, tracking the real-time net worth of U.S. billionaires by state and their growing political influence. U.S. billionaires have continued to amass exorbitant amounts of wealth even as millions of people are unemployed and struggling to make ends meet amid the pandemic.

American Billionaires by the Numbers
Americans for Tax Fairness, Institute for Policy Studies – Inequality Program

COVID-19 Tax Policy Resources

Lawmakers continue to examine how to respond to the continually evolving economic crisis, precipitated by COVID-19. Decisions made now will have short- and long-term implications for families, communities and state and local governments. Click through to read commentary and analyses of economic stimulus and relief plans from the Institute on Taxation and Economic Policy.

COVID-19 Tax Policy Resources
Institute on Taxation and Economic Policy, 2020

Why I’ve Joined the Fight for Tax Justice: Amy Hanauer

By Amy Hanauer, Executive Director of Citizens for Tax Justice and the Institute on Taxation and Economic Policy

For the past 21 years, I’ve lived in Cleveland, on the shores of a beautiful Great Lake. My kids attended excellent public schools and I saw the legacy of a manufacturing economy that had thrived with deep public investments and strong union contracts. I also saw how bad policy decisions and increasing economic divides threatened that economy and left people scrambling for many basics.

Ohioans, like all Americans, know how to adapt—people get more training or add a second job to sustain their families in this changing economy. But increasingly, policies don’t do enough. College costs are high and financial aid is inadequate; quality childcare or pre-K is often unaffordable; and we’re letting our planet burn while not making transit, insulation or green energy available.

So I feel beyond lucky to have been entrusted with a new role, leading a national organization dedicated to tax justice. As the incoming executive director of the Institute on Taxation and Economic Policy and its sister organization Citizens for Tax Justice, I’m joining a phenomenal team that analyzes and makes policy recommendations to improve federal and state tax policy.

Now in its 40th year, ITEP’s work is driven by the belief that tax justice is essential to social and economic justice. ITEP analyses help us understand who pays taxes, and how we can better secure for our communities the resources to educate our kids, protect our lakes and rivers, and keep us safe.

Tax policy has never been perfect, but the 2017 Tax Cuts and Jobs Act took us backward. It reduced what the richest 20 percent pay by more than $200 billion collectively. In 2020 it will boost the income of the top 1 percent—earning an average $1.9 million each year—by nearly $50,000. In addition to increasing economic inequality, these giveaways worsen racial inequality, with white Americans receiving the vast majority (80 percent) of the tax cuts.

The cuts make it harder to do what America desperately needs—pay for things that would improve children’s lives, slow climate change, and put people to work. The plan was supposed to cost a whopping $1.5 trillion over a decade but seems likely to run more like $1.9 trillion—ballooning annual deficits and reducing resources for Social Security, health care, and infrastructure.

We also work on taxes at the local and state levels, where middle-income and low-income families pay a larger share of what they earn in taxes than the wealthiest. Upside-down state tax codes not only worsen income inequality, they make it hard to fund our schools, treat addiction, or get a college degree without deep debt.

After years of watching tax policy increasingly leave communities behind, at ITEP I’ll have the chance to work with local, state and national partners on policy solutions. I’m prepared to push for a tax system that can better deliver economic, climate and racial justice; for a public sector that can prepare our kids and our grid for 2020 and beyond; and for an America that works for all of us, whether we were born in Nebraska or Hawaii, Detroit or Miami.

There are plenty of obvious fixes: We can stop taxing money that goes mostly to the rich, like stock dividend and capital gains, at lower rates than we tax the earned income that most of us work for and live on. We can start taxing the wealth of multi-millionaires at least as much as we already tax the homes that are the main source of wealth for the middle class. And we can restore a reasonable estate tax on the many millions that get passed down from a great, great grandfather to an heir who lives off the inheritance. The smartest states are already moving to make their tax codes more progressive.

Throughout much of the 20th century, despite policies that intentionally perpetuated racial inequity, we had a better tax system that enabled investment and transformation. That’s what helped us turn an agrarian society where barely 10% of adults had a high school degree to one where more than 90% of adults have completed high school and more than a third of young adults have finished college. It allowed us to more than double life expectancy of Black Americans and nearly double the (still longer) life expectancy of white Americans over the century. It built the pipes, power lines and bridges we needed to have the world’s strongest economy.

That’s why I’ve joined the fight for tax justice. In an increasingly unequal America, I’m proud to be on the side of the worker, the planet and the people who know it’s time to push back.

Corporate Tax Avoidance in the First Year of the Trump Tax Law

ITEP’s examination of Fortune 500 companies’ financial filings identifies 379 companies that were profitable in 2018 and that provided enough information to calculate effective federal income tax rates, which is the share of 2018 pretax profits they paid in federal income taxes in that year. For most of these companies, their effective federal income tax rate was much lower than the statutory corporate tax rate of 21 percent. This is by design.

When drafting the tax law, lawmakers could have eliminated special breaks and loopholes in the corporate tax to offset the cost of reducing the statutory rate. Instead, the new law introduced many new breaks and loopholes, though it eliminated some old ones. The unsurprising result: Profitable American corporations in 2018 collectively paid an average effective federal income tax rate of 11.3 percent on their 2018 income, barely more than half the 21 percent statutory tax rate.

Key Findings:

The 379 profitable corporations identified in this study paid an effective federal income tax rate of 11.3 percent on their 2018 income, slightly more than half the statutory 21 percent tax

91 corporations did not pay federal income taxes on their 2018 U.S. income. These corporations include Amazon, Chevron, Halliburton and IBM. An ITEP study released in April 2019 examined 2018 Fortune 500 filings released to date and found 60 companies paid zero in federal income taxes. Now, all companies have released their 2018 financial filings, and this report reflects that.

Another 56 companies paid effective tax rates between 0 percent and 5 percent on their 2018 income. Their average effective tax rate was 2.2 percent.

Corporate Tax Avoidance in the First Year of the Trump Tax Law
ITEP, December 16, 2019

CEO to Worker Pay Ratio

How companies compensate their employees and executives matters. For the last decade, corporate profits have continually hit record levels, but aside from recent wage growth (that still has only modestly exceeded the rate of inflation, and may only be up temporarily due only to the tightened labor market), the benefits of economic growth have flowed mostly to executive suites. In other words, corporations haven’t invested in their rank-and-file workforces in a way that would create family-sustaining jobs and improve family economic security.

Executive Paywatch
American Federation of Labor and Congress of Industrial Organizations (AFL-CIO)

Corporate Elite, Not Workers, Cash in on Tax Cuts

When the White House and GOP leaders passed the unpopular Tax Cuts and Jobs Act, they promised the 40 percent reduction in the corporate tax rate would benefit workers via higher wages and more corporate investment. Instead, the tax law has fueled stock buybacks and incentivized offshore tax havens.

Costly Corporate Tax Cuts Benefit Few Workers
Americans for Tax Fairness, March 13, 2019

RELATED: Americans for Tax Fairness, Corporate Taxes

The Myth of Individualism and Wealth-building

For far too long, some elected officials and the corporate-funded think tanks and special interests that back them have sought to define the vast economic divide as inevitable, as in the rich work hard for what they have and if you’re poor or low-income, you simply haven’t worked hard enough. This paper delves into and debunks these pernicious myths that have helped define too many of our public policies.

Disrupting Narratives That Justify Inequality and Poverty
Institute for Policy Studies, March 12, 2019

Public Policy’s Role in Uneven Economic Opportunity

The U.S. middle class grew significantly during the 20th century in part because the nation put in place public policies (think housing policy, federally backed mortgages, the GI bill, etc.) that helped families access economic opportunity and grow wealth. But the harsh truth is that, by design, these public policies benefited white communities most and often deliberately exclude communities of color.

The Role of Family Wealth in Reinforcing Generational Divides
Institute for Policy Studies, March 4, 2019

Undoing the Damage caused by TCJA (Testimony)

This testimony from Center on Budget and Policy Priorities Chye-Ching Huang before the House Budget Committee highlights flaws in the so-called Tax Cuts and Jobs Act and offers recommendations to undo the damage the law inflicted upon low- and moderate-income people, while rewarding corporations and the wealthy.

Fundamentally Flawed 2017 Tax Law Largely Leaves Low- and Moderate-Income Americans Behind
Center on Budget and Policy Priorities, Feb. 27, 2019