I’m sure there are many terrible burdens that come with living in the highest income households in America, but, luckily, thanks to the vagaries of the U.S. tax code, paying the highest tax rate isn’t one of them.
In the first paragraph, when I said “highest tax rate,” I should have said “highest effective tax rate,” which refers to the rate — as a percentage of its gross income — a household actually pays in taxes to all levels of government, local, state and federal. But, of course, that’s exactly the number we should look at, rather than assuming that a progressive income tax structure would guarantee that the richest pay the highest rate, because the effective rate shows what a household paid after all the deductions and other elements of the tax code that shelter a portion of income from taxation.
And those shelters are a lot more valuable and a lot more utilized by people who make enough to be taxed in the higher brackets.
OK, I buried the lead, as we say in journalism, which refers to failing to disclose the main point of an article in the first paragraph. If you click through the top of the Leonhardt column, you will see that the 400 wealthiest households not only found a way to get their actual tax bill, as a percent of their income from all sources, below the mere billions in the 99th percentile, or the 90th, but even, believe it or not, below the median.
But wait, I still buried the lead. According to Leonhardt’s column, the 400 highest-income households pay a lower overall tax rate, taking into account all forms of federal, state and local taxation, than do those households in the bottom zero to 10 percent.
It’s hard to figure out how that could work. But Leonhardt derives this fact from a not-yet published book, called “The Triumph of Injustice,” due for release next week. Authors Emmanuel Saez and Gabriel Zucman are professors at the University of California, Berkeley. Leonhardt says both profs have “done path breaking work on taxes.” Saez has been named the top academic economist under 40. Zucman has been nicknamed “the wealth detective,” presumably for his ability to figure out how and where the wealthiest hide their do-re-mi.