Good evening. We’ll be back in your inbox on Tuesday, so we’re taking this opportunity to wish you all a happy Easter and Passover! Now, let's get to it.
The Tax Rates of America's Top Earners
Microsoft founder Bill Gates earned an average of $2.85 billion per year between 2013 and 2018, the most in the U.S. for any individual over that period, while paying an effective federal income tax rate of 18.4%. The second-highest earner during that time, media mogul and former New York City mayor Michael Bloomberg, earned a bit less on average at $2.05 billion per year but paid a far lower effective tax rate of just 4.1%.
Those figures come from an analysis of IRS data on some of the highest-income taxpayers that was leaked to ProPublica last year. The ProPublica table below, derived from that data, shows average incomes and tax rates for the top 15 earners between 2013 and 2018.
The data “demonstrates how the American tax system, which theoretically makes the highest earners pay the highest income tax rates, fails to do so for the people at the very top of the income pyramid,” ProPublica says.
Some fascinating details from the latest report, released this week:
• The top 400 earners had an average annual income of at least $110 million.
• The top 11 earned more than $1 billion per year on average — an income that would require 25,000 years of work for the typical American.
• Tech billionaires (think Apple, Google, Microsoft) made up 10 of the top 15, with their high incomes coming mostly from selling stocks.
• In the top 400, hedge fund managers were the largest single segment, comprising about 20% of the group.
• Few celebrities made the top 400. Taylor Swift’s average annual income of $82 million didn’t make the cut, nor did LeBron James’s $92 million.
• On average, Americans pay a higher tax rate as their incomes go up — but only until about $5 million a year. Above that, the trend reverses, and effective federal income tax rates fall. The top 400 pay an average rate of 22%, well below the 29% paid by those earning between $2 million and $5 million per year.
Quotes of the Day: Dueling Takes on Inflation and Fiscal Policy
“The $1.9 trillion American Rescue Plan passed in the early days of the Biden administration will go down in history as an extraordinary policy mistake. And the Fed — an esteemed, independent steward of our monetary policy — similarly overestimated the amount of support the economy needed and pumped trillions of dollars into the system. As a result, we have gotten way behind the curve on inflation; the Fed will have to raise interest rates considerably more than if the problem had not been allowed to arise.”
—Former Treasury official Steven Rattner, writing in The New York Times Thursday.
“Was just thinking about how we've had two years of a global pandemic. A huge change in the nature of consumption. Various shocks to the supply chain. Companies paying for office space, while employees work from home. And the popular thing is to blame fiscal policy for inflation.”
— Joe Weisenthal of Bloomberg News, on Twitter.
Dem Poll: Ending Medicare, Medicaid and Social Security Would Hurt GOP
Back in February, Florida Republican Sen. Rick Scott released a 11-point policy agenda for the GOP that stirred some controversy by, among other things, calling for all Americans to have some “skin in the game” by paying federal income taxes. The plan also proposed to have federal legislation to sunset after five years, saying, “If a law is worth keeping, Congress can pass it again.”
The Scott plan wasn’t exactly well-received, even among fellow Republicans. "Let me tell you what would not be a part of our agenda,” Senate Minority Leader Mitch McConnell told reporters days after the plan was unveiled. “We would not have as part of our agenda a bill that raises taxes on half the American people and sunsets Social Security and Medicare within five years. That will not be part of a Republican Senate majority agenda.”
Scott, who chairs the National Republican Senatorial Campaign Committee, released the plan independently, and McConnell reportedly warned at the time that the proposal would give Democrats ammunition for a bevy of midterm election attack ads.
Sure enough, Democrats are still looking to score points off the plan. Case in point: A new poll conducted on behalf of the Democratic Senatorial Campaign Committee found that attacks based on the Scott plan were highly effective in Senate battleground states.
The poll, conducted by Blue Rose Research and highlighted at The Hill, found that 65% of voters said they were less likely to support the GOP “if Senate Republicans have a new plan that would end Medicare, Medicaid and Social Security in five years.” Six in 10 voters said they’d be less likely to support Republicans if the party has a plan to raise taxes on more than half of all Americans. And 55% of voters said they were less likely to support Republicans if the GOP had a plan to “end the coverage protections for pre-existing conditions from the Affordable Care Act in five years.”
The survey was conducted in Arizona, Georgia, Pennsylvania, Nevada, New Hampshire and Wisconsin from March 25 to 30. It collected 2,777 responses.
The bottom line: It shouldn’t come as a surprise that Social Security, Medicare and Medicaid are popular — or that higher taxes and removing protections for pre-existing conditions aren’t. You can expect to see more Democratic attacks along these lines, even against GOP candidates who haven’t backed Scott’s agenda.
- America’s Highest Earners and Their Taxes Revealed – ProPublica
- Democrats Face Pressure From Left, Center on Student Loans – The Hill
- Pentagon, Industry Leaders Meet to Talk Replenishing Military Weapons Stockpiles – Defense One
- Drug and Alcohol Abuse Is Slowing Labor Force Recovery, Fed Finds – Bloomberg
- Lawmakers Demand Information From IRS Contractor ID.me Amid Security Concerns – The Hill
- The Military Wants ‘Robot Ships’ to Replace Sailors in Battle – Washington Post
- Mortgage Rates Hit 5% for First Time Since 2011 – Wall Street Journal
- Pfizer COVID Booster Provides Strong Immune Boost in Kids Ages 5-11, New Study Shows – USA Today
- To Find Out Where the Covid Pandemic Is Headed, Look Here: The Sewer – Washington Post
- Bidenworld Projects Calm About Covid but Bite Their Nails in Private – Politico
Views and Analysis
- We May Be on Track for a Recession Just as the 2024 Campaign Kicks Off – Steven Rattner, New York Times
- What Could Go Wrong With Biden's Booming Economy? Here Are the Big Risks – Victoria Guida, Politico
- Inflation Might Take a Bite for Longer Than You Think – Megan McArdle, Washington Post
- Is a Recession the Only Way to Stop Inflation? – Spencer Bokat-Lindell, New York Times
- Most Americans Are Moving on From the Pandemic. Biden Should Acknowledge That – Jennifer Rubin, Washington Post
- Nursing Homes Are in Crisis. We Can’t Look Away Any Longer – Jay Caspian Kang, New York Times
- Congress’ Appropriations Process Failures Continue to Weigh Down the IRS – Chad Hooper, The Hill
- More Immigration Will Do Little to Slow U.S. Inflation – Ramesh Ponnuru, Bloomberg
- Consumers Power Through on the Way to Higher Rates – Jonathan Levin, Bloomberg
- Biden Still Hasn't Banned the Short-Term Health Plans He Called 'Junk' – Rachel Roubein, Washington Post
- The Biden Administration Is Addressing Medical Debt. It’s About Time – Paul Waldman, Washington Post
- America’s Pandemic PTSD – Charles M. Blow, New York Times