What is the average federal individual income tax rate on the wealthiest Americans?
Stone Center affiliate Danny Yagan reveals that America's 400 wealthiest families paid an average federal individual income tax rate of just 9.6 percent in nominal terms (12.0 percent inflation-adjusted) between 1992-2020, using a comprehensive income measure that includes unrealized capital gains. The study, published in the Oxford Review of Economic Policy, demonstrates how preferential tax rates on capital gains and the ability to avoid taxes on investment gains through stepped-up basis provisions contribute to these dramatically low effective tax rates. This groundbreaking analysis challenges conventional tax rate estimates by including untaxed wealth appreciation, providing crucial evidence for ongoing debates about tax progressivity and wealth inequality in America.
A blueprint for a coordinated minimum effective taxation standard for ultra-high-net-worth individuals
(2025) Stone Center researcher Gabriel Zucman and the EU Tax Observatory present a groundbreaking proposal for internationally coordinated taxation of ultra-high-net-worth individuals, requiring billionaires to pay at least 2% of their wealth annually in taxes. The report demonstrates that current tax systems fail to effectively tax the ultra-wealthy, who currently face an effective tax rate of just 0.3% of their wealth despite earning 7.5% returns annually. This minimum tax standard could raise $200-$250 billion globally from approximately 3,000 taxpayers, addressing the regressive nature of contemporary tax systems while supporting domestic progressive policies.
(2025) "Taxing the Wealth of the Poor: Evidence from the Danish Old-Age Support Asset Test" with Niels Johannesen and Johan Saeverud, NBER Working Paper No. 33189, revised April 2025
(2025) New research using Danish data shows that asset testing for elderly support programs reduces liquid wealth by 20% among low-income seniors. The study demonstrates how means-tested benefits discourage private savings, providing the first rigorous evidence of substantial behavioral responses to wealth-based eligibility requirements.
"Wealth Tax Enforcement in Sweden: Filing Requirements and Pre-Populated Returns" with David Seim, Journal of Public Economics 249, 2025, 105440
(2025) New research shows that administrative features like filing requirements and pre-populated tax returns dramatically impact wealth tax compliance, even with extensive third-party reporting. When Sweden required only wealthy taxpayers to file wealth information, compliance dropped by 20%, but pre-populating returns immediately restored compliance levels by making government knowledge more salient to taxpayers.
Tax Design, Information, and Elasticities: Evidence From the French Wealth Tax
(2024) New research analyzing French wealth tax reforms reveals that reducing information reporting requirements dramatically impacts taxpayer behavior while tax rate changes have minimal effects. When France allowed simplified reporting below €2.57 million, affected taxpayers' wealth growth rates dropped 20%, driven by increased tax evasion rather than real wealth changes, highlighting the critical role of tax design in shaping compliance.
Increasing the Minimum Wage through Tax Policy
(2021) This document describes how to use tax policy to achieve the same economic goal as a minimum wage increase: increasing the net pay of low paid workers using extra taxes on their employers.
How to Get $1 Trillion from 1000 Billionaires: Tax their Gains Now
(2021) Billionaires pay low effective tax rates because they can defer taxes on their capital gains for decades or forever as income tax on gains is due only upon sale of assets. US billionaires. now own $4.25 Trillion, out of which $2.7 Trillion are gains that they haven’t paid tax upon yet. During COVID, billionaires' untaxed gains increased by $1.25 Trillion. We propose to end this tax deferral advantage by imposing a one-time tax on the stock of billionaires’ unrealized gains at the ordinary tax rate (39.6%+3.8% under Biden’s plan).
Capital Gains Withholding
(2021) This paper studies tax evasion at the top of the U.S. income distribution using IRS micro-data from (i) random audits, (ii) targeted enforcement activities and (iii) operational audits. Drawing on this unique combination of data, we demonstrate empirically that random audits underestimate tax evasion at the top of the income distribution.
Ending Corporate Tax Avoidance and Tax Competition: A Plan to Collect the Tax Deficit of Multinationals
(2021) Between 1985 and 2019, the global average statutory corporate tax rate has fallen from 49 percent to 23 percent, largely due to the rise of international tax competition. The biggest winners from globalization have received the largest tax cuts. In this paper we propose a solution to replace this race-to-the-bottom with a race-to-the-top. Multinational companies that have low effective tax rates in some foreign countries (what we call a “tax deficit”) would pay an extra tax in their home country. We explain how such a tax should be designed and how it could be collected.
A Wealth Tax on Corporations’ Stock
(2021) We propose to institute a new tax on corporations’ stock shares for all publicly listed companies headquartered in G20 countries. Every year, each company would have to pay 0.2 percent of the value of its stock in taxes. As the G20 stock market capitalization is around $90 trillion, the tax would raise approximately $180 billion each year.
Tax Evasion at The Top of the Income Distribution: Theory and Evidence
(2021) This paper studies tax evasion at the top of the U.S. income distribution using IRS micro-data from (i) random audits, (ii) targeted enforcement activities, and (iii) operational audits. Drawing on this unique combination of data, we demonstrate empirically that random audits underestimate tax evasion at the top of the income distribution. Specifically, random audits do not capture most tax evasion through offshore accounts and pass-through businesses, both of which are quantitatively important at the top.
Trends in U.S. Income and Wealth Inequality: Revising After the Revisionists
(2020) Recent studies argue that US inequality has increased less than previously thought, in particular, due to a more modest rise of wealth and capital income at the top (Smith et al., 2019; Smith, Zidar and Zwick, 2020; Auten and Splinter, 2019). We examine the claims made in these papers point by point, separating genuine improvements from arguments that do not appear to us well-grounded empirically or conceptually. Taking stock of this body of work, and factoring in other improvements, we provide a comprehensive update of our estimates of US income and wealth inequality.
The Rise of Income and Wealth Inequality in America: Evidence from Distributional Macroeconomic Accounts
(2020) The fraction of national income that is reported in individual income tax data has declined from 70 percent in the late 1970s to about 60 percent in 2018. The gap is larger in survey data, such as the Current Population Survey, which do not capture top incomes well. This gap makes it hard to address questions such as: What fraction of national income is earned by the bottom 50 percent, the middle 40 percent, and the top 10 percent of the distribution? Who has benefited from economic growth since the 1980s?