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What was the effective federal tax rate for US billionaires in 2021 and 2022 according to IRS and research groups?
Executive Summary
The sources present no single, agreed effective federal tax rate for U.S. billionaires in 2021–2022; estimates vary widely depending on data, definitions, and methodology. Government and academic work using IRS administrative records tends to produce higher effective rates (roughly single‑digit to double‑digit percentages of income), while investigative reporting and certain analyses that treat wealth as the tax base report much lower rates or rates expressed relative to wealth (single digits or fractions of a percent) [1] [2] [3] [4] [5]. These divergences reflect whether observers measure taxes as a share of realized income, of comprehensive income including unrealized gains, or of wealth, and whether the sample is the Forbes 400, the top 25, or the universe of billionaires.
1. Why the numbers diverge so dramatically — the methodological fault lines that matter
Analysts disagree because they answer different questions with different data. Studies using confidential IRS microdata or administrative records measure taxes paid divided by reported taxable income and typically report effective federal individual income tax rates in the single digits to low double digits for the ultra‑wealthy; such work underpins White House and academic summaries citing an 8.2% average for the Forbes‑400 over 2010–2018 (White House/OMB‑CEA, Sept. 2021) and related academic estimates through 2020 [2] [1] [3]. Investigative projects like ProPublica focus on a small set of very wealthy taxpayers and present “true” tax rates calculated on broader concepts of economic power or narrow time windows, producing much lower figures for select individuals [5]. Other researchers and policy briefs express taxes relative to wealth rather than income, yielding fractions of a percent when annual taxes are compared to net worth—this is the basis for claims of 0.3% of wealth or ~4% of pre‑tax income in some reports [4]. The definition of base (realized income vs. unrealized gains vs. wealth) is the central source of disagreement.
2. What government and mainstream academic sources report for recent years
Government and peer‑reviewable academic work relying on IRS administrative data provide the most direct measures of tax liabilities under current law. The OMB‑CEA/White House analysis published in September 2021 concluded that the Forbes‑400 families paid an average federal individual income tax rate of about 8.2% for 2010–2018 [2]. An NBER‑style working paper and related academic outputs using IRS data find somewhat higher effective rates in some periods—estimates differ by sample and year, with some studies showing rates rising toward the late 2010s and intermediate estimates around low double digits for some billionaire cohorts through 2020 [3] [1]. These sources use realized taxable income reported to the IRS and therefore reflect taxes actually paid under existing law, not hypothetical taxes on paper gains.
3. What investigative reporting and wealth‑based metrics say — very different pictures
Investigations that obtained leaked returns or that reframe the question produce much lower headline numbers. ProPublica’s reporting on the 25 richest Americans for 2014–2018 presented a “true” tax rate around 3.4% on reported income for that group, emphasizing the role of low‑taxed capital gains, generous deductions, and timing of income recognition [5]. Other policy briefs and tax‑justice researchers present effective rates as a share of wealth—for example, a G20‑oriented blueprint citing Saez & Zucman-style work reports roughly 0.3% of wealth per year (≈4% of pre‑tax income in that framing) for the ultra‑rich, a framing that highlights how annual taxes compare to vast stock portfolios rather than to realized cashflow [4]. These approaches spotlight incentives and policy gaps but are not measures of federal income taxes actually collected in a given year under current law.
4. Comparing 2021–2022 specifically — what can we say and what remains unknown
None of the supplied sources provide a single authoritative IRS‑based effective federal tax rate specifically for U.S. billionaires in calendar years 2021 and 2022. The academic and government series typically stop at 2020 or cover multiyear averages that include earlier years; the White House and IRS‑based estimates cited end in 2018–2020 ranges [1] [2] [3]. More recent working papers and policy briefs reference 2021–2022 in conceptual terms or provide wealth‑ratio metrics but do not produce a consensus per‑year IRS figure for billionaires in those two years [4] [3]. Therefore, any single numerical claim about 2021–2022 must be read against the methodological choice: realized tax on reported income, tax as share of wealth, or theoretical tax including unrealized gains—and the sources demonstrate these produce different magnitudes.
5. What to watch next — how further transparency and timely IRS data could close the debate
Reconciling these divergent accounts requires two things: timely release of detailed IRS administrative microdata for 2021–2022 and clarity about the normative question being asked (taxes on realized income vs. unrealized gains vs. wealth). Academic working papers in 2025 continue to refine estimates using administrative data and alternative samples, but public debate will persist until official microdata for 2021–2022 are released and researchers converge on standard bases and samples [3] [6]. Meanwhile, headline claims should be evaluated against the specific metric and sample they use—only then can readers understand whether a cited rate is a realized‑income effective tax rate, a wealth‑ratio, or a hypothetical tax on economic income.