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Our only agenda is to publish the truth so you can be an informed participant in democracy. We need your help. More Info ### I would like to contribute One Time Monthly Yearly Join Now ![](\\" ![](\\" Joe Biden stated on February 15, 2023 in a speech in Lanham, Maryland: The “average tax” for billionaires is “about 3%,” which is “a lower tax than a schoolteacher or a firefighter.\" ![\\"true\\"](\\" false/33efdb6633e5e2fdc2d4e2f63383a1e0.jpg.\\") ![\\"false\\"](\\" false.jpg\\") * Workers * Taxes * Joe Biden ![\\"President](\\" President Joe Biden speaks about the economy to union members at the IBEW Local Union 26 in Lanham, Md., on Feb. 15, 2023. (AP) ![\\"Louis](\\" By Louis Jacobson February 20, 2023 # Joe Biden miscalculates how much billionaires pay in taxes #### If Your Time is short • Biden has previously cited an 8% tax figure for billionaires, based on calculations by the White House’s Council of Economic Advisers. But even the 8% figure doesn’t fully align with what Biden said. • Both the 3% figure of the 8% figure refer to calculations made under a theoretical proposal. Under today’s laws, the 25 highest-earning billionaires paid an average tax rate of 16%. • Meanwhile, among households earning from $50,000 to $100,000 a year — the category that many teachers and firefighters would fall into — the vast majority paid effective tax rates of between 0% and 15%. See the sources for this fact-check During a visit to a labor union in suburban Maryland, President Joe Biden made a pitch for more stringent taxes on billionaires. In Lanham, Maryland, Biden told members of the International Brotherhood of Electrical Workers union he was calling on Congress to pass his proposal for a minimum tax on billionaires. At the Feb. 15 event, Biden said there were \"about 720 billionaires\" at the start of his administration. \"Now we have about 1,000. You know what (the) average tax they pay is? About 3%. Look, no billionaire should pay a lower tax than a schoolteacher or a firefighter.\" The number of billionaires in the U.S. is hard to pin down, and can be heavily influenced day-to-day by changes in the value of stocks. But the 720 to 1,000 figure is broadly in line with recent estimates made by news outlets. However, the tax rate Biden cited is wrong, as is the claim about what schoolteachers or firefighters pay. Tax rate for billionaires is more than 3% Nine days before the Maryland event, the White House published a fact sheet on the economy under Biden saying the average tax rate for billionaires is 8%. The White House also provided PolitiFact with other examples of Biden referring to 8%. However, even this 8% figure needs important context. As we have previously noted, the White House’s 8% figure came from a report by its own Council of Economic Advisers that looked at what would happen if the United States were to tax unrealized gains on stocks. Currently, if people see their stock shares rise in value over time, those gains are not taxed until the shares are sold. If the shares are never sold, they aren’t taxed. Under current law — which Biden proposes to change — stocks may be passed on to the next generation with little or no taxation. The White House report found that if you include unrealized gains in the income calculations of the 400 richest U.S. families, those families are ultimately paying a tax rate of 8.2%. Economists and policymakers have long debated whether the government should tax unrealized gains. But Biden made it sound as if 3% (or, in previous instances, 8%) was the standard tax rate paid by billionaires today. It’s not; that calculation is made by taxing unrealized wealth, rather than income, as is done under current law. So, what is the actual tax burden under the current tax code for the wealthiest Americans? IRS data from 2019 shows that the top 1% of taxpayers paid an average federal income tax rate of 25.6%. A more elite group, the top 0.001% — which in 2019 meant people earning about $60 million or more a year — paid 22.9%. There is one study that pinpointed a roughly 3% tax rate for the ultrarich, but that, too, was based on a theoretical model in which unrealized wealth was taxed. ProPublica, an investigative journalism outlet, compared how much in taxes the 25 richest Americans paid each year with how much their wealth grew in that same period (according to Forbes wealth estimates). ProPublica found that they paid taxes amounting to 3.4% of their gain in wealth. (Those 25 billionaires account for about 2.5% of all U.S. billionaires.) #### Featured Fact-check ![](\\" ![](\\" Sam Brown stated on August 9, 2024 in an X post Jacky Rosen “said ending taxes on tips would ‘hurt working Nevada families.’” ![\\"true\\"](\\" false/33efdb6633e5e2fdc2d4e2f63383a1e0.jpg.\\") ![\\"false\\"](\\" false.jpg\\") By Seth A. Richardson • August 23, 2024 At the same time, ProPublica found that the actual tax rate these 25 billionaires paid under current law is 16%. How do teachers and firefighters compare? Biden’s invocation of teachers and firefighters ignores that 43.6% of households paid zero or negative net federal individual income taxes in 2019, according to the Urban Institute-Brookings Institution Tax Policy Center, a Washington D.C.-based think tank. (The percentage was higher in 2020, but that was because of temporary tax relief provisions during the coronavirus pandemic, so tax experts said it’s best to use the 2019 pre-pandemic figure.) The median annual income without overtime for firefighters is $50,939, and $67,080 for K-12 teachers. Households with adjusted gross incomes from $50,000 to $100,000 paid an effective tax rate ranging from 5% to 15%, the Tax Policy Center found. Some of those households even paid an effective overall rate below 5%, or paid nothing at all or got money back from the government. So, even if a teacher or a firefighter paid at the highest of these estimates — 15% — that would still be below the 16% the top 25 billionaires paid. Why Biden has reason to be concerned Tax analysts said Biden has a point when he talks about billionaires finding ways to avoid paying a lot in taxes. \"Higher earners can borrow on their unrealized gains for consumption, and then avoid taxes at death when passing along those assets,\" said Garrett Watson, senior policy analyst with the Tax Foundation, a Washington D.C.-based think tank. This \"buy-borrow-die\" strategy allows the very richest Americans to avoid a large share of taxes they might otherwise have to pay. However, Watson said this tactic \"could be tackled more directly in the tax code without requiring a complicated minimum tax\" like the one Biden is proposing. The Biden proposal would also be \"administratively and legally challenging,\" wrote Steven M. Rosenthal, a senior fellow at the Urban Institute-Brookings Institution Tax Policy Center. The super-wealthy own many assets with fluctuating and sometimes difficult-to- determine values, and creating and verifying these values for them annually would be a burden both for the taxpayer and for the government. In addition the courts may view this as a \"direct tax,\" which must be apportioned among the states according to their population; this might be impossible, since in some states, there may be no billionaires. Our ruling Biden said the \"average tax\" for billionaires is \"about 3%,\" which is \"a lower tax than a schoolteacher or a firefighter.\" Biden has previously cited an 8% figure, based on calculations by the White House’s Council of Economic Advisers. But even the 8% figure doesn’t fully align with what Biden said. Both figures stem from calculations made under a theoretical proposal. Under current laws, the 25 highest-earning billionaires paid a 16% tax rate on average, estimates show. Meanwhile, among households earning between $50,000 and $100,000 a year — the category that many teachers and firefighters would fall into — the vast majority paid effective tax rates of between 0% and 15%. Even the very richest billionaires are paying rates higher than that under today’s tax code. We rate the statement False. #### Read About Our Process The Principles of the Truth-O-Meter ### Our Sources Joe Biden, remarks at an IBEW event in Lanham, Maryland, Feb. 15, 2023 White House, \"What Is the Average Federal Individual Income Tax Rate on the Wealthiest Americans?\" Sept. 23, 2021 White House, \"Fact Sheet: The Biden Economic Plan Is Working,\" Feb. 6, 2023 Internal Revenue Service, \"Individual Statistical Tables by Size of Adjusted Gross Income,\" accessed Feb. 17, 2023 Urban Institute-Brookings Institution Tax Policy Center, \"Effective Tax Rate by Size of Income,\" accessed Feb. 17, 2023 Urban Institute-Brookings Institution Tax Policy Center, \"Tax Units with Zero or Negative Income Tax, 2011-2031,\" accessed Feb. 17, 2023 Urban Institute-Brookings Institution Tax Policy Center, \"Historical Income Distribution for Nonelderly Childless Households,\" accessed Feb. 17, 2023 Bureau of Labor Statistics, \"National Occupational Employment and Wage Estimates,\" accessed Feb. 17, 2023 Steven M. Rosenthal and Robert McClelland, \"Taxing Capital Gains at Death at A Higher Rate Than During Life,\" May 13, 2022 Steven M. Rosenthal, \"Biden’s New Taxes for Billionaires: One Is Hard, One Is Easy,\" March 31, 2022 Tax Foundation, \"Summary of the Latest Federal Income Tax Data, 2023 Update,\" Jan. 26, 2023 Tax Foundation, \"Taxing Consumption Progressively Is a Better Way to Tax the Wealthy,\" June 8, 2021 ProPublica, \"America’s highest earners and their taxes revealed,\" April 13, 2022 ProPublica, \"The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax,\" June 8, 2021 New York Times, \"How Many Billionaires Are There, Anyway?,\" April 7, 2022 CNN, \"Fact check: Biden makes false and misleading claims in economic speech,\" Jan. 28, 2023 PolitiFact, \"Joe Biden’s dubious math on the federal income tax burden,\" July 13, 2022 Email interview with Kyle Pomerleau, senior fellow at the American Enterprise Institute, Feb. 16, 2023 Email interview with Garrett Watson, senior policy analyst with the Tax Foundation, Feb. 17, 2023 Interview with Steven M. Rosenthal, senior fellow at the Urban Institute- Brookings Institution Tax Policy Center, Feb. 17, 2023 ## Browse the Truth-O-Meter ### More by Louis Jacobson ![](\\" ![](\\" Kamala Harris stated on August 22, 2024 in her acceptance speech at the Democratic National Convention: Former President Donald Trump \"intends to enact what, in effect, is a national sales tax ... that would raise prices on middle-class families by almost $4,000 a year.\" ![\\"half-true\\"](\\" th.jpg\\") ![\\"half-true\\"](\\" true.jpg\\") By Louis Jacobson • August 30, 2024 ![](\\" ![](\\" J.D. Vance stated on August 25, 2024 in an interview on NBC\'s \"Meet the Press\": “Anything that you lose on the tariff from the perspective of the consumer, you gain in higher wages, so you\'re ultimately much better off.” ![\\"false\\"](\\" ![\\"false\\"](\\" By Louis Jacobson • August 29, 2024 ![](\\" ![](\\" Donald Trump stated on August 21, 2024 in a Truth Social post: “The Harris-Biden Administration has been caught fraudulently manipulating Job Statistics.” ![\\"pants-fire\\"](\\" th.jpg\\") ![\\"pants-fire\\"](\\" pants-fire.jpg\\") By Louis Jacobson • August 23, 2024 ![](\\" ![](\\" Donald Trump stated on August 8, 2024 in a press conference: Says his Jan. 6, 2021, speech on the White House Ellipse drew the “same number of people,” as the 1963 March on Washington where Martin Luther King Jr. gave his “I Have a Dream” speech. ![\\"false\\"](\\" ![\\"false\\"](\\" By Louis Jacobson • August 9, 2024 ![](\\" ![](\\" Tim Walz stated on August 6, 2024 in un mitin de campaña en Filadelfia: \"El crimen violento aumentó bajo Donald Trump\". ![\\"half-true\\"](\\" th.jpg\\") ![\\"half-true\\"](\\" true.jpg\\") By Louis Jacobson • August 9, 2024 ![](\\" ![](\\" Tim Walz stated on August 6, 2024 in a rally in Philadelphia: “Violent crime was up under Donald Trump.” ![\\"half-true\\"](\\" th.jpg\\") ![\\"half-true\\"](\\" true.jpg\\") By Louis Jacobson • August 7, 2024 ![](\\" ![](\\" Kamala Harris stated on July 30, 2024 in a rally in Atlanta: Donald Trump “intends to cut” Medicare. ![\\"barely-true\\"](\\" th.jpg\\") ![\\"barely-true\\"](\\" barely-true.jpg\\") By Louis Jacobson • August 7, 2024 ![](\\" ![](\\" Joe Biden stated on August 2, 2024 in a written statement: \"Since Vice President Harris and I took office … incomes have risen faster than prices.\" ![\\"mostly-true\\"](\\" th.jpg\\") ![\\"mostly-true\\"](\\" mostly-true.jpg\\") By Louis Jacobson • August 6, 2024 ![](\\" ![](\\" Kamala Harris stated on July 30, 2024 in an event in Atlanta: \"Donald Trump 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Madison Czopek • August 30, 2024 * ![](\\" ![](\\" Instagram posts stated on August 27, 2024 in an Instagram post: “Hollywood actor Kurt Russell just said: ‘It is now proven, beyond a shadow of a doubt that Kamala Harris and Joe Biden CHEATED in the 2020 election with mail-in ballots.’” ![\\"false\\"](\\" ![\\"false\\"](\\" By Caleb McCullough • August 30, 2024 * ![](\\" ![](\\" Kamala Harris stated on August 22, 2024 in her acceptance speech at the Democratic National Convention: Former President Donald Trump \"intends to enact what, in effect, is a national sales tax ... that would raise prices on middle-class families by almost $4,000 a year.\" ![\\"half-true\\"](\\" th.jpg\\") ![\\"half-true\\"](\\" true.jpg\\") By Louis Jacobson • August 30, 2024 * ![](\\" ![](\\" Viral image stated on August 27, 2024 in a Facebook post: “Kurt Russell forms a new non-woke actors alliance with Roseanne Barr and Tim Allen.” ![\\"false\\"](\\" ![\\"false\\"](\\" By Ciara O\'Rourke • August 30, 2024 * 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The average tax for billionaires is about 3 which is a lower tax than a schoolteacher or a firefighter