Read the full report here.

Introduction

On this Tax Day 2024—the deadline for working Americans to settle up with Uncle Sam–neither the nation’s richest individuals nor its biggest corporations are paying their fair share of taxes.

Simply put, the U.S. tax code is rigged against ordinary people. Many billionaires and big, profitable corporations go tax-free for years on end. Companies are rewarded for shifting profits and shipping jobs offshore. Work is taxed more heavily than wealth. Super wealthy families pass down huge fortunes largely untaxed. 

It didn’t used to be this way. Taxes used to be more fair in all these areas. New analysis by Americans for Tax Fairness shows in particular that in the middle and latter parts of the 20th century the highest income Americans were paying an effective tax rate twice what they pay today.

And when our taxes were fairer, our economy was fairer, too. Although many aspects of society in the mid-20th century were worse for many Americans, especially people of color, there wasn’t such a deep divide between the super-rich and everyone else. Everybody shared more in general prosperity.

But instead of returning to those days, Donald Trump and Congressional Republicans want to make the current situation worse. They want to permanently extend the parts of the 2017 Trump-GOP tax law for people making over $400,000 a year that are due to expire at the end of next year. Permanent extension of all the expiring provisions would mostly benefit the wealthy and add almost $4 trillion (including additional interest) to the national debt. 

In contrast, President Biden and Congressional Democrats want to unrig the tax code by raising taxes on big corporations and closing offshore loopholes; more effectively taxing billionaires and other ultra-wealthy individuals by taxing their wealth, or at least all their income from wealth; equalizing tax rates on wealth and work at the highest income levels; and strengthening the estate tax on rich heirs and heiresses. President Biden won’t raise taxes on anyone making less than $400,000 a year. 

All these proposed reforms together would not only improve our current system, but actually make the tax code more fair than it was in the last century. That would make our economy more stable, narrow inequality and help bring our country together again. 

This Tax Day, Americans for Tax Fairness takes a look at what’s wrong with the tax system now; how it used to be better; and what we can do to make it even better in the future.

Key Findings 

• Under our current rigged tax system, billionaires and huge multinational corporations can go tax free; wealth is taxed lighter than work; and family dynasties grow as fortunes tumble down the generations largely untaxed.
• Our tax system used to be more fair in these areas and more. Before a series of tax cuts enacted over the past 40 years or so by Republican presidents and Congresses, the rich and corporations used to pay a fairer share of taxes. 
• In the middle of the last century the highest-income Americans—those with annual incomes over $1 million—were paying an effective tax rate twice what similarly situated taxpayers pay today. The highest-income taxpayers paid effective tax rates in the 40-60% range then, compared to the 20-25% they pay now.
• Big corporations also used to pay much higher effective tax rates back then compared to now. Corporate taxes as a share of the national economy used to track much closer to corporate profits as a share of the economy. 
• Corporate dividends (periodic payments to shareholders), which are a big source of income for the wealthiest Americans, used to be taxed at the same rate as wage income. Now they enjoy a nearly half-off tax discount. 
• More family fortunes used to be subject to the estate tax, which narrows wealth inequality.
• Donald Trump and congressional Republicans want to make our current rigged system even worse. They want to permanently extend the tax cuts in the 2017 Trump-GOP tax law for people making over $400,000 a year that are due to expire at the end of next year. Extending all the expiring provisions would mostly benefit the wealthy and add almost $4 trillion (including additional interest payments) to our national debt. 
• In stark contrast, President Biden and Congressional Democrats want to raise taxes on big corporations and the very wealthiest individuals so they pay closer to a fair share. But they wouldn’t raise taxes on anyone making less than $400,000 a year.