FACT CHECK: Joe Biden Claimed Billionaires Only Pay 8% Income Tax
President Joe Biden claimed the income tax on those worth $1 billion or more is on-average 8% at a speech in Wisconsin.
The claim lacks important tax data. Experts suggest that the average tax rate for those in the bracket is far higher than stated.
Muslim and Arab-American leaders in Michigan refused to help campaign with Biden in the state over his position regarding the Israeli-Hamas conflict, ABC News reported. At the same time during a stop in Virginia, Biden was heckled by pro-Palestinian portesters who accused the president of not intervening in the war and calling for a ceasefire, according to the outlet.
During a speech at Earth Rider Brewery in Superior, Wisconsin, Biden told voters that the top 1% of earners in the United States have an income tax of only 8%.
“Before the pandemic, we had about 700 billionaires. There are 1,000 billionaires now,” he said of America. “You know what their average tax rate is? Eight percent…..That’s why I proposed the billionaire minimum tax of 25 percent. That’s not even the top rate.”
The claim is lacking in including important economic and tax data. Internal Revenue Service (IRS) data from 2020, as reported by the Tax Foundation, showed that the top 1% of taxpayers paid an average of 25.99% income tax. Data from those returns also suggested that this income bracket’s share of income taxes paid rose from 38.8% in 2019 to 42.3% in 2020.
Additional data from the National Taxpayer Union Foundation also showed that the share of taxes paid by the top 1% of all income earners in the U.S. increased from 19.3 percent in 1980 to 42.3% in 2020. Among the top 5% of taxpayers, that number increased to 62.7% in 2020, according to the report.
The Cato Institute reported in October 2021 that data from the U.S. Treasury showed that the top 400 wealthiest families pay an average income tax of 22.7%. That same data showed the same group pays an average total federal tax rate of 31.8%. (Did Times Square Billboards Call Ceasefire Anti-Semitic?)
A White House spokesperson directed Check Your Fact to a September 2021 “Briefing Room” blog post, which notes that a “analysis from OMB and CEA economists estimates that the wealthiest 400 billionaire families in America paid an average of just 8.2 percent of their income…”
The White House spokesperson further said that “we are confident this is a fair and true statement.”
“In short, the OMB-CEA analysis incorporates capital gains income,” the spokesperson said.
Chris Edwards, a policy scholar at The Cato Institute, explained to Check Your Fact that Biden uses unrealized capital gains as part of income when he claims they pay only 8%.
“The US has never had a tax on unrealized gains, and no other OECD country today has one,” Edwards said. “Unrealized gains are not considered ‘income’ under the income tax, and thus should not be in the denominator of tax rate calculations.”
Edwards continued that, “Because the official tax rates—from Treasury, CBO, JCT, IRS—all show that rates at the top end are much higher than at the middle and bottom end. That undermines the Biden narrative, so they’ve invented their own statistic.”
Edwards also pointed to an article he authored in July 2023, stating that the idea was based on “future earnings that may or may not ever materialize.”
Jesse Solis, a communications director for the Tax Foundation, told Check Your Fact in an email, “In short, that 8% claim tells an incomplete story.”
Solis directed Check Your Fact to an article from September 2021, stating the number was also based on the inclusion of unrealized tax gains and corporate taxes.