The White House in Washington, D.C., in April. President Joe Biden's coming tax package will feature an end to a major benefit for wealthy estates that drastically minimizes the levy for inheritors, along with a bump up in the top income tax rate and funding for strengthened IRS auditing. File photo by Stefani Reynolds/UPI | License Photo
Sept. 23 (UPI) -- The 400 wealthiest families in America paid an average federal income tax rate of 8.2% on $1.8 trillion of income between 2010 and 2018, according to a recent analysis by the White House.
Senior White House Economist Greg Leiserson and Chief White House Economist Danny Yagan authored the report based on Internal Revenue Services statistics, the Federal Reserve's Survey of Consumer Finances and Forbes magazine estimates.
It comes as President Joe Biden proposes tax increases on the wealthy and corporations to pay for spending in areas like healthcare and childcare.
America's wealthiest 400 families have been taxed at preferred rates and have been able to avoid taxes on investment gains, placing their tax burden fall below the maximum 37%.
Investment gains are a primary source of income for wealthy families. A "stepped-up basis" tax preference allows wealthy families to pass investment gains to their heirs without having capital gains income appear on their tax returns.
Biden's budget proposes to end the "stepped-up basis" for the highest-income Americans to ensure that all investment gains are subject to income tax.
"Two factors that contribute to this low estimated tax rate include low tax rates on the capital gains and dividends that are taxed, and wealthy families' ability to permanently avoid paying tax on investment gains that are excluded from taxable income," the report said.
The White House estimate of how much the wealthiest American's pay in taxes is far below that of other analyses due to the inclusion of the value of stock portfolio's as income, The New York Times noted.
An estimate by the Tax Policy Center put the average effective tax rate of the top 1,400 American households at 24% in 2015, compared with 14% for all taxpayers.