How the Tax System Favors the Very Rich – And What To Do About It

EconoFact Chats

The very highest-income individuals and families typically pay lower taxes, as a share of income, than middle-class individuals and families. Part of the reason is that much more of their income comes from investment and business incomes that are tax-favored as compared to wage and salary income. The very wealthy also benefit from tax rules and regulations that diminish taxes paid on inheritances. These features of the tax system reinforce income inequality, diminish economic opportunity, and reduce tax revenue. Bill Gale joins EconoFact Chats to address these issues. He offers suggestions on ways to reform the tax system to make it more progressive and to increase much-needed revenues. Bill is the Arjay and Frances Miller Chair in Federal Economic Policy and Senior Fellow in the Economic Studies Program at the Brookings Institution. He served as president of the National Tax Association from 2019 to 2020.